Sep 11, 2007

Senate Republicans blame House Democrats for stalled budget

The Vice-Chair of the Senate Appropriations Committee laid the blame for the stalled budget process at the door of the House Democrats at a hearing Tuesday where Gary Olson, Director of the Senate Fiscal Agency, gave a budget briefing on 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. John Pappageorge, R-Troy, said back in May the Governor proposed a budget that was $1 billon more than the project revenues, and if Democrats want to balance the budget their way, they need to propose a tax increase the Senate can vote on.

“If you don’t like the cuts we are making put up the tax increase and get the votes,” he said. “We are trying to meet you half way. Don’t ask me to do your job too.”

The budget is facing a $1.7 billion projected deficit, and Bishop’s plan leaves some $700 million short of a constitutionally- required balanced budget. Olson also presented a budget balanced completely with cuts and one-time fixes to give Senators a look at the painful cuts required. The options required to balance the budget with just cuts included an early retirement proposal for state workers that could shed up to 6,700 workers and estimates of projected revenue from the Michigan Business Tax. Olson also talked about a continuation budget to avoid a government shutdown and even defaulting on general obligation bonds.

“Defaulting on bonds is an option, but that’s something the state will take years to overcome, as well as hurt our credit rating,” he said.

Sen. Liz Brater, D-Ann Arbor, accused Senate Republicans of playing gottcha politics by daring the House Democrats to vote for a tax increase when they know they are not sure if they have enough votes in the Senate to get it passed. She also said the proposed cuts would have a serious negative effect on families, people’s health and their safety.

“I don’t know why we are even wasting time looking at this,” Brater said. “Looking at bridge collapses in other states, I don’t think it’s hyperbole to say if we don’t balance the budget with some new revenue people will be hurt.”

Brater also pointed out that since 1999 the state has had 40 percent less revenue when you adjust for inflation because of the past tax cuts, and she also pointed out that under former Republican Gov. Bill Milliken, Michigan had 52,673 state employees. In 2006 there were only 52,255 state employees.

Some Senators were also disturbed at the amount of one-tine fixes and tricks used over the years to balance the budget that included draining a $1 billon rainy day fund, selling the tobacco settlement money and early tax collections.

“I’m struck at how we used so many one-time fixes,” said Sen. Michael Switalski, D-Roseville. “We always acted like things would get better if we just got through this year, and we have been doing that for the past six years.”

The committee did not vote on any proposals. But Sen. Tom George, R-Kalamazoo, said the Senate should pass the proposal so the Senate and the House can work on a compromise.

“I think, ultimately, the Governor’s proposal of balancing the budget with a combination of cuts, reforms and revenue is going to be the way to balance the budget,” he said. “We will have something to show them on paper.”

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