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‘Solving’ the Budget Fight


October 16, 2009

In the seemingly permanent obsession over resolving the impermanent state budget, the seeking out of clues that the end to the 2009-10 budget is nigh is a mighty undertaking. Okay, maybe seeking hints to the completion of the budget is not quite as mighty as divining clues to the final days (which, if as shortwave radio nutcakes keep telling us we are in, may make resolving the budget somewhat trivial), but it’s pretty important to those who have a stake in the state’s budget, which is everybody in the state. Many clues were dropped in the past week, and it’s worth noting them.

The budget Michigan now operates under is due to expire in little more than two weeks, that is unless one works for a community college, the state judiciary, the departments of Military and Veteran Affairs, Transportation, Agriculture, Natural Resources, Environmental Quality, Corrections and Education. Those budgets for 2009-10 have been signed, and so if the state undergoes another shutdown beginning November 1, it will be limited.

However, the Senate has said the remaining budget bills for 2009-10 are also going to be sent to Governor Jennifer Granholm and, since she has already promised she would not veto complete budget bills, one can rest relatively assured that some creaking form of state government will wheeze along no matter what the political machinations tool out.

But that world which follows Lansing politics knows the budget is not now done (let us pass on the philosophical truth that no budget is ever really done and is tinkered on every year). So it was Senate Republicans who a week ago let loose the biggest clue that the budget may be “done” relatively soon, and also what the “final” budget might look like.

Because, despite all the protestations that have generated for months, Senate Republicans passed revenue increases.

Okay, accept the argument Republicans make that the package of changes they made will be a long-term tax decrease by phasing out the surcharge on the Michigan Business Tax. Long-term, it may in fact be just that. But short-term, what the Senate Republicans did raises money. Yes, plenty of people object to how they chose to raise money (largely by capping the Earned Income Tax Credit that goes to the poor), but they raised money.

And so the signal sent is the “final” budget resolution will include new revenues. The controlling body of one/third of the governing troika of Michigan has agreed to new revenues, and this is the controlling body that had repeatedly, publicly, said no new revenues should be needed.

Publicly they said that no new taxes are needed. Privately, and off the record (because such things are always said off the record), Republicans have said they understand the financial dynamics driving the state. Once the federal stimulus funds are gone, with the 2010-11 budget, unless the economy somehow miraculously revives to 1990s status (or maybe even 2003 status), state revenues will be simply insufficient to maintain basic services. The state is now literally at the stage of having to determine how many prisons to close, which universities to shutter, how many more roads to allow to return to gravel.

And off the record, because they will only say these things off the record, Republicans say they know the state will need more money. Even though they are committed to cutting expenditures, and know expenditures will be cut, they say, off the record, that even with the budget cut, revenues, at least for the short-term, will be needed.

But they also say, again off the record, that they need to see actual changes to government, actual efforts to consolidate systems, simplify programs, make things more efficient, as their price for revenue increases. Ms. Granholm is beginning that process on her own, by recombining DNR and DEQ for example, and the Republicans say good, but show us more.

In this scenario, Democrats are largely agreed. They, too, want efficiency, though not at the cost of too many jobs.

So what do these clues indicate: that the “final” budget appears it will be a budget of contrasts for 2009-10, a budget that helps set up ongoing ironies of spending less but raising more money, of shrinking government by combining it and in some ways making it larger. The clues indicate that 2009-10 will be more of a transitional budget that will never really be final because as the economy shifts, and needs and spending requirements shift, and revenues shift by contracting or eventually growing, adjustments will be made.

The clues also indicate that these fights over budgets are likely to be a more regular feature of state governance, because the budgets will not ever really be final and the executive and lawmakers will have to move constantly, and one might hope more quickly, to make those adjustments.

And as to when lawmakers and Ms. Granholm will finally complete the “final” budget and move on to the next stage of the fight? Sorry, haven’t a clue.

For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

2 Comments

2 responses so far ↓

  • 1 Jack McHugh // Oct 16, 2009 at 5:35 am

    “The state is now literally at the stage of having to determine how many prisons to close, which universities to shutter, how many more roads to allow to return to gravel.”

    Because Lord knows, we certainly can’t talk about why we pay $5,000 more per prisoner than other midwest states, why we pay $5 billion more for public employee benefits than the private sector average, or why costs at our gold-plated universities rise faster than inflation decade after decade, with virtually no accountability or serious cost containment efforts.

    That said, do we really need an Eastern Michigan University (notwithstanding a flashy new president’s mansion)?

  • 2 Jim Brazier // Oct 16, 2009 at 11:06 am

    The GOP according to what your article states consented to raising taxes by reducing the earned income tax credit. So, the GOP apparently does not mind balancing the budget on the backs of the poor or have-nots. Where is the contribution of the haves? Mike Bishop and his Senate Republican cohorts have certainly fumed about nat raising taxes but he and his party colleagues have not come up with revenues for funding programs for the have-nots or investements such as education to promote equal opportunity for all Michigainers.

    Bishop sounds like he believes that government is bad and deserves to be shrunk. Yet, a bad economy means that people in Michigan are suffering and need assistance through these bad times. When Bishop refuses to lead his party in helping out those who are suffering, he shows callous insensitivity to their plight and a partiality to only helping those who are not.

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