Yesterday, the state of Michigan went through a process called the Consensus Revenue Estimating Conference. University and governmental economists met to discuss where the economy is going and what its projections mean for the state budget.
The good news: the economy is expected to continue to improve, albeit slowly. Also, the state will receive steady revenue, though it might be shy of the rate of inflation. Nevertheless, legislators are talking about ways to cut taxes and cut government.
Ken Sikkema, senior policy fellow at Public Sector Consultants and a former Republican majority leader in the state Senate, and Darci McConnell, a former journalist and current president and CEO of McConnell Communications, joined Stateside to discuss personal tax exemptions, income tax cuts, and the roads.
Listen above for the full conversation, or read highlights below.
Raising Personal Exemptions
Governor Rick Snyder and State Senator Jack Brandenburg, both Republicans, engaged in a minor bidding war over how high to raise the personal exemption. “In addition to their back and forth,” McConnell said, “Democrats seem to be supportive, so you’re talking about potentially some bipartisan support for this.”
Sikkema worries this “up the ante” attitude from legislative Republicans is going to start to affect the state budget. “Republicans, historically — meaning, of late — really haven’t been that responsible in terms of dealing with the spending cuts that have to go along with tax cuts.”
Can Michigan afford to cut the state income tax?
Governor Snyder has been hesitant to cut income taxes, and McConnell applauds his discretion. “I think the governor being cautious about this is a good thing because we have so many other pressing needs that we need to address as a state,” she said.
Sikkema warns of a new breed of “tax-cut-and-spend Republican.” “A tax cut has to be paid for with spending cuts,” he said. “You don’t find a lot of legislators talking about, or identifying, what spending cuts will go along with a significant tax cut.”
The roads, what will it take to fix them?
“It’s not a new story,” McConnell said. “We have some of the oldest roads in the country.” But not enough money is being delegated to fixing them, and McConnell worries that major infrastructure collapses — like bridges — will eventually become a greater concern.
“This is a worst-case scenario,” Sikkema said. It means recent increases on gas taxes and registration fees did nothing to improve roads, as they were designed to do. In fact, “they’re getting worse,” Sikkema said.