LANSING ? Michigan House Republicans, without the support of Senate Republicans, have developed a compromise with Democratic Gov. Jennifer Granholm and scheduled a vote for next Wednesday.

For weeks, the Granholm administration and legislators from both parties have been negotiating over how best to cut business taxes and improve the Single Business Tax, Michigan’s unique value-added tax that is near universally regarded as hurting the state’s business climate. The administration and House Republicans each have their own plans while Senate Republicans have been more tentative about embracing a proposal of their own.

Granholm’s plan would provide a tax cut to three-quarters of Michigan businesses, especially manufacturers, while raising taxes on insurers and other businesses by applying the Single Business Tax more broadly. The new House Republican plan avoids substantial tax increases in favor of broad business tax relief, especially for manufacturers purchasing new equipment.

A Granholm spokesperson dismissed the plan, calling it fiscally irresponsible because it would reduce state revenue by $933.6 million over the next five fiscal years. An official with the Michigan Manufacturers Association, a key backer of the administration’s plan that also supported the original House Republican proposal, criticized the new House GOP legislation.

But House Speaker Craig DeRoche (R-Novi), who had vowed to have the House vote before Labor Day on a business tax plan – whether one forged through compromise or one authored by House Republicans – said he has decided to hold a vote on the new House GOP plan. He said it reflects almost two months of talks between the administration, House Republicans and House Democrats.

“Michigan has waited long enough for action,” he said in a prepared statement. “The House will vote next week on this plan to get Michigan working again, and it is my hope that vote will be bipartisan.”

The House Tax Policy Committee is expected to vote Tuesday on the plan and the tax exemption eliminations.

The revised House Republican plan would cut taxes by $1.67 billion over the next five fiscal years. The tax cuts would be phased in over the period with tax reduction of $138.9 million in 2005-06, but $450.3 million in 2009-10.

When additional revenues proposed under the House GOP plan are included, the net reduction in revenue would be $933.6 million over five years. That is considerably more than the $383.3 million net revenue reduction foreseen in the June plan.

The revenue reduction would be smallest in the 2006 fiscal year at $3.1 million, but that figure would rise to an average of $273 million in the 2008, 2009 and 2010 fiscal years.

Republicans propose eliminating about $100 million in tax exemptions annually as they proposed in June. They are moving closer to identifying which tax exemptions they want to close.

The major changes House Republicans made to their plan:

Instead of giving manufacturers a credit toward their Single Business Tax equal to 25 percent of their personal property tax burden, manufacturers would receive a 20 percent credit on existing equipment and a 50 percent credit for new equipment.

Instead of reducing the Single Business Tax rate from 1.9 percent to 1.7 percent in 0.5 percentage point annual increments if revenues to the state increased sufficiently, the rate would drop regardless of revenues to 1.8 percent in 2007 and 1.7 percent in 2008. Additional decreases could occur if revenues rise sufficiently, but details of how that would occur are still under work.

The initial plan’s proposal to give all other businesses except utilities a Single Business Tax credit equal to 10 percent of their personal property tax burden was dropped. Republicans see dropping this proposal as a trade-off for their plan’s inclusion of a guaranteed SBT rate cut.

DeRoche spokesperson Matt Resch said Thursday’s announcement does not mean House Republicans have broken off negotiations. Resch said DeRoche informed Granholm in a phone conversation of his intentions during the afternoon.

“To say that negotiations are breaking down or have broken down, I don’t think would be accurate,” he said. “The speaker wanted to move the ball down the field when it came to tax reform.”

Democrats slammed the new House Republican plan – a marked contrast to the generally warm response they offered to the plan unveiled by the House GOP in June.

But Democrats also did not declare the House Republican move as tantamount to ending negotiations.

“It’s purely and simply fiscally irresponsible,” said Granholm press secretary Liz Boyd. “It’s a billion dollar tax cut with no way to pay for it. It will simply shift the burden from banks and insurance companies onto citizens.”

Boyd said DeRoche contacted Granholm “about five minutes before the press release hit the e-mail.” Asked how the governor viewed Thursday’s House GOP announcement, she said, “Suffice to say, it’s a lot of posturing.”

Asked if the move is tantamount to ending negotiations, Ms. Boyd said it is not because “we have to resolve these issues.”

Senate Minority Leader Bob Emerson (D-Flint) slammed the proposal as reckless.

“They’re right that we’ve tried to negotiate in a bipartisan way, but the only result seems to be Republican stalling and now this reckless plan that would blow an even bigger hole in the budget,” he said in a prepared statement. “If their only solution to Michigan’s economic challenges is irresponsible tax giveaways that won’t ultimately create jobs and will burden our children with insurmountable deficits, then that is no solution at all.”

Ari Adler, spokesperson for Senate Majority Leader Ken Sikkema (R-Wyoming), praised the House Republican decision to act, but said Senate Republicans would need to study the new proposal before taking a position on it.

Senate Republicans want to lower taxes, but also recognize the state already is battling a budget deficit with existing revenue levels.

“We’ve been talking for so long, and the time has come for action,” he said. “If the House feels they have a plan that’s ready to go and they can pass, then we think they should do that and send it over to us.”

Still, he allowed, “We have as many questions as probably the reporters do” about the House GOP proposal.

Chuck Hadden of the Michigan Manufacturers Association criticized key elements of the new proposal.

Under Granholm’s plan, all manufacturers would get a Single Business Tax credit equal to 35 percent of their personal property tax burden. But under the House GOP proposal, manufacturers would only receive a 20 percent credit, Hadden said.

The House Republicans’ bill to grant a 50 percent credit for personal property taxes created by purchasing new equipment favors new business and provides little help for longtime businesses in the state, he said.

“There are ways we could live with it, but as it stands right now, no, it’s not the plan we were looking for,” he said.

Resch said the purpose of the larger credit for new equipment is to aid businesses that want to expand.

Hadden said he feared the announcement could signal a rupture in efforts to pass a business tax cut. Manufacturers in particular have asked for a tax cut given how hard the recession hit them.

“We’re concerned that because of the way it’s going, we start this whole process all over again,” he said. “I urge both parties to try to find a compromise in this whole process.”

But Tricia Kinley of the Michigan Chamber of Commerce praised the revised House Republican proposal. The Chamber has opposed Granholm’s plan.

“This plan is definitely better than the current law by providing meaningful tax relief, and it’s infinitely better than the governor’s revenue-neutral tax shift plan,” she said.

House Republicans also retooled the new revenue in their