Michigan legislators have returned from a two-week recess to a state budget deficit still reaching the $1 billion mark. The governor and lawmakers are working to make up for a $1.3 billion deficit in next year's state budget which takes effect on Oct. 1.

In order to make up for short funds, Gov. Jennifer Granholm proposed a budget with revenue enhancements including an increase in the state tax on liquor, a continuation of estate tax on wealthy individuals after their death and an increase in cigarette tax from $1.25 per pack to $2. The liquor and estate-tax proposals both were defeated in the House on Wednesday. Granholm spokeswoman Elizabeth Boyd said the governor does not consider the failure of the proposals a serious vote.

"The governor has proposed a balanced budget," she said. "To date, they have been willing to accept the program side of it, and these were the governor's recommendations."

Greg Bird, spokesman for Office of the State Budget Director Mary Lannoye, said while the deficit is slightly less than last year, this year is especially difficult because the state already has cut so much.

"We don't want to cut, but it's too early to say anything is safe," he said. "When you have to keep cutting and cutting, eventually, the core services are wiped out."

Bird said now that the Legislature is back from its two-week break, the real work on the budget will be addressed until the revenue estimating conference on May 18. He said the projections for the 2005 budget will be made after the conference as well.

But some in the House say the revenue enhancements have no chance.

Keith Ledbetter, spokesman for Speaker of the House Rick Johnson, R-LeRoy, said it is very unlikely support for increases will be found in the House.

"It has been shown there is very little support for the tax increases," he said. "Even half of the House Democrats voted against these tax increases."

Ledbetter said they hope to see Granholm look for more places to cut in the budget to balance it without raising taxes.

"The House Republicans are working on the budget right now, and Speaker Johnson is hoping to have his appropriations subcommittees come to him and offer suggestions on where to cut in each department," Ledbetter said.

But Boyd said that the governor is unwilling to make additional cuts to programs, such as Medicaid, that affect many Michigan citizens.

"The governor has made her recommendations," she said. "If state legislators choose not to accept the revenue enhancements, they need to propose alternatives."

In March, spending reductions proposed by House Republicans did not gain enough support to pass.

Johnson has said he would support the increase in cigarette tax, Ledbetter said, and the House is expected to consider the cigarette tax proposal in the next couple of weeks.

"It is early in the budget process and we are trying to get these bills through the process a little bit," he said.