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 Granholm
Surprised by Cut Support at First Forum
Gongwer News Service, November 3, 2003
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TRAVERSE CITY:
Attendees at Governor Jennifer Granholm's first televised forum
on needed budget cuts showed a general interest in holding off
the coming income tax cut, but were willing to look at cutting
some areas of the budget that surprised even the governor.
After the forum at Northwestern Michigan College Monday evening,
aired live on WWTV/WWUP-TV, Ms. Granholm told gathered media
that she had not expected the support among the audience for
proposals to hold off hiring new State Police troopers and to
allow criminals out of prison a month early. She had expected
the public support for holding off on laptops for sixth graders
and for cutting scholarships to private colleges.
But the forum also showed lines beginning to form between
different constituencies that could be affected by different
proposed cuts.
"Often we're very myopic in Lansing and don't realize the
importance of some programs to some people," Ms. Granholm said.
The ultimate goal of this and the coming forums is development
of an executive order to cut the 2003-04 budget. Ms. Granholm
said she was working on that order throughout the process and
keeping legislative leaders aware of her findings. "Part of this
exercise is to get the Legislature to hear what people are
saying outside of Lansing," she said.
The strongest support from the public at the meeting was for
cutting scholarships to private universities, according to a
straw poll of the invited audience members before the live
program began. Some 54 percent supported that cut, which would
save $65 million.
And 49 percent would be willing to see the $22 million cut from
the laptop program.
But the proposal to eliminate the Michigan Merit Award, which
would free up $130 million in tobacco settlement funds, began to
divide the audience. Though 48 percent of those attending
supported the cut, two high school seniors in the audience said
the cut would curtail their schooling.
"Merit provides money for my books next year," said Erin
Featherstone.
Mark Lagerway with Central Michigan University argued that
funding for universities provides future jobs. "What these
students indicate is universities are the best job training
program the state of Michigan has," he said. Only 15 percent of
audience members supported cutting general state assistance to
state colleges and universities.
Higher education supporters said the state should instead cut
funds to local government. Ms. Granholm, for purposes of the
poll, proposed cutting revenue sharing another 8 percent, or
$140 million, which garnered support of 21 percent of the
audience.
Larry Inman, a member of the Grand Traverse County Board of
Commissioners, said cuts to revenue sharing would mean cuts to
public safety and jail services.
"If we lose jobs, we've got to take cars off the road," said one
of the law enforcement officers. "Then when people call 911,
nobody shows up."
That statement did not change the minds of the high schoolers
about saving their book money.
"I think people see government and think government can cut,"
Ms. Granholm said.
But Ms. Granholm said support for a proposal to allow some
inmates out of prison 30 days early was higher than expected.
Eighteen percent of the Traverse City audience supported the $25
million proposal and she said support from attendees at a
presentation in Alpena earlier in the day was higher yet.
Doug Bishop with the Traverse City Chamber of Commerce argued
that there was room to cut K-12 education, particularly new
hold-harmless funds going to the 52 wealthiest districts. "I
think that's a cut that's available," he said.
Ms. Granholm said that was the first time anyone had raised that
$55 million with her. "That's something we'll have to take back
and take a look at," she said, though also noting during the
forum that it would be considered "tweaking" Proposal A school
finance reforms.
Though Ms. Granholm said further budget cuts would be the first
option in balancing the budget, the audience strongly supported
holding the state's income tax steady as one solution to the
problem. Of the 70-some people in the audience, only three
opposed that option. Michigan's current 4 percent income tax is
to roll back to 3.9 percent in January.
"We need to make new jobs in Michigan and tourism is an
important part of that," said Jeff Weaner, owner of the Grand
Traverse Bay Lodge, one of the opponents to pausing the income
tax cut. "If we pause (the income tax cut) then why wouldn't we
pause it again the next year and the next year."
But Sally Sheerer, a teacher, argued that cutting the laptop
program also could hurt business attraction. "Will business want
to come to a state that puts education technology on hold?" she
said.
Others proposed additional solutions such as Medicaid recapture
from estates of Medicaid patients who died without family and
increases to the beer and wine taxes.
"I don't think there's a whole lot of possibility of raising
taxes," Ms. Granholm said. "If we cut to the bone and end up
damaging the safety net then we can looking at raising
revenues," she said after the forum.
But she also argued that all of the potential cuts she outlined
to the audience, which totaled $1.2 billion including $350
million in pro-rata cuts from schools, would not be enough to
balance the budget. "I think we've got to go deep because we're
preparing for 2005," she said.
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Human Services Group Says Michigan Tax Cuts Cost State $4.5
Billion
Gongwer News Service, November 3, 2003
Tax cuts enacted in Michigan since 1999 have cut revenues nearly
$4.5 billion, the Michigan League for Human Services said in a
study.
If the tax cuts had not been enacted, the group argues,
"Michigan could have weathered the recent mild recession without
making deep spending reductions."
In its paper, the League said that total deficits for the state
have topped $6.3 billion, and 70 percent of that is attributable
to the tax cuts. While the largest tax cuts are to the income
tax and the single business tax, the study also said the changes
the state made to its estate tax tying it to the federal estate
tax means a total of $247 million less over the last three years
as the federal government is phasing out its tax.
In 1999, the state enacted a reduction of the income tax from
4.4 percent to 3.9 percent over five years, with the last
reduction scheduled to take place January 1.
The League said if the 2004 income tax cut takes place, it could
mean a revenue loss of $797 million alone-most of the estimated
revenue drop the state is facing in the 2003-04 fiscal year-and
will have a cumulative revenue loss of $2.45 billion.
In 1999, the state began a phaseout of the single business tax,
reducing the tax by .1 percent a year. That reduction was halted
when Michigan's Budget Stabilization Fund fell below $250
million, but the tax is now scheduled to be ended in 2010. The
cumulative revenue loss from those tax cuts is $1.8 billion, the
League said.
The League has long argued that the state should delay the final
income tax rollback, and in its latest study said doing that and
decoupling Michigan's estate tax from the federal phaseout-which
18 other states have done-could add as much as $300 million back
to state revenues for the 2003-04 fiscal year.
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