State - Granholm vetoes bills on liquor sales, schools

By Kathy Barks Hoffman

Associated Press Writer

LANSING (AP) -- Michigan Gov. Jennifer Granholm vetoed a bill Tuesday that would have allowed Sunday morning liquor sales and another measure spelling out how $316 million in federal money should be spent on public schools.

She said the liquor bill could open the state to a costly lawsuit while the schools bill could have jeopardized the federal funding.

The vetoes leave lawmakers with more work to be done on the current budget. The Michigan Licensed Beverage Association, which has lobbied to expand liquor sales, called the governor's veto "baffling."

The liquor sales bill was approved just before the new budget took effect Oct. 1 and was estimated to bring in more than $500,000 to the general fund.

The veto of the education measure doesn't affect the $13 billion school aid budget passed earlier this year, but it could keep school districts from getting the higher per-pupil amounts they were promised until the bill is fixed.

Lawmakers are expected to draft and pass replacement bills after the Nov. 2 election.

The liquor bill would have allowed alcohol sales could start at 7 a.m. on Sunday, rather than being banned from 2 a.m. to noon as they are now. Sellers would have had to pay an extra $160 for a special license, which would have permitted sales up to 2 a.m. Monday. The licensing fee was expected to raise about $512,000.

The bill also would have expanded options for wine and beer-tasting functions and who could serve alcoholic drinks at catered events. The hours that alcohol could be sold on Christmas Day would have been expanded, and community colleges could have gotten liquor licenses to train students in hospitality classes.

Granholm said she vetoed the liquor bill because the state already has lost a federal case involving a law that enabled only in-state retailers to sell alcoholic beverages to consumers. The court said out-of-state retailers, such as California wineries, had to have the same ability or the law was unconstitutional.

Granholm said the liquor bill she vetoed raised similar legal issues because it would have allowed in-state food establishments to sell alcoholic beverages to consumers without allowing out-of-state establishments to do so.

"I wholeheartedly support provisions of the bill that would expand options for consumers to purchase alcoholic beverages, including on Sundays and holidays, (and) enable Michigan wineries and craft breweries to increase exposure for their products," Granholm said in her letter to lawmakers.

But she said too many of the bill's provisions went too far, including a measure that would have allowed bars and restaurants to serve alcohol at offsite catered events, hurting existing catering businesses.

Lance Binoniemi, the Michigan Licensed Beverage Association's executive director, said the cash-strapped state can't afford to pass up chances to bring in more revenue.

"The governor has lost a legitimate and equitable chance to generate revenue for the state without raising taxes," he said in a statement. "We hope that the Legislature will quickly consider a separate early Sunday sales bill when they return after the November elections."

In vetoing the public education bill, Granholm cited a letter from the U.S. Department of Education saying the way lawmakers wrote the bill could cause Michigan to forfeit $316 million in federal funds.

School districts were to receive a one-time payment of $154 per student, essentially returning schools to at least the annual minimum of $7,316 per student districts were supposed to get before budget cuts in the 2009-10 fiscal year. Districts were to get $23 to $46 per student on top of that, depending on how much they now receive in state aid.

Those amounts are likely to remain the same, but the money can't go out until lawmakers rewrite the bill.

Also on Tuesday, the governor signed the higher education spending bill. It cuts operations funding at each of the 15 state universities by 2.8 percent.

Published: Thu, Oct 14, 2010