Fun with budgets

The ultimate drop-dead date for a state budget to be passed, Oct. 1, is less than three weeks from now. Unfortunately, time, not progress, seems to be the only thing moving forward right now.

Senate Majority Leader Mike Bishop said he's willing to push forward with a plan of cuts that Democrats likely won't stomach unless the House passes a tax hike package. Of course, Democrats still don't have the votes in the Senate to pass the tax hike, what with recall threats from Leon Drolet looming.

There's no denying it, Michigan is in a fiscal crisis. We need leadership now, more than ever.

Of course, this could all have been avoided had legislators actually moved forward with this whole project months ago. In point of fact, Gov. Jennifer Granholm had a proposal on the table to re-vamp the Single Business Tax and the year-to-year budget back in November/December. Then-Senate Majority Leader Ken Sikkema was practically begging for it to be brought up, but inertia prevailed.

Months went by, mostly focused on replacing the Single Business Tax. More months continued, and now we find ourselves weeks out from the new fiscal year.

The stakes are clear. Without a budget in place, Michigan will:

• Likely default on its bonds.
• Lose authorization to spend, which means thousands of state workers could be temporarily out of a job.
• Shut down non-essential services, like Secretary of State offices and state parks
• Cause its credit rating to fall, significantly hiking interest payments on loans and worsening budget woes.

We've already had problems with schools, both K-12 and higher education, having to start their years without knowing what their budgets will be. Mid-year cuts are especially tricky for them - it's not like you can cancel an AP U.S. History class mid-year.

So now we wait. Tick, tock. Tick, tock....

Comments

[LegislativeInsider]

Derek,
Just wanted to say that I wish the LSJ would put more of your commentary in it's paper. I work in the legislature and am frustrated with how much is not covered or glossed over by the media resulting in an ill-informed public ripe for the pickings and gimmicks or one-time fixes and arrogant SOBs like Drolet. All that seems to get covered is fluff like Canadian trash and iPods while the real meat is left on the bone, rarely ever considered by the AP or others in the Capitol Press Corp. Anyway, keep up the good work and hold all 296 of those legislative feet to the fire.

[JRS]

There will likely be a combination
of budget cuts and a tax increase.

The budget cuts especially are going to hit Michigan hard, I don't think there is any way to
avoid that.

Is one side going to blink around
11:59 PM on Sept. 30? It could end up being that close.

[Michael Motta]

Credit rating? A-ha! I just got an idea!

Let's allow some creditors to foreclose on parts of Michigan. Wherever Tim Walberg's supporters are big, let's allow that to be taken over by some private sector lending company, especially since Walberg's camp is so pro private sector and anti-taxes. They wouldn't have to pay taxes anymore and could fend for themselves by brandishing pistols as they ride their motorcycles to and from church. The Walbergian utopia.

[michele betz]

I am a state employee. Give me an unpaid vacation. The government is stuck in an abyss.
I do not want my taxes raised. Michigan is already suffering. Raising taxes will only create more revenue loss. Cutting taxes increases revenue. More spending, more tax revenue into the coffers. I don't understand how people don't get this. More money in the people's pockets, more spending... more taxes paid. The feds are reducing the deficit more quickly than expected with the additional tax revenue coming in from reducing taxes and increasing revenue.

[FuzzyMathBadPolicy]

Michele-
What you write sounds nice, and all, but it is not entirely correct. Sure, excessive tax burdens will hurt/stifle economic growth, but the same can be said for state with low, or no, tax burdens (see Mississippi and Alabama). Michigan does not, by all normal standards, have an excessive tax burden, rather we are about at the middle. Besides, if your comments were true, we'd be flush, seeing that the tax burden on Michigan businesses and individuals (unless you are a smoker) have been cut numerous times over the last 10 years. Simply put, a sensible tax stucture needs to be adopted which means a slight increase in the income tax and the expansion of the sales tax to certain, non-business-to-business services. Ideally, the income tax would be raised (or graduated) a few tenths of a percent to 4.25% and the sales tax would be lowered from 6% to 5 or 4.75% and expanded to most consumer services. This would create a stable tax base and enable the state make high-end investments that improve the quality of life, promote clean, green livable communities - both of which will attract employers. Work on lowering the burden of health care costs and tuition, that'll help even more, than all the tax cuts in the world.