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Michigan District Stages Tax Rebellion

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Detroit--A tiny Michigan school district has declared war on the Governor's budget-balancing plan, refusing to pay state withholding taxes until it receives overdue state aid.

The school board in Gobles, a 1,000-student district on Lake Michigan, voted Feb. 14 to send Gov. James J. Blanchard an iou for $15,000 representing the state income tax deducted from the pay of the district's 89 employees.

Gobles school officials say they will keep the quarterly payment, due March 15, in a bank account until Governor Blanchard releases $142,000 in state aid to the district.

Last month, the Governor deferred $500 million in aid to schools and local governments to avert a cash-flow crisis. He has not said how long the aid will remain frozen.

Gobles officials concede their protest may get them into trouble. "I suspect we may hear from the state," said Superintendent Gerald Bosshard.

"I don't know who they're going to put in jail if it should come to that," he added, but he conceded he has packed his toothbrush just in case.

State officials say arrests are unlikely but they plan to deal swiftly with the tax protest. Deputy State Treasurer Douglas Trezise said his department will "quickly inform Gobles officials about the added interest in penalties attached to delinquent payments."

He added, "If we have to, we can take the assessment out of future state aid. I am hoping we won't be forced to do that."

Mr. Trezise said districts with severe financial problems sometimes send income-tax payments in late, but he could not remember similar tax protests in his eight years with the treasury department.

Mr. Bosshart said the school board became frustrated while struggling to draft the district's budget without knowing how much state aid to expect.

"Last year, we lost $52,000 in executive-order cuts" under former Michigan Gov. William Milliken, Mr. Bosshard said, "There's a good chance we won't see the money this year."

The Gobles board's decision came without the advice of its lawyer and over the objections of its president, David Barber, who was outvoted six to one.

"I just don't like to see us doing anything illegal," Mr. Barber said. "We've got no right to fool around with the employees' paychecks. It sets a bad example for the students."

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