Essay: Fiscal Crisis - 2/2/07

I wonder if anybody noticed that the governor’s Emergency Advisory Panel was to present its report on Groundhog Day?

If I weren’t such a responsible adult, I might ask something like… if the report casts a shadow, does that mean we are in for six more years of budget deficits? But I won’t do that.

What I will ask, and I what I think we all should ask, is whether our lawmakers are ready to be responsible adults. Are they ready to stop the finger-pointing blame games?

Are they ready to sit down and discuss openly and honestly and intelligently what services the state should provide its citizens?

Will they be ready to give us an honest estimate of what that will cost, and figure out how to pay for it?

If that last part takes too much courage, they could give the voters alternatives and let us decide. The governor and the legislature could say: Look. To provide reasonable services, like fixing the roads and maintaining the quality of our world-class universities, the state needs this much extra money a year.

So, our lawmakers could say, we are having a special election April 3, and offering you a choice. Either raise the state income tax to X, or extend the state sales tax to cover Y and Z. 

That, by the way, is what happened in 1994, when the voters enacted Proposal A  to dramatically change public school financing. 

There may  be other alternatives. But it would help if all parties -- Republicans and Democrats, governors and legislators and lobbyists -- admit they have been fiscally irresponsible.

Our current crop of lawmakers may not have been able to anticipate how bad things were going to be for the auto industry, which has a direct effect on state revenues.

But they knew a crisis was coming. For many years, everyone in Lansing knew the model for how the state gets its money was structurally flawed. It was virtually guaranteed to supply less money than needed for the things the state had committed to do.

Yet nobody was willing to suggest a way to fix it, because all sorts of irresponsible little demagogues would start bleating, “They want to raise taxes! They want to raise taxes!”

And to compound the problem, the state abolished the Single Business Tax last fall without any plan to replace it. That was a completely irresponsible dereliction of duty.

The silver lining in this mess is that now that they have our attention, the lawmakers have a golden opportunity to fix this.

They need to do so, to attract the kind of  jobs Michigan needs.  High-tech employers won’t come to a place where they have to worry about whether the science teacher is going to be laid off in March. 

Every governor since Bill Milliken has inherited a mess. If Jennifer Granholm wants to leave a legacy, it should be to leave a state four years from now whose finances are in good working order.

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Comments

[Mike in GR]

Mr, Lessenberry, you have advocated higher taxes (among other things) in response to Michigan's budget woes, and I agree with you. But how about being more specific? Why not a *progressive* income tax instead of one rate for all? This past summer the Grand Rapids Press reported record numbers of million-dollar homes sold in Michigan this year; evidently some in Michigan are doing well. I personally would be willing to pay higher taxes, but I think the burden should be distributed more fairly. (Perhaps you have already addressed this; I don't catch your show every day.)

[Dan Smith]

Easy there tax raising liberals. I guess if we really had a crisis I'd agree with you. What we have instead is a failure to really address serious problems. The state has about a $40 Billion budget, and the only part that is short funded, (really short funded) is the part that is discretionary spending by lawmakers. That amounts to about $8 billion. Jack you brought up a great point this week or last about corrections spending and mandatory minimums, great points all that most believe would cut $500 million. The school aide fund may be short but if anyone can seriously argue against reforms to MESSA and teacher retirments (for new teachers!) is just not paying attention. There is no crisis there is simply an unwillingness to to look at, and these that I've mentioned are, long term reforms, instead of one time fixes. Tax increases are fine, so long as we look at the problems first. Finally anyone who knows about the constitution knows that any increase to the sales tax would have most of the revenue go to the school aide fund...hmmm let's call it what it is, sorry this is a shell game, and we're not seriously debating it, in Lansing or here in this blog.

[Anonymous]

There certainly is a weird disjoint between the acknowledgment of "cause" and "effect" with respect to the issues of taxation, public spending, and public education in the state of Michigan.
Last week, the Wall Street Journal editorial page reported on BLS statistics that indicated Metro Detroit teachers were among the best paid in the nation. Better than other teachers in the United States. Better than workers in other industries in metro Detroit.

http://www.opinionjournal.com/editorial/feature.html?id=110009612

The City of Detroit, unlike most other cities in Michigan, has a city income tax to produce more city-government revenue. If the notion is, "more money for teachers means better schools, and better schools means a better economy," then someone needs to explain the City of Detroit. More money for its teachers, and the teachers' union and teachers' pension funds and teachers' health care costs, does not seem to have translated into "better education" or "better schools" in the City of Detroit. And the high-tax and high-spending Detroit city government apparently hasn't translated into a better economy for the City of Detroit. Is this the desired model for the rest of Michigan?