The bottom line: The state is facing a deficit for the fiscal year ahead that is likely to be at least $2 billion. After years of deficits and cuts, there is simply no fat left to trim.
There are only two choices: Impose crippling cuts on education at all levels - elementary and secondary and higher ed.
After that, make more deep cuts to what remains of our budget to fix roads and bridges, things like that, and reduce or ruin what remains of the budget for human services, including Medicaid.
The other option is to do what politicians call “find new revenue,” which means, of course, raising taxes in some form.
Nobody ever wants to pay more taxes, especially now. The recession has thrown many of us out of work. Others who are still working have seen incomes decline, but not expenses.
The Michigan Chamber of Commerce would evidently prefer balancing the budget without new taxes, no matter what. Senate Majority Leader Mike Bishop, if I understand him correctly, also is insisting that he will oppose any new revenue.
But here’s the problem with that. Balancing the budget with cuts alone would ruin our state’s ability to compete, possibly for the rest of our lives. We have an undereducated workforce, thanks to the legacy of our old brawn-based automotive economy. For decades, we saw little need for higher education, as long as unskilled labor could make high wages working on the line in our auto factories.
Those days, and most of the factories, are gone. Our only hope is attracting new economy, high-tech jobs. In order to do that, we have to have an environment and a workforce worth coming for.
If we destroy higher education and allow our infrastructure to deteriorate further, we have no hope of getting those jobs.
Governor Jennifer Granholm is offering a sensible alternative. We’ve been becoming more of a service-based rather than a manufacturing-based economy. She wants to extend the sales tax to most services, and drop the tax rate by half a percent.
She would cleverly and responsibly require that the new revenue be used at first only to eliminate the deficit in the school aid fund. Within two years, when that is accomplished, the new money would be shifted to wipe out the stupid surcharge the lawmakers irresponsibly slapped on the Michigan Business Tax back in 2007.
You can argue that this isn’t the best way. Some liberals are complaining that sales taxes hurt the poor. But there is no alternative. The budget has to be balanced, this year.
Michigan’s constitution forbids a graduated income tax, and there is no way to change it in time. You can argue with portions of this budget. Granholm wants a new tax on physicians that could drive doctors out of state. Instead of restoring the Michigan Promise Grant as promised, she would bring it back as a tax credit after graduation.
That won’t make students happy. But the spotlight now turns to the Republicans. Are they really interested in saving our state?
Do they value getting Michigan through this crisis and giving our children a chance for a future more than ideological purity?
Whatever the answer, we’re about to find out.
Jack Lessenberry posits this statement, as though it were an article of faith:
"After years of deficits and cuts, there is simply no fat left to trim."
Is it a true statement? I would suggest that it is at least a debatable statement. Which is why a legislative debate would be a very good thing for the State of Michigan.
Here is this, from the Mackinac Center:
http://www.mackinac.org/10745
And this reminder, that Chicago Mayor Richard Daley's reaction (however dubious it might be in fact) to a large tax increase in Oregon was essentially, 'We're going to compete for those Oregon jobs!'
http://www.suntimes.com/news/cityhall/2017137,mayor-daley-trade-shows-012810.article
(Some may argue, quite rightly, that Michigan has avoided some of the high-tax problems of both the City of Chicago and the State of Oregon. To the extent that is true, it is to Michigan's credit. Also credit to the Republicans in Michigan, whose numbers are sorely absent in the City of Chicago and the State of Oregon.)
Posted by: Anonymous | February 12, 2010 at 03:00 PM