Sep 12, 2007

Senate Democrats take up challenge and introduce revenue-producing bills

LANSING – Responding to Sept. 11's Appropriations Committee meeting where the Director of the Senate Fiscal Agency, Gary Olson, outlined Senate Majority Leader Mike Bishop's, R-Rochester, proposal to balance the budget that begins Oct. 1 with $1 billion dollars in cuts and one-time revenue fixes Sen. Liz Brater, D-Ann Arbor, introduced a package of bills the next day to increase revenue as a part of the solution to the budget crisis.

Brater and Democrats on the Appropriations Committee were dismayed at what they called “draconian” cuts in the budget and simple gotcha politics, and they were more appalled when the Senate Republicans, who control the Senate, acknowledged the budget will have to balanced with a combination of cuts, reforms and new revenue but said they will only act on a tax increase proposal from the Democratic-controlled House and indicated they will do nothing until they get one they can vote on. The state faces a $1.7 billion budget deficit.

The bills make a number of technical changes to the income, sales and use tax acts and can be amended to provide needed revenue for critical state services. Although a number of revenue increasing measures have been discussed recently, Lansing insiders believe the most likely option will be a proposal that raises the income tax from its current 3.9 percent to 4.4 to 4.6 percent, a tax on services or a 1 percent increase in the sales tax. It’s expected the House could vote on some of these proposals as early as Friday.

“Today I introduced a package of bills that will help us solve this budget crisis in a swift and responsible manner," Brater said in a press release announcing the package "These bills allow us to come together in the Senate to enact a long-term, comprehensive fix that will protect critical services and allow us to invest in our people. I look forward to working with all of my colleagues to move forward and meet our responsibilities to the people of Michigan."

The cuts Olson outlined would only cut the budget deficit by about $1 billon, and that would leave approximately $700 million to go, presumably made up in in a tax increase initiated by the House. The cuts include eliminating a proposed 2.5 percent increase for K-12 School Aid, eliminating a proposed 2.5 percent increase for higher education and eliminating a similar increase for community colleges. The cuts would also include $116.8 million in cuts to the Department of Human Services, $78.6 million in cuts to the Department of Community Health and $50 million in cuts to Corrections, $23.4 million in cuts to all other departments and $75.4 million in cuts to state employee economic funding. But Olson also gave Senators a look at a proposal that balances the budget with cuts alone.

It would include all the cuts already outlined, as well as a huge cut in statutory revenue sharing, - money local municipalities get to help pay for police, fire and other local services - by $398.7 million. The already hurting City of Detroit would suffer the most with a loss of $208.9 million

Sen. Mickey Switalski, D-Roseville, the lead Democrat on the Senate Appropriations Committee, and Sen. John Gleason, D-Flushing, also sponsored revenue bills in the package.

"We were elected to act and this package will help us do just that,” Gleason said.

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