LANSING - With a state budget shortfall approaching $400 million, the Engler Administration has been looking under every rock for revenue sources that will help balance Michigan's books.

In April, Gov. Engler signed a bill requiring state homeowners to move up the payment of their December school taxes to July, which plugged a big hole in the budget by allowing the cash-strapped state to maintain its pledge of keeping school funding at $6,700 per pupil.

Now state Republicans are ready to take $292 million in federally provided money out of the Michigan Unemployment Insurance Trust Fund, and use it to plug other holes in the budget. The unemployment money was appropriated by Congress as part of legislation that extended federal unemployment benefits last March. The Michigan AFL-CIO has appealed to the Labor Department, maintaining that federal guidelines require that the money be used for improved worker benefits or for administration of unemployment benefit programs.

For example, federal rules specifically prohibit the use of that money for job training purposes, yet one state budget measure appropriates $16.8 million for job training grants.

"This is an outrageous use of 'Enron' economics to pervert the unemployment system," said Michigan AFL-CIO President Mark Gaffney. "Now they're trying to cover the budget shortfall by raiding the UI trust fund. They should be ashamed of themselves. That money should go to laid off workers, not to profitable companies in the form of tax cuts."

Earlier this year, organized labor and state Democratic lawmakers fought long and hard to improve unemployment benefit levels for workers, which had been capped at a maximum of $300 per week since 1995. Republicans, who control all the lawmaking in the state, first proposed an increase to $415 per week, but finally settled on a $365 increase.

While workers had to fight for increases in Unemployment Insurance benefits, Michigan employers enjoyed Unemployment Insurance tax cuts for the last several years - allowing the state's Unemployment Insurance benefit fund to balloon to $2.9 billion.

The Michigan Chamber of Commerce doesn't like the shift in federal money, either. Tricia Kinley, director of tax policy and economic development at the Michigan Chamber of Commerce, told Crain's Detroit Business she also thinks the state lacks authority to use the unemployment money in such a manner.