Monday, March 09, 2009

Senate Republicans Continue to Disregard State Budget

Mark your calendars for Sept. 30th. If the behavior coming out of the MI Senate keeps up throughout the year, we can spend that night watching the little red clock at the Freep count down the minutes until the state government shuts down again.

Don't believe me? Just take a look at the attitude of the Senate Finance Committee as they blew another $250 million (MIRS) - $500 million (Gongwer) hole in the budget last Thursday by passing more tax cuts. Let's go with the Gongwer opening:

In a committee meeting that boiled down to how much lawmakers can cut taxes and still balance already suffering state budgets, taxpayers won out as the Senate Finance Committee on Thursday approved three tax relief bills that would cost the state at least $500 million next year.

Committee chair Sen. Nancy Cassis (R-Novi) emphasized repeatedly that although the legislation would reduce revenue, lawmakers must find relief for residents, especially business owners, where they can, or they will be forced to leave the state to find work or schooling for their children.

Cassis is hell-bent on sticking to the failed economic policies that keep getting the Legislature into the same jam here in Michigan; Republicans insisting on cutting revenue, without the corresponding budget cuts to pay for it. Nancy will point to all those people leaving Michigan to "school their children", what she doesn't tell you is that state cuts to both K-12 and higher education will force them to do that as well. After all, colleges are raising tuition in light of state budget cuts; how it is "more cuts" will help that situation? Many K-12 districts are struggling with huge budget deficits; shall we make more cuts there as well?

Three Senate bills expand the perimeters on tax breaks: SB69 raises the income level for small business credits under the MBT, costing the state an estimated $251 million, SB201 changes the taxation on trade-in value of cars and watercraft vehicles, calculated at $140 million when it was based on boats alone, and SB191 raises the Homestead Tax credit. The Treasury Department estimates that SB201 and 191 will equal around $300 million alone, with "no foreseeable way to recover revenue from another source".

Mike Bishop and others in the Senate have said repeatedly that they will address the current budget hole of $1.4 billion (and it's probably closer to $2 billion given the latest downturn of the past few months) with all cuts to "live within our means". Bishop also wants to use the stimulus to cut the MBT surcharge, tacking on another $700 million or so to the deficit when that money is gone. Now, the Senate has added roughly another half billion to the bill - and they have yet to identify what they would cut to make up for all this money. Cassis keeps pointing at the film credits - but the film credits don't come anywhere close to the kind of hole Republican “tax cut only” policy would create. They can’t magically cut billions from the budget without totally destroying health care, education and public safety. Doesn't anyone remember what we just went though in '07 when we were looking at $1.7 billion? Bishop's cuts were laughed off the table then, and with the need out there growing by the day, they are going to cut more than that now?

OK. Come up to the window. Tell us how we will pay for all this tax cut "spending" - because it needs to come from somewhere.

And here is our underlying problem in the Legislature, the one that will lead us to a budget throw down by the time this is over - Senate Republicans could care less about what their policies will do to the state budget. From MIRS:

Pappageorge warned against those whose "only concern is the budget," noting that there are other economic considerations. He said it wasn't the panel's job just to be concerned with state revenue.

And when they are challenged on the issue, they get surly and defensive.

The committee meeting turned into a familiar clash, with Scott SCHRAGER of Treasury warning that "the revenue picture isn't getting better and this will not help."

Chair Nancy CASSIS (R-Novi) shot back: "I appreciate you holding on to this sacrosanct budget."

That is the attitude we are facing. When asked to be responsible lawmakers, the Senate ranges from "not our job" to attacks based on partisan issues alone; Cassis is obsessed with the film, and now advanced battery credits as well, for no other reason anyone can see besides they were positives for the Democrats. On the flipside, you had the House Democrats (and everyone else in the state) throw a major fit when Granholm cut $800 million from the budget: They are vowing to reverse those cuts and somehow keep the same level of spending, if not add more.

This is a train-wreck in the making, and no one is really reporting on it. Wait until summer comes, maybe the urgency will increase and you will see it bubble up in the "traditional" media, but the genesis of a major budget clash is happening right now.