LANSING – A House Democratic proposal to sell part of the state’s future tobacco settlement revenues to reap immediate funds that could close the current year budget deficit of about $300 million in the general fund was rejected Thursday by Senate Republicans.

Senate Majority Leader Mike Bishop (R-Rochester) said the concept is fiscally irresponsible.

“Probably the worst thing the state could do right now is to borrow money to pay for that shortfall. The most important thing we can do right now is to take this on head on and resolve this budget shortfall directly and not push it into the next administration,” he said. “It’s an absurd solution. We’ve got to find a better way.”

Senate Republicans have called for using the surplus in the School Aid Fund to patch the general fund hole, and Governor Jennifer Granholm has endorsed the idea. But rank-and-file House Democrats have objected, stalling the idea.

Bishop said Thursday that Senate Republicans had made a counterproposal. A Senate GOP source said that proposal still relies on using School Aid surplus, but to a lesser extent through the use of other funds.

Bishop said officials are still shooting to complete the current year budget fix and the 2010-11 budget by June 30. However, officials, speaking on condition of anonymity, have voiced increasing worry that with just five session days remaining, that task is becoming increasingly difficult.

House Speaker Andy Dillon (D-Redford Twp.) did not talk to reporters during Thursday’s session, but Rep. George Cushingberry Jr. (D-Detroit), chair of the House Appropriations Committee, said he supports using surplus School Aid Fund revenues to fill the hole in the general fund.

Cushingberry said it’s a “double standard” to inject general funds into K-12 schools and not do the same when department budgets relying on general funds are coming up short.

But Cushingberry rejected the idea of further securitizing the state’s tobacco settlement revenue, saying it’s a bad idea and forces the state to lose out on a lot of money.

Lt. Governor John Cherry Jr. issued a statement Thursday urging resolution of the budget by June 30.

“With the July 1 budget deadline fast approaching, a number of recent comments on the budget raise concerns that the process may be reverting to the dysfunctional patterns that have characterized the budget in recent years,” he said. “This administration will continue to fight for Michigan’s key priorities and will not stand for any budget bill that cuts education. Consequently, I will be urging the governor to veto any appropriations bill that cuts education at any level: K-12, community college or higher education.”

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