The slow economy, a downturn in car sales from the Big 3 automakers, a loss of revenue from the Single Business Tax and 15 years of tax cuts have combined to present Michigan with one of the worst budget s shortfalls in its history. The state will come up $3 billion short of funds used to pay for education, health care and public safety, and there is an immediate school-funding crisis, with a $377 million shortfall for the current year.
Gov. Jennifer Granholm’s 12-person, bipartisan Emergency Financial Advisory Panel - made up of two former governors and state budget directors, legislative leaders and longtime Lansing policy experts from both political parties - issued its final 20-page report last week. The common sense reports says a combination of cuts in spending and creating a modern tax structure that abandons the focus on the economic system of the 20th century will address the shortfall and combat the immediate shortfalls and position us to thrive in the future. Clearly, the only way we are going to fix the problem is with a cut in spending and an increase in revenue.
Senate Republicans think we are going to win the race to the bottom with 15 years of tax cuts. There is no way we can compete with Communist China and others that pay slave wages and provide no, or very few, services. A pair of tax studies last summer illustrated quality of life, such as good schools, cultural opportunities and low crime attract businesses, not low taxes. We are already competitive in taxes with other states, and now the Republicans want to cut the essential services that attract business here. Since 1994 and Proposal A, Michigan has enacted tax cuts that have reduced revenue $3.2 billion a year. Taxes have been cut 30 times since 1993, and we are more than competitive with other states in base tax rates.
Yet since then everything else has gone up. The caseloads of social workers, more people on Medicare, more prisoners and the cost of educating both secondary and higher education students have increased steadily since 1973. Yet revenue has gone down.
We had more state employees in 1973 than we have now. I want to move forward, not backward.
Under former Republican Gov. Bill Milliken we had 52,673 state employees. In 2000 under former Republican Gov. John Engler – the only former living Governor who did not participate in the Advisory Panel – there were 61,493 state employees. In 2006 there were only 52,255 employees. Does than make Engler a big government advocate? Hardly.
To make up the current shortfall just through cuts would require, for example, eliminating all funding for colleges and universities and all mental health services.
Misinformed critics that refuse to pay their fair share are already out, and despite experts saying only investment in education, infrastructure and quality of life issues will help improve the economic outlook critics still want that race to the bottom. House Minority Leader Craig DeRoche made the ridiculous claim that Granholm talks about budget "doom and gloom" every January without proposing structural spending reform. What do you call 30 tax cuts every year for 15 years and spending cuts for the last four to make up for the budget deficit left the current governor?
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