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LOCAL COMMENT: State needs a
bigger cut of federal money
Better return would ease budget deficit
by Lyke Thompson, December 3, 2002,
Detroit Free Press
For more articles visit
www.bridges4kids.org.
Michigan faces a huge budget shortfall of about $500 million
this year and $1.8 billion next year. To compensate, the state
will endure budget cuts hurting children, the environment, the
state's infrastructure, poor people and people with
disabilities, among others.
There is, however, one strategy that may help avoid some
budget cuts: getting Michigan its fair share of federal
dollars.
For years, Michigan received 86 cents or less back for every
dollar it sent to the federal government. The state lost $9.2
billion in 2001, according to the Tax Foundation. Slightly
older data from other sources confirm the magnitude of these
losses.
The big reason for this shortfall is that we have fewer
federal facilities, employees, contractors and military bases.
For example, in 2001 Michigan's per capita share of federal
procurement expenditures was 45 percent -- whereas it would
have been 100 percent if we had received our fair share. By
contrast, Missouri was receiving 158 percent of its share and
Alabama 154 percent.
That's where the easy explanations end and where the political
ones begin.
We are also blessed with a very competitive political system
in Michigan. We regularly send delegations to Washington that
are split on a partisan basis with a huge ideological spread.
Moreover, we regularly toss out a few members of Congress who
have accumulated substantial seniority.
The upshot is that we do not speak with one voice in Congress
as some one-party states do. But we should. Gov.-elect
Jennifer Granholm ought to call together the Michigan
delegation to build an agenda to bring our dollars home.
To initiate this, Granholm, the leaders of each party in the
Michigan House and Senate, and our U.S. senators and
representatives should meet in Lansing before the first of the
year to publicly forge a consensus agenda for the state to
pursue in Congress and with the president over the next two
years.
What should be on this consensus agenda for getting more
federal support?
My first suggestion relates to our struggling economy.
President George W. Bush has promised tax cuts to stimulate
the economy. Why not channel those tax cuts through the states
by creating a revenue-sharing program keyed to the
unemployment rate?
The tendency is for states to cut budgets and raise taxes
during a recession. Doing this accelerates recessionary
pressures by taking more money away from consumers.
If the federal government were to provide revenue-sharing
grants to states using a per capita formula weighted toward
states with higher unemployment levels, Michigan would get
funds that would allow us to avoid further budget cuts. Many
of the other states with low federal returns are also those
that currently have higher unemployment levels.
Michigan would find many natural allies in this quest, because
a new report by the National Conference of State Legislators
indicates two thirds of all states are facing declining
revenues.
This kind of revenue sharing would have an immediate positive
impact on Michigan and other hard-hit states. Students could
save on tuition. Services to the poor could be preserved,
potholes patched, and pollution cleaned up. And it would have
a strong positive effect on the economy.
Several other projects could further Michigan's return on its
tax investment in the federal government. These include:
Pursuing the necessary millions to run a high-speed rail line
from Detroit to Chicago. This project is the only way to avoid
the even more expensive widening on I-94 across the Lower
Peninsula.
Creating a large-scale federal program to remove the lead from
older houses. There are many thousands of lead-poisoned houses
in rural and urban older communities across Michigan. Many of
these homes have repeatedly poisoned children, undermining
their intelligence and their performance in school. There are
limited state and federal funds available to work on this
challenge, but it will take billions to correct this problem
in Michigan.
Substantially increasing federal funds to decrease pollution
from sewage overflow during heavy rains. In southeast Michigan
alone this problem is expected to cost the region as much as
$52 billion, according to the Southeast Michigan Council of
Governments. Across the state the problem is even larger and
affects the quality of our Great Lakes.
These few projects represent a beginning. They would create
jobs.
All the federal government has to do is share with us some of
our own wealth. It is very important that this be done, and it
is equally important Michiganders expect their new
representatives to bring home more than 86 cents on the dollar
by the next election.
LYKE THOMPSON is a professor in the College of Urban Labor and
Metropolitan Affairs at Wayne State University in Detroit.
Write to him in care of the Free Press Editorial Page, 600 W.
Fort St., Detroit, MI 48226.
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