While working to settle Michigan’s $2.8 billion budget deficit last week, the House and the Senate passed a higher education budget that eliminated the Michigan Promise Scholarship and about $60 million in additional financial aid funding. The state has until Oct. 31 to settle the $40 billion budget under a 30-day extension passed last week. The budget was supposed to be finalized by Oct. 1, but legislators and the governor are engaged in a political battle about partisan issues. All parties must agree for a budget to move forward.

“While no one ever likes to raise taxes, if we want Michigan to come out of this and move forward, we have to invest in things that can help us do that,” said state Rep. Joan Bauer, D-Lansing.

Bills passed in the House include an increase on physician taxes, a hold on increases to personal income tax exemptions and reductions to Michigan business tax credits.

Additional revenue bills to fund the supplemental one could be voted on as soon as Thursday and include a tax increase on tobacco products excluding cigarettes, higher fees for bars serving liquor late into the night and a hold on income tax credits for certain residents, said state Rep. Cindy Denby, R-Handy Township.

“That is a poor approach for Michigan to take right now when we have families struggling to make end’s meet and small businesses trying to stay afloat,” she said.

These revenue bills are the only proposed funding to restore the Michigan Promise.

A letter distributed Wednesday to lawmakers on the House floor from Business Leaders For Michigan, a nonprofit organization, discouraged lawmakers from “tax increases and revenue enhancements,” and listed MSU President Lou Anna K. Simon as a member and supporter of the organization.

MSU spokesman Terry Denbow said in e-mail Simon has never seen this letter.

“MSU, like U-M and Wayne State, is a member of Business Leaders for Michigan, just as we all are members of numerous community-based organizations across Michigan,” he said. “But none of us inherently promote or share the political views of each of these organizations where we might appear on their letterheads.”

The Democratic-led House passed three revenue bills, and the bills move to the Republican-led Senate for consideration as early as next Tuesday.

Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester, said the Senate is working to erase the deficit, not increase taxes.

“We don’t believe that a tax increase is how you solve the budget,” Marsden said. “This deals with this year’s budget with no new tax increase.”

Chances of these tax increases passing in the Senate are slim, said Sen. Michael Switalski, D-Roseville.

“Just from discussion with my colleagues, it doesn’t have a lot of support in the Republican side,” he said. “But I’m not saying it is impossible.”