Governor Rick Snyder (and Budget Director John Nixon) presented the 2011 budget to a joint session of the Michigan legislature yesterday.
Michigan Radio's Jennifer White hosted a call-in show, “Funding Our State,” to take a look at the state of the state’s budget, which is currently facing a 1.8 billion dollar budget deficit for the new fiscal year that begins October 1st.
To find out what this budget means for educators, for finances, for business, and for you, click the link below.
Rick Pluta reports that Snyder told a packed room of legislators and lobbyists that fixing the budget means taxing pensions and big cuts in funding for K-12 schools, universities and local governments. Snyder claims that this is because previous administrations, Democratic and Republican, have failed to deal with mounting debt and spending problems.
According to Snyder, the total debt load is now 47 billion dollars. That's $407 dollars for every person living in Michigan.
Part of Snyder's solution is to shut down police posts and close at least one prison, a strategy fiercely opposed by public lawmakers in the past.
Governor Snyder also wants tax reforms that will make Michigan more business-friendly. He wants an end to the complex and unpopular Michigan Business Tax, enacted three years ago in the midst of another budget crisis, and replacing it with a 6% corporate income tax that will only be paid by about a third of Michigan businesses, the ones that are incorporated.
A representative from the Michigan Chamber of Commerce says that businesses can find a lot to like in Governor Snyder's budget proposal, but other groups are finding a lot of things to not like. Human services advocates say ending the tax credit for the working poor will drive more families with children into poverty. Local governments say cuts will drive struggling cities into insolvency. Seniors are angry about having their pensions taxed.
When Michigan Radio's All Things Considered host Jennifer White asked Governor Snyer about shaking things up in Lansing, the governor had this to say:
“Well, it's time. It's not about just shaking things up, it's about the future. We have a broken tax system, we have a broken budget system in our state. It hasn't worked for years. It's time to set a foundation for the future.”
“That's why I called this, not a budget tax presentation, but a foundation to reinvent Michigan. It's about looking to future and creating jobs, a level playing field in terms of simple, fair and efficient taxation, joined value-for-money in budgeting, and creating an environment where our kids can get excited about being in our state and having a great career.”
When Jennifer White asked Budget Director John Nixon what the biggest financial issues he saw with Michigan's budget were, he had this to say:
"The amount of one-time money that you have in the budget that is backing ongoing expenditures. That was about a billion and a half dollars. 14% of the 2011 budget was made up of that. We saw that we had to fix that, we either had to raise that kind of revenue or scale the budget back."
"This budget scales the budget back to the scales of available revenue. We looked at it from various angles, did a lot of analysis, but really came to the conclusion that we have to reduce expenditures. The budget that we're putting forward to the legislature includes about a billion and a half in reduced spending."