Michigan Watch

Jennifer Guerra / Michigan Radio

Governor Rick Snyder’s budget proposal would change how we fund public schools. That change would start with a cut to schools at a time when the School Aid Fund is growing.

The School Aid Fund is one of the main sources of money for K-12 public schools. Since it was established by the 1908 Michigan Constitution and even though in the 1963 Constitution “higher education” was added, the money in the School Aid Fund only has been used to pay for educating public school children. That is, until this year. 

The last legislature ‘borrowed’ a couple of hundred-million dollars from the School Aid Fund to give to community colleges. I say ‘borrowed,’ but there’s no indication that it’s going to be paid back.

Federal stimulus money helped make up the difference. But for this coming fiscal year, there is no more federal stimulus money.

Bill Rice / Flickr

It was only a few months ago that Republican Rick Snyder and the majority Republican legislature were voted into office. Snyder said on the campaign trail that he wanted to change the way state government works.

He promised to “re-invent” Michigan.  People liked the sound of that.

As he’s revealed the path to his vision of Michigan, not everyone is pleased. 

(sound of protestors in capitol)

Union members, Democrats, public employees, retirees and the poor have been holding rallies at the capitol about as often as the legislature meets in Lansing.

Bill Rice / Flickr

When the budget was introduced, it was left to Lieutenant Governor Brian Calley to explain some of the details.  Among them was the Governor’s proposal to eliminate the Earned Income Tax Credit, a move that would take away a tax break for the state’s working poor.

Flickr

When he presented his budget to the legislature, Governor Snyder explained part of the shared sacrifice would be taxing public and private pensions.  There is no state income tax on pensions right now.  The Governor noted, retirees still use government services.  He also said there are some retirees who are still working, paying the current 4.35% in state income taxes.  He said taxing pensions is a matter of fairness to people of retirement age who are still working.

Alan Cleaver / Flickr

Update 12:21 p.m.

The State of Michigan will have to honor some tax credits for years to come because of contractual obligations.  In a speech today, Governor Snyder indicated over the next four years, the state was on the hook for $2-billion dollars in credits.  About $500-million of that is in next year's budget. 

March 2nd, 8:23a.m.

Governor Snyder says his approach to taxes in Michigan is “simple, fair, and efficient.”  One way the Governor wants to make the tax structure more fair is by eliminating all tax credits for business.  It’s a controversial move which surprised many people in Lansing.

user dig downtown detroit / Flickr

For eight years, year after year, the state of Michigan has been cutting the money it distributes among the 15 public universities.

“We haven’t been chiseling around the edges.  We haven’t been making minor adjustments.  We’ve been really making huge cuts.”

You can talk about tax structure and decisions by governors and legislatures in the past, but above all, the state's financial difficulties have to do with the economy.  

Because Michigan has been heavily reliant on manufacturing, specifically the automakers and their many suppliers, Michigan has been hit especially hard.

Mitch Bean is the Director of the House Fiscal Agency.  Basically, he’s one of the economists who keeps the legislature informed about the economy and the state’s budget.

User thinkpanama / Flickr

Nationwide and in Michigan the rate of foreclosures has slowed a bit in recent months.  But Realty Trac experts say that’s less a sign of a robust housing recovery and more a sign that lenders have become bogged down.  They’re reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing, the so-called robo-signing scandal.

Since producing a Michigan Watch series on the "hydraulic fracking" boom in Michigan last September and October on Michigan Radio, not much has been said or done about this method of drilling for natural gas.

A leak has now put the issue back in the news.

The Associated reports a leak has shut down a drilling operation not too far from Traverse City.

It's not yet clear whether it will damage underground water sources.  It does raise questions as to whether Michigan regulations are adequate to protect the environment while exploiting the gas reserves in the state.

Photo courtesy of Inforummichigan.org and Peplin Photographic (larrypeplin.com)

When the Governor gave his State of the State speech, I was standing on the crowded floor of the House of Representatives.  Governor Rick Snyder outlined his plans to get Michigan back to work.  We all listened as he said the Michigan Economic Development Corporation would lead the way.

“The MEDC will recalibrate its efforts and become a better partner with these regional groups to enhance economic gardening, talent enhancement, and support service to companies.”

I was sifting through the many reports by Gongwer News Service.  Gongwer covers just about everything that happens in and around the Lansing capitol complex.  What caught my eye was an article entitled "State Estimates Tax Expenditures of $33.8 Billion for FY'11." 

I read through the Gongwer story which linked to a 111-page report by the Michigan Department of Treasury.

MDHS

There are close to 10-million people in Michigan.  And almost three-million are now receiving some kind of state assistance.  Half of them are children.

“A lot of them are my next-door neighbors.  It’s bad in Michigan right now.  And people are in a position where they’ve never been," says Becky Clark, who works with the Michigan Department of Human Services in Lenawee County.

Lester Graham / Michigan Radio

The money the state sends to local governments is called revenue sharing.  But "sharing" might not be quite the right word.  It’s actually a promise, a deal the state made with the towns we live in. 

Summer Minnick is with the Michigan Municipal League.  It represents the interests of the cities, villages and townships to state leaders.  She says decades ago, local governments gave up the power to charge their own sales tax to raise money.

Governor's office

Over the last decade, factories have closed.  People have lost their jobs. Some have had their hours cut.  Some have had their wages cut.  It’s been hard for many Michigan families. 

With so many people hurting, it’s easy to look around and get a little resentful when people who work for the government still have their jobs. 

More than 53,000 state workers --from the people who sweep the floors in the capitol to lawyers in the Attorney General’s office to engineers in the Department of Transportation-- still seem to be doing okay.

Lani Chisnell / Michigan Radio

The state budget amounts to $47-billion.  There’s a predicted shortfall of $1.6-billion in the upcoming fiscal year budget.  But, maybe $1.6-billion out of $47-billion isn't that bad.  Just cut everything by three-and-a-half percent and, Voila!  Everything’s fixed.

Steve Chrypinski / Michigan Radio

The incoming governor and new leaders of the legislature know they have a lot of work ahead of them.  The State of Michigan’s finances are a mess.  After a decade of cuts to education, prisons, arts, tourism and everything else, it appears more cuts are coming.  Lester Graham with Michigan Watch reports it’s not clear what the new government leaders are going to do, but they say it begins with some tough decisions about the budget.

rickforMI

Business groups say Michigan’s regulations and the state’s regulators make it more difficult to do business in the state than it needs to be.  During his campaign for governor, businessman Rick Snyder made it clear he agreed with that.

“Our regulatory system is backwards in this state.  Not only the amount of regulation, but how people are being treated.  Lansing is treating us as if we’re bad and should be controlled.  The average person is a good, honest person.  The average organization is trying to succeed.  We should be focused in on the exceptions.”

Don’t misunderstand.  Businesses in Michigan often complain about the red tape.  There are plenty of stories about Michigan government bogging down any attempts by business to expand in the state or to build new plants here.  But, it’s hard to determine whether those complaints are business people just griping about any kind of restrictions placed on them… or a real problem within the state’s bureaucracy.

So, let’s look at some of the ways you measure that.

rickformi flickr photostream

Rick Snyder says the way government works in Michigan doesn’t work.

“Now government.  It’s time for bureaucracy to go away.  It’s been with us a hundred-plus years.  It doesn’t work.  It is time for a new model.  It is time for customer service government.  The role of government is to treat you, the citizen, as the customer and look at life through your eyes and say ‘How can we help you succeed and how can we get out of your way.’”

Hundreds of brokers for oil and gas companies are offering landowners in northern lower Michigan contracts to drill for natural gas. Energy companies are betting the access to deep shale gas reserves will pay off big. But landowners don't always know about the risks.

An exploratory well has produced good results from a new source of natural gas in northern lower Michigan. So, energy companies have hired agents, called landmen to go knocking on doors of private landowners, trying to get them to sign contracts to lease their land for drilling.

Bureau of Land Management

A regulatory agency in Michigan says it can handle a new type of drilling for natural gas. That's what regulators in other states said before complaints about water contamination and leaking gas started coming in.

World Resources Institute

When the Great Lakes water levels fell a few years ago, people began thinking more about how much water we use. Now, this new kind of drilling, called horizontal hydraulic fracturing, again is causing concern about how we use water.

Water already has been used for vertical hydraulic fracturing in thousands of gas wells in Michigan. It takes about 50,000 gallons to drill each well and fracture shale layers underground to release the natural gas.

Horizontal fracturing, also called horizontal fracking, uses a hundred times more water.

Lester Graham

Environmentalists are concerned drilling for new sources of natural gas in Michigan could contaminate water. They're basing that on reports from other states that blame a new method of drilling for contaminating their water.

This new kind of drilling is called horizontal hydraulic fracturing. Until recently in Michigan, it was only used in vertical wells. Drill down, pump water, sand and chemicals at high pressure into a layer of shale, fracture it and release the natural gas trapped there.

Creative Commons photo by user Meridithw

Michigan could be seeing the beginning of a new boom in drilling for natural gas. Leases for drilling rights are going for unheard of prices in northern-lower Michigan.

Drilling for natural gas in Michigan is not new. The first natural gas production began in the 1930s according to the Michigan Public Service Commission. Since then we've seen drilling booms come and go.

Lester Graham

The way we pay for schools changed a lot back in 1994 when voters passed Proposal A. Before Proposal A, much of the support for the schools came from local property taxes. But voters passed increase after increase and in some districts property taxes got so high that people, especially senior citizens, couldn't afford to live in their homes. Michigan had some of the highest property taxes in the nation.

Lester Graham

School districts across the state have been cutting staff and freezing teacher pay to get through budget cuts made by the state.

Iris Salters is President of the Michigan Education Association, a labor union. She says teachers and other school officials are dealing with the cuts, but it's getting to the point where it's affecting the education your kids are getting.

Lester Graham

Michigan legislators hear from educators all the time about money for schools. But legislators, for the most part, are not hearing from parents and other taxpayers.

Tom White is with the SOS (Save Our Students Schools and State), a coaltion of education managers, the P-T-A and others. He says until the public really pressures lawmakers with protests, phone calls and petitions (what the legislators refer to as blood in the streets'), not much is going to be done about more money for schools.

Lester Graham

Getting your budget cut is no fun, and that's exactly what's happened to schools in Michigan. Generally speaking, educators know why that's happened. Michigan's economy tanked and that's affected the tax dollars coming in for schools.

Steve Carmody

You can hardly find a bar in Michigan that doesn't feature video screens offering you a chance to get rich and help Michigan schools. The lottery has done such a good marketing job of telling players they're helping Michigan schools that people have an inflated idea of how much the lottery money helps.

David Martell is the Executive Director of Michigan School Business Officials. He says it's true the Lottery does help.

Lester Graham

Michigan's schools are required by law to have a budget by June 30th. The legislature doesn't have to complete its budget until September 30th. So for the schools, it's hard to figure out a budget when you don't know how much money you're going to get from the state.

"I mean, that's crazy," said Tom White, Chair of a group called SOS (Save Our Students Schools and State), "We don't know until it's so late in our budgeting year, because every year the legislature appropriates funds, but they don't get around to it in a timely fashion.

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