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Lester Graham / Michigan Radio

For most Michigan kids, today is the first day back to school.  And many are taking backpacks full of school supplies. They are not required to take school supplies. By state law the public schools are to supply everything students need for class. 

When you add it all up, the new school clothes, gym shoes, and all those binders, crayons, paper, pens and pencils, back-to-school shopping is big business.

“It’s really become probably the second biggest shopping period of the year, right behind Christmas.”

That’s Tom Scott with Michigan Retailers Association. One national estimate puts back-to-school shopping at about 16 percent of retail business in a year. It’s difficult to separate just how much of that is actual school supplies and not clothes or computers. 

The school districts always put out a long list of things kids might need for school and parents start hunting.

The Michigan Court of Appeals says the Legislature violated the state constitution by illegally taking money from state employee paychecks to cover retirement health care costs.

State employees are in line to get back $60 million dollars that was withheld from their paychecks if this decision stands.

The court of appeals says then-Governor Jennifer Granholm and the Legislature could not take three percent of state employee salaries for retirement costs after lawmakers failed to block three percent pay raises.

The pay raises were approved by the independent state Civil Service Commission, and could only be reversed by super-majorities in the House and Senate.

The appeals court said that was just another way to take away the pay raise, and violated the process set up by the state constitution.

Governor Rick Snyder says the money is needed to help cover a shortfall in the state employee retirement fund. He could ask the state attorney general to appeal the decision to the Michigan Supreme Court.

*Correction - an earlier version of this story incorrectly stated that the current Michigan legislature and Governor Snyder "adopted the plan earlier this year that requires state employees contribute 3 percent of their paychecks toward their retirement health care costs."

The plan was adopted under a previous legislature and then-Governor Granholm.

The headline has been changed as well. (previous headline "Court rules Michigan legislature and Gov. illegally quashed pay raise").

We regret the error.

 

 

LANSING, Mich. (AP) - Residents involved in roughly 12,500 welfare cases in Michigan could lose benefits under a stricter, four-year lifetime limit that has received final approval in the Michigan Legislature.

The Republican-led House passed the legislation with 73-34 votes Wednesday mostly along party lines.

The measures will go to Gov. Rick Snyder.

The welfare limit already has been approved as part of the state budget that kicks in Oct. 1. Lawmakers plan to put the cap in a separate state statute to help implement the budget plan. The state's current four-year limit on welfare benefits would expire Sept. 30 unless the Legislature revises or extends the limitations.

The revised welfare limits have fewer exemptions than the four-year limit now in state law.

State Budget Director John Nixon says he’s unsure how Michigan will make payments to food stamp and welfare recipients and Medicaid providers if the federal government defaults, the Associated Press reports.

“Michigan draws about $400 million a week from federal funds that could suddenly dry up next week if the nation hits its debt limit and cannot pay its bills… Forty-four percent of Michigan's $45 billion budget is supported by federal funds, as are 25 percent of state workers.” the AP notes.

In an interview with the AP, Nixon says the state will do what it can to, “keep things moving.”

Meanwhile, Governor Snyder said yesterday that a possible default has him concerned:

“One of the challenges is (the federal government) haven’t told us exactly what it’ll mean. So we’re prepared for a number of scenarios.”

Lindsey Smith reports, "Snyder says Michigan could move money around to cover things like Medicaid payments until the federal government reimburses the state." Snyder said:

“I think we’re going to be in reasonably good shape, as long as it doesn’t go for an extended period of time.”

Tim Walberg
US House of Representative

The divide over budget and debt ceiling talks continues between Congressional Republicans and Democrats. Within the Republican Party, the Tea Party Caucus is a prominent voice against any deal that contains tax increases.

Republican Congressman Tim Walberg represents Michigan’s 7th district and is a member of the Tea Party Caucus. He spoke with Michigan Radio's Jennifer White about what he thinks it might take for both Republicans and Democrats to agree on a budget.

(photo by Steve Carmody/Michigan Radio)

Michigan Senator Debbie Stabenow says she hopes President Obama and Congressional leaders can strike a ‘balance’ in Sunday’s planned talks on extending the debt ceiling.  Stabenow says the President and Republicans should prioritize the needs of middle class Americans. 

“Its very concerning to me that we not see the budget be balanced on the backs of middle class families and senior citizens.”

whitehouse.gov

The debate over the federal budget and the debt ceiling is heated, and there are very dire predictions from both Republican and Democratic leaders about what will happen if these issues aren’t resolved soon. But for Americans who are dealing with every day, immediate issues, this debate can seem distant.

Republican Congressman Mike Rogers represents Michigan's 8th Congressional District. He spoke with Michigan Radio's Jenn White about why people should care about this debate.

Congressman Rogers says these issues "impact the ability for our economy to grow and for people to get back to work."

Lindsey Smith / Michigan Radio

Today elected officials in Grand Rapids adopted a budget for 2012. The plan closes a $6 million budget gap in the city’s general fund.

The plan includes money for a new ‘transformation fund’ – which can only be used for one-time investments in long-term structural changes.

Grand Rapids took a couple measure last year to keep their budget out the red…they laid off around 175 employees and voters approved a city income tax hike.

(photo by Steve Carmody/Michigan Radio)

Flint's new city budget begins July first.  But it's still not clear if city employees will be laid off to make the numbers work.    The Flint city council approved the city's budget on Monday.   The spending plan is based partly on a 15% wage and benefit concession by Flint's city unions.   Concessions that the unions have not agreed too. 

Even though the new budget takes effect July 1st, Flint mayor Dayne Walling insists layoffs are not imminent.   He says decisions on possible staff cuts will be based on monthly reviews of Flint's budget situation.  

 “There is a reality that you can only spend a dollar one time.    And once that dollar gets spent…than its not available for services in January or next Spring.”   

Flint has already laid off dozens of city employees during the past year, as the city struggles with a multi-million dollar budget deficit.

flickr / joshuadavisphotography

Governor Rick Snyder passed new laws expanding the power of Emergency Financial Managers, and there’s been debate over whether or not Emergency Managers are able to turnaround the municipalities and districts they’re assigned to. Michigan Radio’s Jenn White spoke with Gary Olsen, Former Director of the Michigan Senate Fiscal Agency and Senior Policy Fellow at Public Sector Consultants. Here is the interview:

Do Emergency Managers leave their cities or districts in better financial condition?

Political Roundup

May 27, 2011
Photo by: contemplative imaging

The State Legislature completed work on a $46.5 billion state budget this week. It’s the quickest budget process since the 1960’s. Michigan Radio’s Jenn White spoke with Susan Demas, political analyst for Michigan Information and Research Service, and Bill Ballenger, editor and publisher of Inside Michigan Politics.  You can hear the interview here:

Ballenger says  Governor Snyder had a clear plan coming into office, which helped get this budget passed so quickly. He also points to the strong Republican control.

These are the biggest margins of control since the years after World War II ended. This is how strong the majority is in the House and Senate with a Republican Governor. That is incredibly important.

Certain items in the tax structure and in this budget have gotten lots of attention from the public. Tax on pensions, the reduction of the Earned Income Tax Credit and the cuts to K-12 schools all have been on people’s minds.

user aunt owwee / Flickr

The Michigan Legislature has wrapped up its financial planning for the future.

The $46 billion state budget is done - they'll start spending the money October 1st (that's when the fiscal year starts).

The Associate Press writes:

The Republican-led Michigan Legislature has finished approving a new state budget that will cut state aid for education and many state departments...The quick resolution of next year's budget is a victory for Republican Gov. Rick Snyder, who wanted lawmakers to wrap up votes by May 31.

This is the earliest the state budget has been completed in 30 years, according to the Detroit News.

Early passage gives school districts, agencies, and local governments time to plan for their next fiscal years.

Lester Graham / Michigan Radio

The Michigan Senate handed a complete state spending plan over to the state House today.

That leaves just a couple more steps before the budget bills go to Governor Rick Snyder for his approval.

The arguments on both sides of the aisle in the Legislature have been cyclical in recent weeks; Republicans have offered up departmental spending plans with deep cuts, and Democrats have said the cuts help businesses and hurt working poor families and children.

When talking about the K-12 schools budget, Democratic Senate Minority Leader Gretchen Whitmer said:

"Amidst a long day of voting on bad budgets, we find ourselves looking at the absolute worst of the worst."

The K-12 schools budget makes additional cuts in per-pupil funding with the possibility of offsetting those cuts by consolidating services and by encouraging other Republican-proposed “best practices.”

Overall the complaints of Democrats have had little impact on the budget process. The party lacks enough votes to get in the way of a budget that has thus-far rolled quickly through the Republican-controlled Legislature.

It appears any debate on this budget will be over by early next week.

It's official.

Governor Snyder has just signed "the most sweeping tax change in the state since 1994," according to the Associated Press:

It cuts overall business taxes by about $1 billion in the fiscal year starting Oct. 1 and $1.7 billion the following year and replaces the Michigan Business Tax with a 6 percent income tax on corporations with shareholders. Some of those companies will pay more, but most companies won't pay the tax.

In the Detroit Free Press, AFL-CIO President Mark Gaffney said the tax overhaul won't create jobs.

Gaffney questioned whether a small coffee shop owner who receives a tax cut would hire someone. He said that depends on more business, and more business depends on customers having more disposable income.

"I hate to think Michigan is going to be the next experiment in supply-side economics," he said. "There's a reason they call it trickle-down, it's a trickle."

The Governor's mantra has been that cutting taxes will lead to more jobs in Michigan.

When MPRN's Rick Pluta asked the Governor for empirical evidence how he knows lower taxes will lead to jobs, Snyder said, "It's basic economics in terms of cost structures. There was some polling done by the Small Business Association that actually went out and asked their members about what would you be doing with these resources and they got good feedback to say that a lot people would be looking at creating jobs."

The unemployment rate in Michigan stands at 10.2% right now - that number doesn't count the chronically unemployed - people who have fallen off the unemployment rolls.

Detroit Mayor Dave Bing says he'll veto the city council's budget bill. The council budget cuts spending by $50 million dollars more than the mayor wants.

 Detroit City Council voted 8-1 in favor of their plan. But Mayor Bing says adoption of his $3.1 billion dollar budget is crucial if Detroit is to avoid having Governor Rick Snyder step in and appoint an emergency manager to steer the city out of a $155 million dollar deficit.

There’s one week left for the legislature to meet the governor’s deadline for passing a state budget before the end of May.

Governor Rick Snyder says negotiations are still on pace to wrap up by May 31st.

“There are still lots of things, because it’s a very large document, that we need to get through," Snyder said. "But that's all part of the process and it's coming along in a positive way."

Snyder says it would be acceptable if the final deal isn’t ready until a few days the May 31st deadline:

“Passing it anytime in May or June is a big success over our history," said Snyder. "So I view it all as positive. I just like to hit deadlines that we talked about. So a practical matter it would be good to get it wrapped up because there’s a lot more work to be done. So the sooner the better. And we’re on a path to get that done."  

Snyder and Republican legislative leaders announced a deal last week that settled many of the larger budget issues including the size of funding cuts for education.

Democrats complain that they were left out of budget negotiations.

Budget bills start rolling through Senate

May 24, 2011

The Republican-led state Senate has started approving parts of the budget.

That includes a bill that cuts funding for public universities by 15 percent.

Universities could face bigger cuts if they don’t hold tuition increases at or below 7.1 percent.

Democratic state Senator Morris Hood says tuitions are already too high.

"Our profound disinvestment has led to tuition increase after tuition increase, making a degree even harder to attain," said Hood. "We’re passing this problem onto our already struggling constituents. Budgets are about priorities, and I think we are sending a clear message; the wrong message."

Republican leaders in the Legislature expect to wrap up work on the budget quickly and easily in comparison with recent years.

The budget bills will volley between the Senate and House over the next week as lawmakers try to wrap up work on the budget by next Tuesday.

Republican Senate Majority Leader Randy Richardville says he does not anticipate any big battles between the Republican-controlled chambers. But he says there may be a few hang-ups over schools funding.

"The K-12 budget is one of the more complicated budgets and made some adjustments during targets," said Richardville. "That one being also being one of the biggest budgets has the highest propensity to have some problems with it. But I think those problems will be mostly technical. I don’t anticipate any problems with getting the budgets passed."

Democrats are upset that additional funds for K-through-12 schools will not go directly to reduce cuts to per-pupil funding. Additional projected tax revenue will instead go toward districts that approve cost-saving measures, and make retirement payments.

user aunt owwee / Flickr

Governor Rick Snyder and legislative Republicans are expected to wrap up work this week on the budget. If they succeed, they will meet the governor’s target of finishing the budget four months ahead of the constitutional deadline.

Democrats, who are in the minority in the House and the Senate, have some objections, but expect to lose this week’s budget battle.

That won’t stop them from calling for using a revenue windfall to make sure schools don’t lose any money in the new budget.

State employee unions are calling on lawmakers to approve government reforms that the unions say would save the state tens of millions of dollars.

A labor organization report says Michigan government has too many managers compared to workers who directly deliver services to the public. It also says the state spends more on outside contracts than it does on its civil service workforce.

Phil Thompson, with union SEIU 517M, says he knows time is running short to influence lawmakers on the current budget.

"Realistically we understand that the elements in this report aren’t going to be able to be handled in the next week or so. What we want to do is set the foundation for an intelligent, in-depth discussion that will generate savings in fiscal 2012, but more importantly to generate millions of dollars in savings in future years."

The state employee unions say efficiencies could save the state about $185 million dollars in the coming year, if lawmakers approved the changes before October.

The new budget deal struck this week between Governor Rick Snyder and Republican legislative leaders cuts the amount of money for redeveloping abandoned factories and preserving historic buildings.

The governor says the state won’t need to rely so much on targeted incentives in the future.

The new budget will zero out brownfield and historic preservation tax credits, and replace them with a new fund to offer economic development grants.

$50 million will be set aside for brownfields and historic preservation.

That’s $15 to $20 million dollars less than the state targets now.

But Governor Snyder says the state can do a better job of choosing projects "and hopefully make those dollars go farther than they are today."

Mark Morante, with the Michigan Economic Development Corporation, says the state will target only projects most likely to be completed.

In the past, many tax credits that were awarded went unclaimed. He also says the state won’t need to rely on incentives as much because tax changes will bring down the cost of doing business.

"With this six percent corporate income tax and roughly an 80 percent cut in corporate taxes in general, our job will be a little easier on that side of the table, so we will probably need less incentives," said Morante. 

Those tax reforms have been criticized as a tax shift onto individuals. But the governor and his Republican allies in the Legislature say that will be worth it if it creates new jobs.

Democrats feel slighted on budget deal

May 19, 2011
Lester Graham / Michigan Radio

Governor Rick Snyder and Republican leaders in the Legislature have reached a budget deal for the coming fiscal year.

The plan will use hundreds of millions of dollars from a tax revenue windfall to lessen proposed cuts to K-12 schools.

Democratic leaders say the plan violates a deal they agreed to last week, because the money doesn’t go directly to replace the cuts. Instead it will be used to urge schools to cut costs, and help make retirement payments.

"I think that we should motivate people to do the right thing and to find efficiencies where they can," said Democratic Senate Minority Leader Gretchen Whitmer. "And if you want to incentivize them with extra dollars, I’m comfortable with that idea. But this violates the agreement that we had, and the agreement was that we would mitigate the per-pupil foundation allowance so that the dollars would get right into the classroom with the kids."

Republican Senate Majority Leader Randy Richardville says negotiations could have gone more smoothly with Democrats.

"There was no malice, there was no intent to mislead or anything like that, we don’t have that kind of a relationship. But this is the first time that this group of people is actually getting together and negotiating a deal, so there may have been some improvements laid out, we could probably do things better than we did, and we’ll continue to work toward that."

There is about a week and a half left before Governor Snyder’s self-imposed, May 31 budget deadline.

Richardville says he expects the Legislature to meet that goal.

Legislative leaders meet to finalize budget targets

May 19, 2011
Thetoad / Flickr

Governor Rick Snyder met with legislative leaders to refigure budget plans, now that the state is expected to collect more tax revenue than originally predicted.

An application on Snyder’s i-Pad reminds him every day of a looming, self-imposed budget deadline of May 31st. He says he and lawmakers are going to meet that deadline.

"There’s still work to be done, but we’re moving in a very positive direction, and we’re moving on a path to have the Legislature get the budget done by May 31st – so those countdown clocks could pay off.”

Details could be made public as soon as today.

Part of the deal appears to include about $25 million in tax credits for the film industry, and rolling back cuts to K-12 schools. That’s more money than Governor Snyder or the Legislature had originally proposed.

Part of a projected budget windfall is expected to go toward reducing proposed cuts to Michigan’s K-through-12 schools.

The question floating around the state Capitol is how much of a projected boon in tax revenue collection will go toward reducing cuts to per-student funding, and how much will go toward paying for pensions or into the state’s “rainy day” fund.

user brother o'mara / creative commons

Lansing City Council makes cuts

On the heels of a failed millage and a $14.7 million budget shortfall, the Lansing City Council approved a budget last night that would eliminate more than 100 city positions. Michigan Radio's Steve Carmody was at the council meeting and reported that dozens of firefighters and police officers could be laid off as well. Mayor Bernero said the cuts in the budget were unavoidable:

"Over half the budget is in police and fire.  And yet, we have insulated police and fire up to this point…because the deficit was too large.   But even now, we are doing everything we can to mitigate the effects on police and fire."

The Lansing State Journal reports that the city will attempt to reduce the number of cuts through employee concessions:

Slightly more than 100 city workers could lose their jobs under Lansing's fiscal 2012 budget, though the city will attempt to preserve up to 61 of them by seeking employee concessions.Under the new budget, approved 5-3 by the City Council on Monday night, $3.3 million in state funds will be matched for every dollar gained in concessions before the fiscal year begins July 1.

New Emergency Manager starts at Detroit Public Schools

Roy Roberts a former GM executive, had his first day on the job yesterday. The Detroit Free Press reports he'll work alongside outgoing Emergency Manager Robert Bobb until Bobb's contract ends "no later than June."

Michigan Radio's Sarah Cwiek reported that Roberts says the district "must undergo a 'cultural change' and reject a 'Rodney Dangerfield kind of mentality' for students to succeed.

Roberts has to balance a budget deficit of $327 million, and he can do that with broadened powers granted to him under the state's new emergency manager law.

Cwiek reports that Roberts "says he doesn’t have plans to dismiss the elected school board or throw out union contracts, though."

The Freep reports that Roberts is working under a one-year, $250,000 contract.

Snyder calls for less humility and more unity

Governor Rick Snyder gave a speech to the Economic Club of Grand Rapids yesterday in which he asked for "less humility, a bit more swagger and a lot more unity among Michiganders," according to Chris Knape from the Grand Rapids Press:

“We're too negative,” Snyder told what was billed as a record Econ Club crowd gathered at the Amway Grand Plaza Hotel. “We look in the rear view mirror too much to say, 'this is what we've always had, so we've got to keep that going.'"

Snyder also lambasted the taste for political winners and losers in the state.

“Too often they will view they won something because somebody else has lost,” he said.

Knape reported that Snyder had "generally positive responses from the business-heavy crowd," except for one element in his speech - tax credits - Snyder's explanation "landed with a thud," according to Knape.

The Lansing city council is scheduled to vote on next year's city budget this evening.   Declining property values and rising health care costs are forcing deep spending cuts. 

 City leaders hope an estimated 4 million dollars in state revenue sharing will allow a reduction in the number of possible police and fire fighter layoffs.

Jerry Ambrose is Lansing's city finance director.    He says the Mayor's office is also seeking 3 million dollars in union contract concessions, mainly in health care coverage. 

Lester Graham / Michigan Radio

LANSING, Mich. (AP) - State economists agree that Michigan is expected to take in $429 million more this fiscal year than they forecast in January.

But their predictions for the next budget year have dropped as deep business tax cuts take effect.

Lawmakers will be able to use some of this year's surplus in the next budget year, and lawmakers are likely to consider putting some of the money toward easing deep cuts for public schools in 2011-12.

Without the business tax cut, the state would have gotten nearly $500 million more in the next budget year than state economists had predicted in January. But that will largely disappear as business revenue declines.

The heads of the Treasury Department and House and Senate fiscal agencies agreed on the revenue figures Monday.

(photo by Steve Carmody/Michigan Radio)

There’s mixed news today concerning the city of Lansing’s budget crisis.  City leaders have been trying to figure out how to deal with a projected 20 million dollar budget deficit.   

 N0w, city council vice president Kathie Dunbar says the city learned this week that its employee health care costs will rise 2 million dollars higher than expected next year. 

She says fortunately the state legislature has passed a budget plan that should guarantee the city 4 million dollars in state revenue sharing funds. 

More than a dozen state senators have sponsored a bill that would eliminate Michigan's income tax by 2022.
Lester Graham / Michigan Radio

Update 5:21 p.m.

Republicans eked out a legislative victory today as Governor Rick Snyder's tax overhaul package cleared the state Senate.

It fell to Snyder’s lieutenant governor to cast the tie-breaking vote.

Lieutenant Governor Brian Calley delivered a short speech before he cast the vote to break the deadlock on the tax reform package he had a hand in designing.

Calley predicted some lawmakers will pay a price for supporting the administration's tax reforms.

"Because real change comes with real consequence," said Calley. "Real change will come with drama."

Seven Republicans joined Democrats to vote against the package, largely because the measure will end the tax exemption on pension income for anyone born after 1946.

Democrats say it will shift the burden of paying for government services to families and the elderly.

State Senator Steve Bieda was one of the Democrats who voted against the measure.

"It’s shifting the tax to those who are least able to pay in our society," said Bieda. "We are talking about the elderly, people who are living on pensions are going to see a huge increase. I think it’s unjust, unwise, and it’s certainly very unfair."

Bieda tried to delay the vote until next week when the state adopts new revenue numbers. It’s expected there will be a windfall of more revenue than was anticipated at the beginning of the year.

The package eliminates the Michigan Business Tax in favor of a corporate profits tax.

It also eliminates a host of tax breaks, including the income tax exemption for people on pensions.

Overall, the package rolls back taxes on businesses by nearly $2 billion. Most of the businesses that would benefit are small and medium-sized corporations.

Republicans say the result will also be a tax code that is simpler and easier to follow.

State Senate Majority Leader Randy Richardville says there are some hard choices in the package, but they combine to make Michigan more business-friendly.

"So we put the good, the bad, the ugly altogether in one package and said, we believe the greater good is worthy of some of the not-so-good or ugly, so to speak."

The Senate bill restores the earned income tax credit for working poor families, but at a reduced rate.

The House is expected to quickly concur with the Senate action and send the measure to Governor Snyder for his signature.

3:55 p.m.

Lieutenant Governor Brian Calley has cast the tie-breaking vote to win Senate approval of Governor Rick Snyder's tax overhaul plan.

The package scraps the Michigan Business Tax in favor of a corporate profits tax.

It will be a net tax cut on many small and mid-sized businesses.

It also eliminates a host of tax breaks, including the income tax exemption for pensions.

Republicans say the result will be a tax code that is simpler and easier to follow and more business-friendly.

user cedarbenddrive / Flickr

Michigan could see some sweeping changes to its tax structure after today's vote.

Michigan's former Senate Majority Leader Mike Bishop sent out this Tweet:

"Here we go ... Senate in caucus now, but will soon emerge to vote on Gov's tax proposal. If it passes, I expect it will be by a vote or 2."

From the Associated Press:

The Republican-led Michigan Senate is preparing for what likely will be a close vote on a proposal that would significantly shake up the state's tax structure.

The vote planned Thursday is on a proposal that would cut overall business taxes by about $1 billion in the fiscal year starting Oct. 1 and $1.7 billion the following year. The key would be replacing the Michigan Business Tax with a 6 percent corporate income tax while eliminating many types of tax credits and exemptions.

Some exemptions on retiree income would end, which has drawn opposition from some Republican lawmakers. Some Republicans also will oppose the measure because it would delay scheduled rollbacks in Michigan's personal income tax rate, which is 4.35 percent.

A committee reported the bill to the Senate floor Thursday.

A Michigan Senate committee isn't yet ready to make a decision on a broad plan that would significantly change business and income tax structures in the state.

The Senate Reforms, Restructuring and Reinventing Committee adjourned Wednesday without a vote on the legislation.

It's still possible the proposal will be voted on in the Republican-led Senate as early as Thursday.

The plan backed by Republican Gov. Rick Snyder would cut overall business taxes about $1 billion in the fiscal year starting Oct. 1 and $1.7 billion the following year. The key would be replacing the
Michigan Business Tax with a 6 percent corporate income tax while eliminating many types of tax credits and exemptions.

Some exemptions on retiree income would end, which has drawn opposition from some Republican lawmakers.

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