CHICAGO — Michigan Gov. Jennifer Granholm said she would sign the six remaining budget bills next week, completing the state’s $40 billion fiscal 2010 budget and ending a tumultuous budget season.

But debates over key pieces of the final budget remain. Granholm, a Democrat, surprised lawmakers Monday by cutting $54 million from a $12.9 billion school budget, saying it was underfunded and that lawmakers need to raise additional revenue to restore the cuts.

She warned that continued declines in the revenue sources that fund the school budget could lead to additional cuts.

Granholm also continues to spar with lawmakers over cuts to revenue aid to local governments, Medicaid reimbursements, and a popular college scholarship program.

The state is operating on an interim budget that expires Oct. 31. Lawmakers crafted the temporary budget in the early hours of Oct. 1 after a brief government shutdown amid disagreement over how to eliminate a $2.8 billion deficit. The total budget package reflects more than $1 billion in cuts and $2 billion in federal stimulus money.

Republican lawmakers, who control the Senate, said they would not raise taxes even if Granholm continues to veto appropriations as she did in the school budget.

“Do not veto portions of these budgets with the expectation that money will be expropriated at a later date to fund the vetoed programs,” Republican Senate Majority Leader Michael Bishop said in an open letter to Granholm. “There is not sufficient support in the Senate Republican caucus for tax increases and for you to think otherwise is a mistake.”

Granholm has signed nine of the 15 bills that complete the budget. On Wednesday she said she would sign the six remaining bills next week, but, she added, she expects to make some line-item vetoes. The bills remaining to be signed include general government spending, human services, state police, community health, higher education, and energy, labor and economic growth.

The governor wants lawmakers to raise taxes and fees in order to restore funding to the school budget, save the Michigan Promise scholarship program, and reduce the size of the cuts made to revenue aid to local governments. Under the current budget, local governments face an 11% cut in state revenue aid.

From the school budget, Granholm cut $54 million in aid earmarked for the state’s largest districts, including 26 in the Detroit area, which she said would be better able to handle the cuts.

Granholm said she was forced to veto the appropriations because the budget was not balanced. “While my approval of this budget will allow public schools to keep operating and school districts to continue making scheduled bond payments, the Legislature has much more work to do to complete a balanced funding plan for our schools,” she said in a statement.

State budget director Robert Emerson this week said that sales and income tax revenue — which make up more than half of the school fund — continue to decline monthly and that additional cuts could be necessary.

As the long budget battle draws to a close, nearly all lawmakers are warning that next year will be worse. In his letter to Granholm, Bishop urged her to sign the six final budget bills “so that work can begin on the next fiscal year budget, which will be even more challenging than what we just faced.”

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