LANSING – Michigan’s sagging revenues will mean more budget cuts this year, even though the state will be using some federal stimulus funds to soften the blow of the extended recession, Gov. Jennifer Granholm said Wednesday.

“We’ve got a drop in revenues that is breathtaking,” Granholm said of revenues that were down in February by more than 31 percent from the same month a year ago. “We’re looking at it very carefully.”

Official numbers have not yet been posted by the Department of Treasury, but indications are that revenues were substantially below the lowered estimates set in the January Revenue Estimating Conference.

Granholm said she will use federal stimulus funds to counteract some of the revenue loss, noting that was part of the purpose of the stabilization portion of that package.

The governor said a more complete indication of the problem will be evident with April revenue figures, when the numbers include annual tax returns.

But of potential budget cuts, she said, “We’ll probably have to go back at it.”

Legislators also expect that more cuts will need to be enacted this fiscal year, but they are not in a rush to set the cuts.

Senate Appropriations Chair Sen. Ron Jelinek (R-Three Oaks) said action should wait until the May Revenue Estimating Conference. It is better to wait until then so officials have harder data to work with, he said.

But, “there will need to be more cuts,” he said.

Sen. Michael Switalski (D-Roseville) reluctantly concurred. And he worried that the state’s options on cuts could be limited, especially in terms of the K-12 school system.

Switalski hoped that federal stimulus money could help shore up some of the budget for this fiscal year.

The state already cut the budget in December, although at that time legislative Republicans worried the state was not cutting enough to make up for potential shortfalls.

STIMULUS/M.B.T.: Senate Majority Leader Mike Bishop (R-Rochester) said last week that he hoped some stimulus funds could be used to eliminate the surcharge on the Michigan Business Tax.

But Granholm said stimulus funds cannot be used to cut the surcharge. She told reporters the tax cut battles were fought in Washington when Congress passed the stimulus bill containing substantial tax relief.

She said the package does not allow for stimulus funds to be deposited in rainy day funds or to be used for tax cuts.

“We’re not going to pay back a dime that was spent inappropriately,” she said.

UNIVERSITY FUNDS: Universities have objected to Granholm’s demand they freeze tuition in a year in which they would also see a 3 percent cut in operating support from the state under the proposed budget, but talks are underway to provide an inflationary increase.

Granholm did not reveal any specifics on how that would be done, but reiterated her view that it is important that tuition be frozen so students don’t see “their tuition taxes go up.”

COBO: Granholm also reiterated her view that there is little flexibility in the federal stimulus package to allow funds to go to Detroit to expand and renovate its Cobo Hall convention facility. The expansion project is currently caught in a legal showdown between Mayor Ken Cockrel Jr. and the city council over transferring ownership of Cobo to a regional authority which would get funds by extending the life of regional taxes devoted to the project.

The council, in a move vetoed by the mayor, has indicated it wants to try to secure stimulus funds for the expansion/renovation.

But Granholm, who believes the veto will withstand a legal challenge, said the best she thinks the council could accomplish is submitting a grant for a “green project” that could make the facility more energy efficient.

She said Cobo is not “shovel-ready” and is not in a category that is covered by federal stimulus funds.

“This should not be an issue of city versus suburb or black versus white; it is an issue of how to get a fine convention center,” Granholm said.

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