March 10, 2017
House Bill 4001, new Speaker Tom Leonard’s tax cut, croaked at the gate 52 to 55. Since then, the air has been humming with bits about the twelve Republicans who voted NO. Activist groups from the Tea Parties to the Mackinaw Center are grilling the Nyet-sters. Who would vote no on a tax cut? Well, someone who’s not unbalanced—budgetwise, that is.
Here’s the deal: figures for the foregone yearly revenue are $900 million to $1.1 billion. Wait? Wasn’t the budget roughly $55 billion? Yes, BUT— the State Budget is mostly non-discretionary. The legislature can’t touch most of it. Between constitutionally-mandated items, Federal-directed spending, and legally required lines, the actual discretionary State Budget is around $9 Billion.
Okay, buckaroos, here’s some graduate-school level, public finance theory: take a paper, draw a line down the middle.
On one side you have a PLUS. (+) On the other side you have a MINUS. (-)
On your PLUS side, you have income. On the MINUS, you have spending and expenses.
At the bottom, you draw a line, take the PLUS, subtract the MINUS. If the result is positive, Smiley face! If however, the result is negative, it’s red ink. Frowny face! That figure is called a deficit, and your budget is not balanced. The Michigan Constitution forbids unbalanced budgets: Art V, Sec 18.
We can unbalance a budget two ways: one is by adding to the MINUS side, more spending than income. The other way is to decrease the PLUS side. Take $900 M to $1.1 B out of the PLUS side, Michigan’s budget gets more unbalanced than Lena Dunham in a corset. At Trump Tower.
The obvious move? If you want to reduce the PLUS side, you’ve got to knock an equal or better amount off the MINUS. Your problem is that you can probably only cut from the $9 Billion discretionary pool. A $900 M to $1.1 B cut is 10% to 12%, and that is indeed a lot of bananas. Particularly since that $9 Billion goes to things like roads, infrastructure, local revenue sharing, community colleges, state police, parks… all stuff that communities use and are supported by the ultimate lobbyists: your back-home folks and your local elected officials.
But hey, that’s okayyy… because ideologically-driven representatives will sit down and calmly accept sacrifice for their districts… NOT!!! Reps heard big time from their affected constituencies and are not feeling the love. One of the biggest losers is local government revenue sharing, which hits your cities, villages, counties, who can tell to the penny how many cops, firefighters, EMS responders YOU are costing them. And did I say fixing roads?
And did I mention the governor? Rick Snyder’s office was quicker on the draw than Donald Trump on a tweet: “I have serious concerns about this bill.” For the mild-mannered Snyder, that’s the equivalent of calling it a rabid, rampaging Warthog from Hell.
But what do you expect? First off, the Guv is a CPA, foremost a budget guy. Second: how soon we forget! When Snyder took office, Michigan was a fiscal basket case. Not only was the economy flat-butt which everyone knows, but the public sector was a fiscal house of cards waiting to tumble. The unknown real story of the Snyder years has been a valiant struggle to prop up the very shaky governmental sector at all levels. Detroit was just the biggest and baddest actor.
The state wasn’t just spouting red ink, it was riddled with structural deficits. These are budgets that are routinely out of whack. The turning around of state government from its chronic unbalanced condition to a solid balance sheet was a mighty victory, if a largely unsung one. Rick Snyder is no way, no how, going to agree to jeopardize this signature and basic achievement.
So here’s the deal guys: if I may be so bold, I’d make a suggestion to the House Budget—not Hawks—Raging Warthogs From Hell. You have two sides of the page. You want to cut the PLUS side, great! I like tax cuts. But get out your pencils, get to work, and cut the equivalent, or more from the MINUS side. Bring both halves to the gunfight. That way we can debate the relative costs and benefits of the policy and you can make a case rationally. That’s what a conservative would do.
Don’t just drop the tax break down with no corresponding cuts. That’s giving the pony with an IOU. It’s the equivalent of Jennifer Granholm’s other side of the same coin: announcing benefits without specifying ways to pay for them, except her Rainbow Unicorn Magic. All you Republicans, take heed: you were given majority by the people to put an end to structural deficits and government by Rainbow Magic. You have been the Caucus of Reality. Don’t blow it.
teaches Political Science at Oakland University and serves on the Board of the Regional Transportation Authority. He was elected to represent the 40th District in the Michigan House and was appointed Chairman of the all-important Appropriations Committee, responsible for the entire state budget. Prior to politics, Chuck was political columnist for the DETROIT NEWS, and has hosted talk shows for radio and television.