It's worse than they thought.
State officials are now staring down the barrel of an $803.2 million shortfall in the current Fiscal Year (FY) 2007, according to the House Fiscal Agency (HFA) on the back of Friday morning's Consensus Revenue Estimating Conference. The sizeable growth in the hole, which the Granholm administration had estimated to be $715 million, is the result of declining state revenue and higher spending pressures from social service programs, among other factors. As the budget shortfall continues to grow; it becomes more and more apparent that cuts, and cuts alone are NOT going to help Michigan.
For years, Senate Republicans have demanded cuts, cuts, and more cuts. Governor Granholm has obliged and has cut over $3.6 billion from the State’s budget over the past four years, and has cut more from the budget than any previous Governor, as well as operating state government with fewer state employees than we had in 1970. Granholm continues to cut services and streamline government and she has lived up to her end of the bargain. Senate Republicans need to live up to theirs. Economists from across the country who have reviewed the state of Michigan’s budget have agreed that cuts alone will not help Michigan. Sensible cuts and new revenue streams (taxes) will be required to bring Michigan’s budget out of its funk.
Senate Republicans introduced and passed S.B. 436 and 437 on party-line votes. Basically, S.B. 437 would create a cut to schools of $36 per pupil, and make devastating cuts to the 21st Century Job Fund to balance the 2007 budget.
Senate Democrats have two main reservations about this legislation.
First, it is irresponsible in terms of both long and short-term economic development -- schools representing our long-term economic development and the 21st Century jobs fund as the agency charged with long-term economic development. Second, cutting schools at this point in the school year is irresponsible, since schools have most likely already committed the funds.
Basically, the Dems feel this amounts to shooting ourselves in BOTH our feet. In many ways, this plan is even worse than one that is based on cuts alone, since it effectively robs the 21st Century Jobs Fund -- which was created with strong bipartisan support to stimulate our economy -- to balance the budget. It's also important to mention that the money that would be taken from the 21st Century Jobs Fund includes dollars that have already been assigned to specific companies. In other words, we believe this legislation would effectively break the state's contracts with these companies, which would expose the state to lawsuits.
Both of these bills are non-starters, since they move us in the wrong direction, and send a terrible message to Wall Street agencies, who have already lowered the state's credit ratings a number of times.
The Senate Dems are ready to vote on a comprehensive solution that includes cuts, reforms, and revenues. Unfortunately, based on what we witnessed this month, Republican Leader Mike Bishop is still refusing to reach a compromise and solve this crisis. To not even consider a compromise which involves revenue enhancements, or tax increases, or new taxes… whatever you want to call it… to take it off the table all together, against the advice of experts and economists… that is irresponsible.
Guest Writer - Jeff Winston