1. I'm dismayed to see this
morning that Tom Clay of the highly-esteemed Citizens
Research Council has "blasted" the recent budget
deal as a
"mere quick fix." This from an article by the Detroit Free Press' John
Wisely (who is fresh off an assignment covering the running brouhaha
between hockey legend Gordy Howe and his nosy neighbors).
Clay's specific criticisms are absolutely right: first, that the income
tax hike is flawed because it's temporary and begins to be phased out
in 2011 (after most of the current crop of legislators is gone). I
don't know who's idea it was to include this provision, but shame on
them for it. Sometime after 2011, we can expect to be in the same old
mess again, with griping about recalls and endless late night sessions.
This sort of thing is exactly why I say Michigan should
consider a
paygo (rule or law).
Tom's other beef - that the service tax will be uneven in how
it's applied - is also correct. The governor, of course , did offer a
much fairer 2-percent across the board service tax plan back in
February. But the Senate Republicans (in their infinite wisdom) killed
it a month later. So we have this selective approach
instead.
Pretty it ain't, but hey, the money has to come from somewhere.
Judging from the article, it would seem Clay has nothing good to say
about the deal whatsoever. If that's actually his position, I'd be
surprised. But clearly there are shortcomings in the deal (as noted
above) Still, at least it provides SOME new revenue for the
next few
years...revenue that otherwise would not be there. That's why Professor
Doug Drake is right when he says (in his token last line of the
article) that
"it's a considerable first step."
There's a lot more work to do in Lansing, despite the
budget deal that
averted a government shutdown Monday morning.
The agreement relies heavily -- too heavily -- on revenues through
sizable new taxes, but the work to date only glances at cuts or
substantive reforms.
-snip-
(L)egislators need to begin thinking more seriously about downsizing
government in a way that reflects the state's own diminution and the
likely sour outlook for the economy.
This from what used to be described as Michigan's left-leaning daily.
Keep this up, Freep, and you'll have to go buy yourself a giant plastic
pig! (In the DFP's defense, they did run a very good column
by Tom Walsh yesterday [who's not known particularly as a
flaming leftist] entitled "New
Tax Burden? Chill Out and Hear
the Truth" It's worth your time.)
3. Speaking of the Freep, the Lansing City Pulse's Bill Petit has
some comments about the the Freep's "a pox on all
their houses" approach to covering state government.
The Detroit Free Press reports
this morning that the Small
Business
Association of Michigan is thinking about trying to muscle a
proposal onto the ballot that would repeal or change (they won't say) the new tax on certain services.
Considering SBAM's extreme reputation as sort of Michigan
Militia of state
business organizations (for instance, they teamed
up with the Pigman for the "teabagger" protest earlier this
year), it seems likely they'd just go for outright repeal
(as opposed to just shift to the income tax or other revenue sources)
irrespective of whether it throws the state budget back into massive
deficit and on the brink of another shutdown. Apparently that extra 6%
on skiing, tarot card readings and tanning salons is just too much to
bear.
Unfortunately for SBAM, getting the issue on the ballot would require
some gymnastics (along with a lot of money). We learn this thanks to
Bob LaBrant of the Michigan
Chamber of Commerce (!), quoted in the Freep:
Repealing the new tax law would be difficult, but not
impossible.
A petition drive that collected 304,100 valid signatures -- a steep
requirement -- would force the Legislature to either repeal the law or
put the question before voters on a statewide ballot as early as
November 2008.
What's not possible is a referendum that goes straight to the ballot,
said Bob LaBrant, a legal expert for the Michigan Chamber of Commerce.
He said state law prohibits a referendum to repeal laws intended to
avoid a deficit, which both the higher income tax and sales tax
accomplish.
Huh? Really? What law is that?
Actually, it's not just a law...it's in Article
II §
9 of the Michigan Constitution:
The people reserve to themselves the power to propose
laws and to enact
and reject
laws, called the initiative, and the power to approve or reject laws
enacted by the legislature, called the referendum. The power of
initiative extends only to laws which the legislature may enact under
this constitution. The
power of
referendum does not extend to acts making appropriations
for
state institutions or to meet deficiencies in state funds
and must be invoked in the manner prescribed by law within 90 days
following the final adjournment of the legislative session at which the
law was enacted. To invoke the
initiative or referendum, petitions
signed by a number of registered electors, not less than eight percent
for initiative and five
percent for referendum of the total vote cast
for all candidates for governor at the last preceding general election
at which a governor was elected shall be required.
Before I get started, just one more musical interlude celebrating the
budget deal approved this morning. Michigan will live another day!
Woo-hoo!
Sorry, killjoys, you're not going to bring me down today. The pigman
can wait. I'm in a festive mood.
OK...seriously now: what did we learn from this wild and crazy ride?
Well, #1 is obvious: term limits suck. But we knew that
already. Clearly there needs to be some sort of effort to reform or
eliminate term limits, and this topic has already been discussed. Here's what should be lesson #2:
passing tax cuts that take effect years in the future without
identifying any way to pay for them is extremely bad policy. As
I wrote a few days ago, the genesis of the latest fiscal
crisis was set largely in 1999, when Governor John Mathias Engler
proposed (and the legislature happily agreed) to enact a cut in the
income tax over 5 years - as well as a 25-year phaseout of
the Single Business Tax (later sped up and then eliminated
altogether). No cuts or alternate sources of revenue were identified as
part of the cuts. After one-time sources of revenue dried up...bingo!,
we had a problem of such a magnitude it nearly threw state government
into total disarray.
That's just dumb. There's no excuse for it...and we really ought to at
least attempt
to stop this from happening again.
To do so, we might take a cue from the House Dems in Washington, who just
this year re-enacted the so-called "pay-as-you-go" (or
"paygo") rule. Under paygo, proposals to increase entitlement spending
or cut taxes must identify either an alternative source of revenue or
equivalent cuts in other spending.
Congress' paygo rule is by no means a silver bullet. It's just a rule,
and can be waived whenever Congress feels like it. But at least it's
there, and at least it's a standard that hopefully people pay some
attention to (read an op-ed about Paygo by Russ Feingold and Lincoln
Chaffee here).
I wonder what our legislative experts think of how a Michigan
paygo rule would work - or if
it would work? My own sense is that it would probably be best
enacted through a law (rather than a legislative rule). This would at
least require a bit more effort on the legislature's part in order to
get around the rule (and in the process attract more attention). I'm
sure there are some unintended consequences here...but what are they?
It's clear that the Republicans long ago relinquished their claim to
the fiscal responsibility mantle. So it's up to us to act. And we'd
better do it soon. It's just a matter of time before another John
Engler - maybe Dick
DeVos - weasels his way into the governor's mansion again and starts
ramming
through new - and unfunded - tax cut proposals. This time we got lucky.
Next time the government shutdown may last more than five hours....and
those will be some very unhappy
days.
O sing to the Lord a new song,
for he has done marvellous things.
His right hand and his holy arm
have gained him victory.
The Lord has made known his victory;
he has revealed his vindication in the sight of
the nations.
He has remembered his steadfast love and faithfulness
to the house of Israel.
All the ends of the earth have seen
the victory of our God.
-Psalms 98:1-3
Michigan is back! Government is operating and we have the
first general tax increase in nearly quarter of a century!
Hallelujah!
Of course there are things I'm not wild about in this deal. For one, it
doesn't completely cover the deficit. There's still a $400 million hole
to be filled...a hole that will supposedly be filled by yet another
round of service cuts and maybe some more one-time fixes. But that's
certainly better than a $1.75 billion hole (which is what we had
before...not to mention the additional $1.9 billion hole we had earlier
this year before the revenue-neutral replacement for the Single
Business Tax was approved). And the importance of this
event can't be overstated. After
nearly a quarter century, the John Engler anti-tax, "government IS the
problem" tide has finally turned in Michigan!
It took them a while, but the people's elected represenatives
decided that we ought to have a government in Michigan. Savor the moment.
To Speaker Andy Dillon and those House Dems whom I have thoroughly
chastized and browbeaten over the past couple of weeks: I still think
you let this drag on too long. But in the end, you did the right thing.
Thank you...and when the pigman comes a calling, we've got your back.
For those brave House and Senate Republicans who voted for new revenues
and who opted to put the needs of their state before party loyalty:
thank you. You can be proud of the example you've set for the rest of
us.
Thank you also to Senator Mark Schauer and to all of the House and
Senate Dems who held firm in their resolve from the beginning. Our
state is a better place thanks to you.
Finally, to Governor Jennifer Granholm: When the
pressure was on to delay and to kick the can down the road once again,
you didn't waver. You hung in there. Governor, this is
your finest hour. Enjoy it.
The Michigan Senate voted early Monday to expand the state's sales tax to apply to services in two months, completing the final piece of a budget deal to end a partial government shutdown that lasted a little more than four hours.
Applause broke out in Gov. Jennifer Granholm's office at the Capitol as soon as the final vote was announced. The deal prompted Granholm to call off the partial shutdown of state government that had officially started at 12:01 a.m.
"This budget agreement is the right solution for Michigan," Granholm said in a statement. "We prevented massive cuts to public education, health care and public safety while also making extensive government reforms and passing new revenue. With the state back on solid financial footing, we can turn our focus to the critical task of jump-starting our economy and creating new jobs."
...and then the weary citizens of Michigan filled the streets to sing:
Okay...maybe they didn't exactly break into song. But they should! Why? The first general tax increase in
Ladies and gentlemen, the John Mathias Engler hex has been broken! Hallelujah indeed!
Well, here we go. Michigan's first government shutdown/payless payday in 48 years...brought to you by Senate Majority Leader Mike Bishop and his Senate Republican colleagues.
‘The harvest is past, the summer is ended,
and we are not
saved.’
For the hurt of my poor people I am hurt, I mourn, and dismay has taken
hold of me.
-Jeremiah 8:20-21
UPDATE by Hazen Pingree: Here's the lede from the AP:
Michigan government is partially shut down
LANSING - Michigan's state government partially shut down early Monday with no budget deal in place for the new fiscal year.
Gov. Jennifer Granholm was still awaiting key votes in the Democratic-led House and Republican-controlled Senate after 12:01 a.m., the deadline for approving a state budget. The state has no authority to spend money without a budget in place.
The Legislature was racing to pass the final bills needed to avoid the shutdown but failed to meet the deadline of the start of the new fiscal year.
The
main item,
of course is revenues. According to the Free
Press (also more from the Detroit
News), legislators will raise the income tax from
3.9% to 4.35%, coupled with an expansion of the sales tax to a number
of services. Of course they still have yet to vote on any of this and
until they do no one should take this too seriously.
Still,
I can live with 4.35% so long as the new service taxes raise a
sufficient amount. Unfortunately, the MIRS write-up from last night
suggests this deal will also use about $220 million in one-time cash that
the state expects to take in during implementation of the new Michigan
Business Tax. If true, that's pretty disappointing. Come on, guys!
You've come this far...why cop out and use one-time revenues now? With
the economy the way it is, we know there's going to be more revenue
shortfalls on the way. Then we're going to be right back here again.
Cut if you must, but please...no more one-time revenues!
Also
included in the "agreement..."
The
legislature did manage to pass (see below) legislation that would offer
"discounts" to Medicaid recipients who have healthy lifestyles. The
notion of charging unhealthy people more for health care has always
seemed rather big-brotherish to me, but apparently 107 of 110 House
members think it's okay. As Colbert would say, "moving on..."
Public
employee health insurance pooling is part of the supposed
deal, and a number of bills did pass. I always assumed this
would be part of the final agreement - even though it doesn't address
our current fiscal crisis at all and will likely have negligible fiscal
impact in the future. There's also a ban on state employees receiving
pensions while they're getting a state paycheck, (a.k.a.
"double-dipping"). I can live with it.
The other
major element is a bill requiring school districts to abide by a common
school calendar. The MEA hates this, because they want the issue to be
decided in contract negotiations. I'm somewhere between ambivalent and
supportive on this one.
Bottom line: I suppose
this deal is preferable to a government shutdown. However, using $200
million in one-time revenues seems downright silly. You're SO close to
actually having a truly balanced budget (with no one-time fixes). Why
not just suck it up, add a few more services to the sales tax (or a
slightly higher income tax rate), be done with it, and have genuine
bragging rights?
(Bumped back to the top because it seemed like the right thing to do - promoted by Hazen Pingree)
5:01 p.m. Seven hours until state government shuts down. (Eric B.)
4:31 p.m. Off topic, but Casey FitzSimons has just returned an onsides kick for a touchdown, and the Lions will beat the Chicago Bears and go to 3-1. The score is right now 37-27 with 45 seconds left. (Eric B.)
4:15 p.m. The Senate is in Recess. The House is still voting on the Conference Committee Report on SB418. Much arm twisting is going on behind the scenes and the general consensus is that this is going to go to the wire tonight. (~JPowers155)
3:17 p.m. I can report that Leon Drolet has officially declared defeat. In an e-mail he sent out about four hours ago, he writes:
"Friends,
I am no longer in Lansing. The battle to prevent a massive tax increase has already been lost and the tax hike will happen. Hanging out in Lansing is now a waste of my time.
I am now spending time every day preparing to support recall campaigns against key legislators who allowed this tax hike to happen. Successful recalls will change the way policy and tax questions are answered in Lansing."
Let us descend upon Mr. Perks and turn him into a victory ham! (Eric B.)
3:05P p.m. Now less than nine (9) hours to government shutdown. (Hazen Pingree)
A good job by the guv last night. Just the right tone...and a striking contrast to Bishop's miserable attempt at a response (anyone know where the Youtube of this is? I actually would like to put it up just to illustrate how bad it was).
How did we get here? Here's one 167-year old dead
ex-governor's opinion:
Term Limits
Much has been said about the evils of term limits. It's all
true.
Throwing people out just as they're starting to figure out how to
actually do their jobs effectively is one incredibly stupid
idea and the fact that we're here today, getting ready for a government
shutdown in the middle
of a recession,
is living proof. Is it any wonder term limits were brought to us by
the
same government haters who paid for the giant scofflaw
anti-tax pig
parked in front of the Capitol today.
In the old days, legislators used to have a much better sense
of their political abilities and limitations and more comfortable
telling leadership to go jump in a lake. These were the folks
that could be relied upon to come together in a crisis and make things
right. With a few exceptions, they're all gone now, thanks to
%$#*&ing term limits.
John Mathias
Engler and the 90th Michigan Legislature
Back when SUVs were selling like crack cocaine and Michigan
was flush with
cash (relatively speaking), John the Body and his allies in the
Republican-controlled
legislature thought it would be fun to cut Michigan's income tax rate
from 4.4 percent to 3.9 percent. But they didn't have the chutzpah to
do it all at once. Instead, they opted to phase it in...over 5 years.
Originally
backed by Republicans, this plan did pass with substantial
Democratic support (including many legislators I like and respect).
Just for kicks, here are the vote totals listed in the House and
Senate journals for SB
001 of 1999 - one of a package of bills
implementing the .5% income tax cut:
Loren Bennett (R), Joanne Emmons
(R), Don Koivisto (D), Bill
Schuette (R), Dianne Byrum (D), Harry Gast (R), Burton Leland (D), Joe
Schwarz (R), John Cherry (D), Mike Goschka (R), Thaddeus McCotter (R),
Dale Shugars (R), Ken DeBeaussaert (D), Joel Gougeon (R), George
McManus (R), Ken Sikkema (R), Dan DeGrow (R), Bev Hammerstrom (R), Art
Miller (D), Glenn Steil Sr. (R), Chris Dingell (D), George Hart (D),
Walter North (R), Leon Stille (R), Mat Dunaskiss (R), Phil Hoffman (R),
Gary Peters (D), William Van Regenmorter (R), Bob Emerson (D), Dave
Jaye (R), Mike Rogers (R), Joe Young (D)
No
Alma Wheeler Smith (D) Jackie Vaughn
(D)
NV
Bill
Bullard (R), Ray Murphy (D), Virgil Smith Sr. (D)
And in the House (See if any names look familiar):
Jason Allen (R), Jennifer Faunce
(R), Jim Koetje (R), Andy
Richner (R), Patty Birkholz (R), A.T. Frank (D), Mike Kowall (R), Vera
Rison (D), Clark Bisbee (R), Valde Garcia (R), Wayne Kuipers (R), Sue
Rocca (R), Mike Bishop (R), Belda Garza (D), Janet Kukuk (R), Alan
Sanborn (R), Rose Bogardus (D), Terry Geiger (R), Charles LaSata (R),
Mark Schauer (D), Doug Bovin (D), Paul Gieleghem (D), Gerald
Law
(R), Gloria Schermesser (D), Ken Bradstreet (R), Jud Gilbert (R), Lamar
Lemmons III (D), Judith Scranton (R), Lingg Brewer (D), Pan Godchaux
(R), Patricia Lockwood (D), Scott Shackleton (R), Bob Brown
(D),
Bob Gosselin (R), David Mead (R), Dale Sheltrown (D), Cameron Brown
(R), Mike Green (R), Mary Ann Middaugh (R), Marc Shulman (R), Bill Byl
(R), Lauren Hager (R), Mickey Mortimer (R), Doug Spade (D), Bill
Callahan (D), Derrick Hale (D), Andy Neumann (D), Tony Stamas (R),
Nancy Cassis (R), John Hansen (D), Bill O'Neil (D), Mickey
Switalski (D), Sandy Caul (R), Artina Tinsley Hardman (D),
John
Pappageorge (R), Susan Tabor (R), Deb Cherry (D), Jim Howell (R), Bruce
Patterson (R), Paul Tesanovich (D), Irma Clark (D), Ruth Ann Jamnick
(D), Chuck Perricone (R), Buzz Thomas (D), Hansen Clarke (D), Mark
Jansen (R) Steve Pestka (D), Laura Toy (R), Ken Daniels (D), Ron
Jelinek (R), Hubert Price (R), Gerald Van Woerkom (R), Eileen DeHart
(D), Jon Jellema (R), Mike Prusi (D), Gerald Vander Roest (R), Julie
Dennis (D), Rick Johnson (R), Mike Pumford (R), Steve Vear (R), Gene
DeRossett (R), Ruth Johnson (R), Nancy Quarles (D), Helen Voorhees (R),
Larry DeVuyst (R), Larry Julian (R), Andrew Raczkowski (R)
Paul
Wojno (D), Paul DeWeese (R), Thomas Kelly (D), Triette Reeves (D), Dave
Woodward (D), SteveEhardt (R), Kwame Kilpatrick (D), Randy Richardville
(R), Gary Woronchak (R)
No
Laura Baird (D), Gilda Jacobs (D), Jack Minore (D), Keith
Stallworth (D), Liz Brater (D), Ed LaForge (D), Joseph Rivet (D), Ed
Vaughn (D), Mike Hanley (D), Lynne Martinez (D), Martha Scott (D)
Many of the "yes" voters did have concerns about where the
money was going
to come from to fund these tax cuts or what would happen if the
unthinkable happened and Michigan's
economy went into the tank. However, using the same logic that led John
Edwards and Hillary Clinton to vote for the Iraq War, they
decided that - since the thing was going to pass anyway
- they may as well vote for it (conscience be damned) and go on record as being a
lean,
mean tax cuttin' machine. This they did.
Since
then, of course, no one has bothered to pass any new tax or
substantial service cuts
to make up for the missing revenue. Instead, Michigan has
limped along on a series of one-time fixes -
gimmicks such as completely burning through the $1.2 billion rainy day
fund. This is one major reason why we have a deficit today.
