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Printer-Friendly ModeState doing little to fix budget
June 25, 2007 —
The seemingly endless debate over how to deal with Michigan's recession has finally been adjourned - for a while.
After much debate and filibustering on how to defeat the $800 million problem, Michigan legislatures, along with Governor Jennifer Granholm, finally settled on a resolution in late May.
Much to the relief of Michigan taxpayers, a tax increase is not part of the resolution. In addition, other proposed ideas, such as the layoff of 30 Michigan State Police troopers, have been averted. Also, Michigan's K-12 funding was not cut by $122 per pupil as proposed, allowing many Michigan parents to breathe a bit easier - for now.
Education seems to have received a mixed blow. While it appeared to catch a break, those at the collegiate level were not so lucky. The $83 million worth of payments destined for state universities and community colleges have been deferred from August to October. This will undoubtedly cause tuition rates to rise and university officials to cut back on campus programs and organizations.
Michigan's elected officials have also dipped into tobacco settlement funds which number around $400 million. There has also been a diversion from the planned revenue-sharing costs worth as much as $40 million. These "rainy day" funds, along with many others, have become a temporary solution to an ongoing problem.
All of these deferrals and fund withdrawals are essentially the same premise as using a credit card: take home today anything that can be paid for tomorrow.
The big problem that looms ahead for Michigan is the fiscal year of 2008, which officially begins in early October. A $1.6 billion deficit is in the works for the coming year.
This large lump sum of cash would usually have been more than covered by the Single Business Tax, which generates approximately $1.9 billion annually.
The STB was adopted in 1975 to replace other forms of tax, generating nearly six percent of the total state revenue. Unfortunately, the SBT was chosen by the legislature to be phased out by December of this year, well into the 2008 fiscal year. Without a replacement tax of some kind, Michigan's much needed tax revenue may continue to dwindle, pushing the state deeper into the hole.
This deficit can be felt all over the state, particularly by those either looking for a job or living in the fear of losing the one they already have.
These anxieties are simply worsened when one takes the time to examine these figures: over the last six years, Michigan has lost nearly 250,000 jobs in manufacturing, and has suffered heavy losses of 1.7% in non-farm employment.
All of this comes while every other state in the union seems to be enjoying strong economic growth.
Any person living in Michigan ought to look upon this crisis as a failure of their elected officials. In this case, our so-called "representatives" reacted to the crisis much too slowly, and when they finally decided to sit down together for a discussion on the matter, they allowed things such as political labels and partisan mentality to blind them from finding a reasonable solution.
What is the state to do? In the coming years, we, the voting public, should pay more attention to issues like this, and make sure we have the placed the proper people in office to handle such situations with more competence than our current leaders.
Hopefully, the tuition increase that we are about to take will give us the collective shot in the arm that we need.