Thursday, September 09, 2010

Looks Like We Have a Budget Deal

I've been holding back on writing about this until it was more apparent that the deal was on solid ground, but with the Governor releasing a statement of agreement late yesterday, and the Senate moving to transfer funding to cover the general fund shortfall - it sure looks like this is going to happen. School districts and state employees are not going to be happy, and that might trip things up - but chances are they will find the votes to pass the entire package. The legiscritters want out of there so they can go campaign or find other jobs, ASAP.

Since neither party will move to raise and/or restructure revenue, we are going to get more cuts, reforms, and funding transfers. It really is that simple. Don't want to raise the money? Then we have to do what we can to get by. At this point, K-12, revenue sharing, State Police and Agriculture are maintained, we are getting the federal money for the roads - and all of that is the best we can hope for. Gongwer spelled out some details Monday night:

Under the proposal (SB 1226 ), state employees eligible to retire who agree to retire within a specified timeframe would get a multiplier on their retirement income of 1.6 percent instead of the usual 1.5 percent. There also would be an "80 and out" provision enabling employees with a combined age and years of service equal to 80, with at least 30 years of service, to retire with a multiplier of 1.55 percent of income. Those not retiring would have to contribute 3 percent of their pay to the retirement system.

The deal would force department to pay for the 3 percent raise received by state employees without providing additional money to fund it, but it would exempt several areas from the de facto 3 percent reduction, notably revenue sharing. And the departments of Agriculture and State Police would be funded at the Senate-passed levels and avoid the 3 percent cut.

And it appears that under the deal the state would come up with the $84 million in required funds to match $475 million in federal transportation funding. Without the match, the state would have lost that money for road and bridge projects across Michigan. Getting the matching money will be through administrative efficiencies in the Department of Transportation, along with restructuring some debt.

Other provisions include refinancing state debt, a tax amnesty program, and shortening the time that the state waits to seize unclaimed property. No liquor deals, no fireworks. Whatever. Get it done.

Already some editorialists have been weighing in on the deal, pointing out this doesn't solve our long term structural problem, that it is only balanced "on paper" and probably will fall short of projected expectations, etc. so forth and so on. No kidding. But what did they expect? This is an election year after all. With the Party of No betting that obstructionism is the winning hand, nothing good could have happened this year. Nothing.

Always remember this though: Out of the "Big Three" involved in these negotiations, only the Governor put forth any sort of plan that addressed the need transition our revenue collections to reflect the changing Michigan economy and help solve these structural deficits. She's the only one. Bishop and the Republicans said "no" to any sort of compromise and insisted on cuts alone, and Dillon... well, we are still waiting on Andy's plan. Probably safe to say that he never really had one.

That is the bottom line on the whole affair. The blame games will continue on, to be sure, but the facts are the facts - whether or not the media wants to acknowledge them.

And wish us all the best for the future. If Snyder wins, he has promised $1.5 billion in business tax cuts, and hasn't really addressed how he would pay for that. If Bernero wins, we still will have the problem of the Republicans refusing to be a part of the solution. And who knows what we can expect out of a bunch of rookie legislators.

Better hope that national recovery continues, or we will be facing some very nasty decisions all over again by next year.