Michigan Budget Still Unresolved

September 11, 2007

Michigan lawmakers just ended months of intense debate about how to replace revenue from the much reviled Single Business Tax (SBT) in July, but they are now once again embroiled in a bitter debate- this time over the entire budget.

From Forbes:

Tempers and frustrations clearly are boiling over with time running out and doubt about whether a deal is any closer than seven months ago. Discussions may be getting worse, in fact, with legislative leaders now talking about crafting their own plans this week. If no agreement is struck by Sept. 30, some government services theoretically could shut down Oct. 1.

Although the parties are at odds, it appears both are on board with a tax increase. Again from Forbes:

Despite the bickering, higher taxes appear inevitable. State government, which funds everything from prisons to public universities, is facing a $1.75 billion deficit if Governor Jennifer Granholm’s proposed budget is enacted. Spending reductions could lower the shortfall, but it appears at least $1 billion in extra revenue is needed.

“I do believe that everyone in the state of Michigan realizes that we’re going to raise taxes, one or two ways … an income tax or some tax on services,” Democratic House Speaker Andy Dillon of Redford, MI said.

Michigan was one of only four states to actually lose population between 2005 and 2006, according to the Census Bureau, and only Louisiana and Rhode Island lost people quicker.

The unemployment rate in Michigan is 7.2 percent, 2.6 percentage points higher than the national average of 4.6 percent, according to the Bureau of Labor Statistics, and is much higher than any other state in the country.

Increasing spending by raising taxes is not the way to fix Michigan’s problems. People and businesses are flocking from the state at a record pace, so the last thing lawmakers should do is raise the price of living there. Unfortunately for the people of Michigan, they seem resolute in doing so.


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