Jan 29, 2009
Senate Republicans deepen Michigan’s budget problem with irresponsible and politically motivated vote
LANSING -- Senate Republicans played politics with an irresponsible vote to eliminate the surcharge on the Michigan Business Tax (MBT) and deepen the state’s projected budget deficit.
Senate Bill 1 passed 25-11 along party lines on Thursday with four Democrats crossing over to vote for the irresponsible measure. The phased in measure will blow a $166 million hole in the budget in the first year, and more than half a billon dollars by the third year when the phase in is complete. The Republicans offered no plan to make up the revenue, no cuts to make it up and no savings to make it up.
“What has happened to all my fiscal conservative friends on the other side of the aisle," said Sen. Michael Switalski, D-Roseville. “It’s as if the goal of the proponents of this bill to put the budget into a bigger deficit.”
Republicans are sticking to the false claim that the surcharge is costing jobs and causing companies to close. Of course, they could not offer a single example. In just the last couple of days, Starbucks will close another 300 stores in 2009 and slash about 6,700 jobs, Black and Decker will cut 1,200 jobs, Ford Motor Credit said today its cutting 1,200 jobs, Boeing is cutting 10,000 jobs, Pfizer is cutting 19,500 jobs, Caterpillar is cutting its workforce by 20,000, Home Depot said it would slash another 7,000 jobs and I have no idea how many jobs the Big 3 have cut.
How many of those jobs were lost because of the MBT Surcharge? The answer is zero.
This is just a political ploy designed to make Republicans look good to voters. Republicans have a history of doing this so they can tell voters they cut taxes. They pulled a similar trick in the election season in 2006 when they killed the Single Business Tax (SBT) with no replacement in sight.
The good news is the voters saw through it, and gave the Republicans control of the House and more people voted for Democratic Senators; the GOP only kept control of the Senate because of gerrymandering.
This has more to do with the fact that most of the Senate Republican caucus is running for statewide office in 2010. Mike Bishop and Tom George are running for or have been mentioned as running Governor, Bruce Patterson and Bishop are considering runs at Attorney General and Michelle McManus and Cameron Brown are running for Secretary of State; so far.
A bipartisan effort enacted the MBT to replace the SBT in 2007. To avoid a brief government shutdown and erase a huge budget deficit, the Legislature enacted a 6 percent sales tax on certain services in November 2007.
Then a month later on December 1, the Legislature enacted the same MBT surcharge on December 1, 2007 to do away with the service sales tax. The same Senators who voted for it in 2007 are the same ones who killed it today with no replacement. It passed 33-4 in the Senate.
Democrats want to get rid of the surcharge too, and House Speaker Andy Dillon has made abolishing it a priority this session. But not without replacing the revenue.
“Unreasonable haste is the direct road to error, Moliere,” said Sen. Gretchen Whitmer, D-East Lansing. “I wanted to stand up and clear something up. Not one of us thinks we should or cannot afford to do anything.”
The bill now goes to the House Tax Policy Committee.