THE UPCOMING FY11 MICHIGAN BUDGET, GOOD AND BAD
It looks like we have a Michigan State Budget for FY 2011. The broad
outlines have been agreed to in principle by the House Democratic
Majority, the Senate Republican Majority, and Governor Granholm. Right
now the details are being hammered out, but the framework is in place.
Cheers or raspberries? Well, a bit of both. Here’s where’s its good and
where it aint.
Where It's Good:
GOOD.
First off, it’s getting done. That’s no small thing. The Second Granholm
Administration has been characterized by both failure to complete
budgets on time and by government shutdowns. Just getting the whole deal
done by the September 30th deadline is good.
Another good thing is no new taxes on
existing services. Holding the line is necessary for any kind of
recovery. Here’s another good thing : spending cuts. The Departments of
Corrections, Human Services, and Community Health are taking $50 million
off on top of everything else. Still another
is reform of the State Employee Retirement System (SERS.)
This outlined deal gives State workers the same basic arrangement
as teachers got earlier this year: an incentive to take early
retirement, plus 3% contribution to their future health care, phased in
over 5 years.
NOT SO
GOOD: In a nutshell:
we have another kick-the-can, clever-gimmick and one-time fix solution.
There is no fundamental reform. The SERS changes are good, but barely
scratch the surface of benefit liability time bomb. In addition there
was no attempt to halt the 3% wage increase the state workers got this
year—at a time when most Michiganders were taking cuts.
One budget fix is a proposed Tax
Amnesty proposal. This sounds great, except for one thing: this plan
gets us money up front at the price of foregoing future income. The next
Governor will have less revenue to work with because that money got
pulled forward to plug Jennifer Granholm’s budget hole this year. Ditto
for a proposal to change how unclaimed property is treated. This just
cashes out a long term income stream to avoid budget pain and tough
choices today.
The budget deal ratifies taking of
$208 million from the School Aid surplus to patch a hole in the FY 10
budget. It also deals with raising road money for Federal matching funds
by agreeing with the Governor’s plan to borrow. Instead of prioritizing
road and infrastructure work, and figuring out how to pay for it, we get
$40million by borrowing against next year’s income.
This budget represents lost
opportunities. With the
ObamaBucks funding spigot probably turned off by the next Congress,
State School Aid and General Fund will face even greater challenges in
the coming years. House Republicans put a number of ideas out for long
term reform. All were ignored.
A) Implement a hard 4 limit on welfare. Every other state except Vermont has a real lifetime limit for “Temporary Assistance.” Yearly savings: $20 million yearly savings.
B) Reinstitute state prisoner phone surcharge. You’re having
trouble paying your own phone bill, why pick up the tab for the
convicts? $4 million yearly savings.
C) Consolidate Civil Rights
enforcement agencies. Why give the Civil Rights Commission a redundant
enforcement role when we have an Attorney General to do the same thing?
$5 million yearly savings.
D) Increase sustainable Timber Harvest on state-owned land.
Annual growth of forest cover is2.7 times the amount harvested.
We’re not talking about denuding the forest, just opening our resources
to sustainable, regulated harvesting. $25 million annually.
E)
State employee administrative changes. Create a new compensation and
benefit structure for new hires. The current structure is unsustainable,
why keep fooling the newbies?
F) Require competitive
bidding for non-instructional services in schools. If our K-12 public
schools are so strapped for dollars, why can’t they take lowest bid for
non-teacher services like everyone else does? Why not put scarce dollars
into the classrooms?
Maybe these are great ideas, maybe
stupid ones, but let’s at least put them on the table. It’s past time to
quit patching holes with one-time fixes and wishing on a star for a
better tomorrow. Yes, it’s
good we’re getting this budget done. But the hard work has been once
again put off. We ought to be leaving Mr. Bernero or Mr. Snyder
something to work with besides a drawer full of IOUs.
