NEWS UPDATE: Michigan government OKs temporary budget; ends state shutdown

LAST UPDATED: 3:20 a.m. Oct. 1

Michigan lawmakers adopted a continuation budget to end the state's second shutdown in three years.

Democratic Gov. Jennifer Granholm signed the 30-day budget early Thursday morning. The move ends temporary worker layoffs and office closures from a near two-hour state shutdown after lawmakers in Lansing could not agree on a budget by midnight, according to the Detroit Free Press.

The continuation budget will fund Michigan's government and public schools. Lawmakers will use that time to agree upon whether to "cut spending, use federal stimulus money or raise taxes" in the permanent state budget that seeks to erase a $2.8-billion shortfall for the 2009-10 fiscal year, which started today.

Michigan Promise Grant scholarships for more than 90,000 college students seem "nearly certain" for cuts, according to the New York Times. But Granholm said in a prepared statement that she "has rejected Senate Republican cuts that eliminate college scholarships for over 50,000 Michigan students."

According to the Free Press, lawmakers approved most of a permanent state budget that would offset the deficit "with no tax increases and substantial cuts in spending, from schools to Medicaid and mental health programs, aid to cities, environmental programs and government operations – including the Legislature."

The state House and Senate scrambled to address the shortfall, which includes more than $1 billion in cuts, late Wednesday and early Thursday. A bill that would have reduced state aid by $218 per pupil to schools was shot down late Wednesday by a 2-106 vote.

The state Senate adjourned until 12:15 a.m. without sending an interim budget to Granholm, who notified around 51,000 state employees they would be temporarily laid off at 12:01 a.m. if no budget was set, the Free Press reported.

The Michigan Messenger reported the state House adjourned until noon Thursday after approving two budget bills, one of which "includes steep cuts in revenue sharing for cities and municipalities."

While the state government is shut down, only state employees for essential services, such as prisons and public health, would be at work. The state experienced a four-hour government shutdown in 2007.

Keep checking for more details as they unfold.