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Rep. Al Pscholka, R-Stevensville, said he was voting in favor of a bill to take money from the School Aid Fund to balance the current budget "to uphold the Constitution."

(Kyle Feldscher | MLive.com)

LANSING -- Much of the surplus in the current budget for Michigan schools could be used to pay down the state's projected deficit after members of the Michigan House of Representatives passed a bill Wednesday.

House Bill 4110 would use about $250.3 million from the state's School Aid Fund to pay down a deficit in the general fund, a separate part of the state's budget. On Wednesday, lawmakers in the House passed the bill 62-48, mostly along party lines.

The state is facing an estimated $456 million budget deficit for fiscal year 2015, which runs through the end of September. The School Aid Fund was projected to end the fiscal year with a $283.5 million surplus.

Rep. Al Pscholka, R-Stevensville, said he was voting in favor of the bill in order to balance the budget and "uphold the Constitution." The Michigan Constitution requires a balanced budget.

"I'm proud of the fact that we are balancing this budget without touching kids, without touching colleges, without touching universities," Pscholka said.

HB 4110 and House Bill 4112, which passed by a 66-44 vote, will head to the Michigan Senate for consideration. The two bills together seek to fill the budget deficit, along with an executive order issued last week by Gov. Rick Snyder cutting $103 million.

House Bill 4112 cuts about $93 million in general fund spending to specific government programs, including a $12 million reduction for the state's film incentive program.

The budget shortfall in fiscal year 2015 is the result of businesses in Michigan cashing in old Michigan Business Tax credits issued between 1996 and 2011. Representatives from the Michigan Economic Development Corporation said Wednesday the state is on the hook for $9.38 billion in leftover tax liability until 2032 due to the credits.

Rep. Sam Singh, D-East Lansing, questioned when Michigan Department of Treasury knew about the budget deficit. He said the tax credits are audited every year and he found it "very convenient" that the deficit was announced after Snyder was re-elected.

"There's something wrong with this process that we're finally hearing about these things and now we're forced the make decisions (about fixing the deficit)," Singh said.

All of the speakers who rose to speak against the two bills were Democrats, who mostly voted against the bills due to their opposition to the School Aid Fund being used to fix the budget deficit.

HB 4110 would shift $167 million from the K-12 portion of the School Aid Fund to the community college portion of the fund. The money that would be freed up by the move would then go toward the general fund deficit.

The legislation also uses $80 million that was initially intended to be paid toward Michigan Public School Employees Retirement System (MPSERS) to pay down the deficit. That payment would have been above and beyond the required payment to MPSERS, according to state officials.

"Two hundred and fifty million dollars is being siphoned from the School Aid Fund," said Rep. Sarah Roberts, D-St. Clair Shores. "This money could be used to significantly increase the foundation allowance in support of improving education here in the state of Michigan."

Rep. Brandon Dillon, D-Grand Rapids, said no one in state government should have been surprised about the effect tax credits had on the state budget. He said there were projections as early as 2011 that the credits would have a negative effect on state revenues.

He encouraged taking more time to find a solution to the budget deficit, pointing out that the budget year ends on Sept. 30. He said he wants to bring the people who received the credits to the bargaining table.

"It's unfortunate that we're using the School Aid Fund to fill these holes once again," Dillon said. "The School Aid Fund should be the last resort we use to fill holes in the general fund."

Kyle Feldscher is the Capitol education and MSU reporter for MLive Media Group. Reach him via email at kylefeldscher@mlive.com or follow him on Twitter at @Kyle_Feldscher. Read more stories here.