Wednesday, February 16, 2011

The Republican Budget Blues

Snyder budget. Hit everyone. Boom.

Once again, my man Peter Luke has the best rundown on some of the details that have leaked out. More to be revealed tomorrow I'm sure, but from what I'm reading so far, this is going to be one spectacular meltdown.

(And quite frankly, I think it's DOA in the Legislature. Just can't see them voting to increase taxes, especially on seniors, who are the Republican's bread and butter - but stranger things have happened.)

All retirement income, including pensions, but not Social Security, would be taxed in that overhaul. Additional exemptions for seniors and children would be axed. And the income tax rate, set to decline to 3.9 percent, would be maintained at 4.25 percent following a scheduled one-year reduction in 2012. The $3,700 personal exemption would phase out for single filers with $75,000 in income and joint filers with $150,000.

For reaction to the pension story, the GR Press trotted on down to the new Gun Lake casino and found a bunch of seniors hanging out there - which was probably not the best portrait of sympathy you could paint, but you have to admit it was rather amusing. Needless to say, they aren't happy.

Anyhoo, Detroit will not be so amusing after a 40% reduction in revenue sharing.

On the spending side of the ledger, city officials in Michigan were bracing for what could be a 40-percent reduction in their revenue sharing payments, a straight cut of some $400 million with $200 million added back for cities that meet new standards for cooperation and cost cutting Snyder’s budget presumably will outline.

“We’re going from a program that was revenue sharing to revenue stealing,” said Summer Minnick of the Michigan Municipal League. “This was created when locals gave up local taxing authority and (state elected officials) have been slowly taking it away to fill their own budget hole. Local citizens are going to feel the impact.”

WILX (AP) is reporting the EITC will be cut - and they are also reporting a hefty K-12 cut as well. (EDIT: Full AP story at the Freep)

Under his plan, public schools would see a 4 percent cut, or about $470 per student. Universities would be cut 15 percent, but be given financial incentives to keep tuition increases around 7 percent or less, according to state budget director John Nixon.

Gongwer just tweeted this: "Gov Snyder tells Gongwer: 'One thing I've already said is there is no net tax increase here. It's actually a tax reduction overall.'

Sure, for business interests. For regular folks... well, that's a different story. Seems it's more tax breaks for the rich, and we'll balance the budget on the backs of seniors, children, college students, and public safety. Did you expect anything different?

Me, I'm going to grab some popcorn and watch the Republicans duke it out. I'm not in a position to put the kind of time and energy into this that I used to, although, if y'all want to stage some massive protest, I'll come down and shoot it. Just for funsies.

UPDATE: More from the AP - wave goodbye to the movie industry, and maybe even the battery industry. One thing is for certain, we won't be attracting any new companies to come here without those incentives - so we better hope we can keep the ones we have. Here are the major highlights:

— Drops the individual income tax rate from 4.35 percent to 4.25 percent on Oct. 1; the tax will then remain at 4.25 percent rather than being decreased to 3.9 percent in future years as scheduled.

— Eliminates the state income tax exemption for pensions, but Social Security benefits will continue to be exempt.

— Eliminates the Michigan Business Tax and replaces it with a flat 6 percent corporate income tax on major corporations.

— Eliminates business credits awarded for films, brownfield redevelopment, the Michigan Economic Growth Authority, etc., although current commitments will be honored. Sets aside $25 million for film credits from the 21st Century Jobs Fund.

— Rolls funding for universities and community colleges from the general fund to the school aid fund, the main funding source for K-12 schools.

— Cuts per pupil funds $300, in addition to the currently budged $170 per pupil reduction.

— Eliminates statutory revenue sharing payments for cities, villages and townships in FY 2012, leading to a net savings of $92.1 million. The change impacts 509 local units of government. Increases constitutional revenue sharing by 4 percent, to $659 million.

— Includes $200 million for a new incentive-based revenue sharing program for cities, villages and townships that meet specific standards to be detailed in March.

— Sets a lifetime limit of 48 months for residents to receive welfare payments, with exemptions for incapacity and hardship.

— Closes the Shawono Center in Grayling, and cuts 20 beds in capacity at the Maxey Training School in Whitmore Lake, resulting in $787,000 general fund savings.

— Eliminates 300 field worker positions in the Department of Human Services.

— Closes one prison to be named later this year.

— Reduces the number of Michigan State Police posts, saving $3.2 million.

— Reduces state aid to libraries in the Department of Education budget by $2.3 million in the general fund, with $950,000 directed to the Michigan eLibrary, resulting in net savings of $1.4 million.

— Suggests privatizing food service and prison stores operations in Michigan prisons, and suggests that resident care aide services at the Grand Rapids Veterans' Home be competitively bid.

—Turns the dairy farm inspection program over to industry field representatives certified by the Department of Agriculture.

And so your elected representative cannot mess up Snyder's plan, it will be presented as two bills; one for education, the other for everything else. So much for bipartisanship and public input. Apparently no compromise will be allowed.

Not such a cute little nerd now, is he? I'm imagining his campaign, had he told the truth - "Massive cuts to education and public safety, massive tax increases for you, more tax cuts for my business friends, and we won't have any discussion about it."

Hey, you wanted a CEO. That's how they roll. Don't act so surprised.

One last thing. I can't help but think - we had a progressive governor, with a progressive plan, and very few could be bothered to stand up and support her. And I'll be honest about this, it's very, very hard not to be really pissed off about that now. So, I need to step back and deal with those feelings, take a few long walks and deep breaths, find that forgiveness for myself and others, and figure out where to go from here. Easier said than done.

Good luck people. We are going to need it.

UPDATE 2: Mi-Tech has the Gongwer story on the proposal. Also worth a read, if only to laugh at the teabaggers who are absolutely furious about the tax increases.