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4/5/2007
Hard to believe - a deficit hawk next door
Well, not really. Michigan Governor Jennifer Granholm and her legislature are in deep budget muck. They’re up against a $940M shortfall in this year’s budget and a projected deficit of more than $1B for the year beginning October 1. (Gee, how familiar does that sound?)
Imagine this headline across the top of the Journal Sentinel – “Doyle budget cuts pass Senate” I would faint dead away. Well, that’s exactly what Gov. Granholm was forced to do. Here’s the lowdown, per last Friday’s Detroit News:
LANSING -- Lawmakers Thursday eliminated one-third of the state's $940 million budget problem with final passage of Gov. Jennifer Granholm's executive-order cuts in state spending for the current fiscal year.
The order was passed by the Democratic-controlled House Appropriations Committee 24-6 -- a full House vote is not required. The Republican-controlled Senate adopted the spending reductions last week.
The cuts fall on state funding of employee pensions, State Police auto theft prevention efforts, computer services, day care and burial aid for the poor and state payments to colleges and universities.
Now, that’s not to say there’s not a lot of politicking going on. State employees, schools, road builders, ad infinitum… they’ve all got their hands out. And cutting spending isn’t seen as the only solution. Much much debate has centered on the wisdom (or not) of hiking taxes and other costs of doing business in this manufacturing-challenged Midwest outpost.
House Democrats aren't expected to approve the $600 million in additional cuts approved by the Senate last week but will work the next two weeks on their own list of reductions, said House Speaker Andy Dillon, D-Redford Township.
Dillon said the House proposals also will include taxes or fees, because the state also needs a revenue increase by June 1 to balance its books.
Dillon confirmed House Democrats are considering a tax on utilities that could be put in place by summer and raise about $500 million a year. Dillon also said a public vote on a graduated income tax, consolidation of local governments and an array of other changes are under consideration for the 2008 fiscal year.
Michigan has a flat tax rate. Senate Majority Leader Mike Bishop, R-Rochester, said he wouldn't "torpedo" any potential budget crisis solution, but he's concerned the utility tax would become a "veiled tax increase" on consumers.
The drama surely includes the typical stuff. Everyone’s working together (yeah, sure). A Democrat Governor, Republican-controlled Senate and Democrat House. (a variation of the familiar?) Taxpayer groups fighting increased fees and the bureaucrats defending needed “investment.” Somebody pointing out luxury teacher’s benefits. Even government shutdowns. It’s all there.
But the point is, they’re doing it. How bad does Wisconsin’s budget rating and/or her cash flow have to get? How drastic does a deficit have to be – or how wise do we and our elected officials have to get – before somebody starts recognizing that major program cuts simply must be made?
COMMENTS
I have close relatives in MI. They both worked for, and retired from Ford. They left Michigan's high taxes and moved to Arizona. My sister-in-law always commented that tax increase referendums always passed in the city of Detroit. Why? Because over 50% of the city residents benefited if the city had more money to spend. They either worked for city, they were teachers, or they received finacial assistance from the city. It worked for a while, that is until the people that paid the taxes left the city. Add to that the downsizing at GM and Ford and it spells tough times for Detroit and the entire state of Michigan. Michigan, like Wisconsin, is still providing unsustainable benefits to their teachers and all their public employees, although it appears that's going to change in Michigan. To make matters worse the big three auto makers also provided unsustainable benefits. There's a lesson to be learned from Michigan's plight. Don't ask your private employer, or the taxpayers in the case of public employees, to compensate you more than they can afford to pay.
The lesson to be learned - indeed. Thanks for your observations Russ. JE
Russ (Thu Apr 05 12:29:43 2007)
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