First Tuesday: Gov’s budget has balance

March 2, 2010

Sharon Parks

Check out the latest “First Tuesday” newsletter. Each month it features a column by League President & CEO Sharon Parks and offers short updates on the League’s work. To subscribe sign up here.

Here’s today’s column:

Last month when I wrote my First Tuesday column the governor was about a week away from presenting her final, and probably most difficult, budget. We’ve now had a chance to look at that budget and, while it is not all that we would like to see, it is a balanced approach. The FY2011 Executive Budget includes a mix of spending cuts, tax cuts for business, new revenues and reforms. 

 Although the League is very disturbed by the prospect of more cuts in spending and massive early retirements, we’re solidly in support of expanding the sales tax to services. (See story below “From Poodle Cuts to Pedicures…”) We are concerned, however, about lowering the sales tax rate to a point that the revenue yield is less than needed.  

The League also supports the governor’s proposed physician’s tax as a means of averting another reduction in Medicaid reimbursement rates. We also believe the governor, like most of the nation’s governors, is right in assuming at least two more quarters of federal recovery money through a higher Federal Medical Assistance Percentage (FMAP) matching rate. 

While the governor’s plan was in large part drawn from the Business Leaders for Michigan Turnaround Plan, the business community doesn’t like it — even though the budget calls for significant business tax cuts. And, despite this balanced approach, it appears by all accounts that the budget is dead on arrival in both the House and the Senate, as the House speaker and Senate majority leader both call for a cuts-only budget.  

The prospects for folks who are desperately trying to make it in this brutal economy are bleak indeed. A cuts-only budget would not only continue the deep cuts made in the current year’s budget, but would further shred the safety net and curtail a wide range of services in local communities across the state.

So much is at stake. A generation of children needs the opportunity to realize their full potential. Tens of thousands of adults in Michigan need the opportunity to gain the skills and education to compete for a job in the workforce that pays a family-sustaining wage.  Communities that have seen their infrastructure ravaged by this economy need to be vibrant and safe once again. 

The League has joined an important effort called A Better Michigan Future. The campaign’s platform also offers a balanced approach to solving Michigan’s fiscal problems.  It does so in way that modernizes the state’s tax structure and provides transparency and accountability. I hope everyone will look carefully at this approach and join in an effort to chart a new course for Michigan.

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