LANSING – The conservative think tank Mackinac Center for Public Policy is again calling for cuts and redirection of state revenues to eliminate the $1.3 billion expected shortfall in general fund revenues for the 2004-05 budget.

The group Tuesday re-released an analysis it did for the current budget year with some adjustments for the coming budget. The proposed cuts and new revenues would add some $1.76 billion to the state’s general fund and $4.33 billion total funding, said Michael LaFaive, Mackinac Center fiscal policy director.

“Our ideas to balance the budget can be implemented without eliminating any core state functions,” LaFaive said. One of the groups suggestions is to eliminate the Michigan Economic Development Corp.

But Greg Bird, spokesperson for the State Budget Office, said eliminating core governmental functions is exactly what the report proposes.

“There are certainly a large number of these proposed cuts that we feel would certainly harm or diminish the quality of life if we were to make those cuts,” he said, noting especially proposals to eliminate state involvement in certain health care programs. Some health care services we believe are a core function of government.

The report calls for eliminating or privatizing a number of functions, including agriculture industry development ($2.4 million total, $946,300 general fund), employment placement and training ($80.9 million total, $7.2 million general fund), non-Medicaid community mental health services ($328.4 million gross, $326.8 million general fund), at-risk programs for community colleges ($3.3 million general fund), adoption subsidies ($219.4 million gross, $83 million general fund), state historical sites ($5 million gross, $4.8 million general fund) and the entirety of the MEDC.

The Center is also calling for eliminating the general fund subsidy to the school aid fund, currently proposed at $139 million, and cutting statutory revenue sharing in half to $313 million.

The report also calls for some new revenue, but mostly one-time cash infusions.

Among the proposals is to auction off licenses for racinos to any organization interested in building a track, rather than limiting those licenses to existing tracks. The move would bring in an expected $1.6 billion under the House versions of the legislation, but would drop to $450 million under the Senate versions, LaFaive said.

While maintaining her distance to discussing the racino proposal in detail, Gov. Jennifer Granholm described as “interesting” a proposal that the state auction off available licenses for slot machine gambling at horse race tracks. The governor has said she would not discuss the racino proposal, which was sent to a Senate-House conference committee on Tuesday, until the budget is completed. But she told reporters of the auction proposal, “I am open to all suggestion as to how that should be done.”

The group also recommends selling the state fairgrounds for about $60 million and the McMullan Conference Center at Higgins Lake, run by the Department of Natural Resources, for about $10 million.

The report also calls for tobacco settlement revenue, $282 million, and gambling addiction revenue, $3.5 million, be put in the general fund instead of their current restricted funds.

Several business groups joined the Mackinac Center in pushing for the cuts and changes.

Small businesses have been forced to cut costs, said SBAM CEO Rob Fowler. They can’t raise prices. Instead, they’ve coped by becoming innovative in reducing their expenses. Why should we expect any less from state government?”

Not all business groups were in full agreement with the Center’s proposal, however. The Detroit Regional Chamber of Commerce agreed with the idea of reviewing the budget for potential areas to cut or shift funds, but not with all of the cuts proposed in the report, particularly elimination of the MEDC.

“We continue to support the state’s engagement in economic development as a vital strategy for the state’s growth,” said CEO Richard Blouse Jr.

“By the elimination of the MEDC we severely hamper our ability to grow our economy,” Blouse said. “The MEDC has been tremendously successful.”

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