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state budget

When the Legislature returns to the state Capitol next week, there will be another item added to its to-do list. That is: coming up with millions of dollars to fill a budget gap created by the state Supreme Court decision on Michigan’s new pension tax. The court upheld the tax on pensions, but said denying a tax break to some higher-earners effectively created a graduated income tax.

A graduated income tax is not allowed under the state constitution. That part of the decision also blew a $60 million hole in the state budget. Sixty million dollars is a small part of a general fund budget that exceeds $8 billion.

But it is an amount the governor and the Legislature will need to make up to meet their obligation under the state constitution to have a balanced budget. One possibility would be to use a projected surplus from last year’s budget to fill the gap. That number becomes official in January. But it appears the surplus will be somewhere near $400 million.

Lawmakers are already fighting over what to do with that money. Democrats say it should be used to restore some budget cuts to schools. Republicans say it should go into the state’s “rainy day” savings fund, or to pay down debt.

Lester Graham / Michigan Radio

A legislative agency says the state is taking in a lot more money than it expects to spend as the books are about to close on the last fiscal year. The revenue estimates from the state House Fiscal Agency say the state appears to be in line to reap $285 million more than expected.

That includes a $145 million windfall for the School Aid Fund. Some Democrats say a portion of that money should be used to restore cuts to K-12 schools.

Michigan Budget Director, John Nixon on state finances

Oct 4, 2011

We are now just a few days into the state’s new fiscal year. State Budget Director, John Nixon gives us an update on the state of Michigan’s finances.

Nixon says many states relied on federal stimulus money, and now it's time to look at other options.

“We had a huge infusion of stimulus money and then there was a big cliff because once that stimulus money went away all the states are scrambling saying, “oh my gosh how do we keep our programs whole?” Well that’s what we’ve done. We cut a billion and a half dollars of spending out the budget and we balanced the budget.”

A Conversation with State Representative Jeff Irwin

Aug 16, 2011
housedems.com

The Michigan legislature returns from break next week. While they will be faced with a new set of issues when they return, at least one legislator is critical of the work that’s been done so far.

Every week we interview lawmakers about what's happening in our state and the nation. Michigan Radio's Jennifer White today talks with Freshman Democratic State Representative Jeff Irwin about the state budget, working with the legislature and what we can expect in the coming months.

Aflyingpsychofly / Flickr

Governor Rick Snyder’s administration and state employee unions will open contract negotiations this week. The first topic of bargaining will be whether state workers will give up the salary and benefits they’ve already been promised.

The new state budget is not balanced yet. For one thing, the budget assumes millions of dollars in savings in employee costs. State state worker unions have yet to agree to those cuts. In fact, the state can’t even begin to negotiate unless the unions agree to re-open the current contracts. Kurt Weiss is with the state Department of Technology, Management and Budget.

“We know it’s a significant number. We know it’s a painful number.”

Weiss says the alternative to concessions is layoffs and privatizing services. The largest amount of money would come out of the state Department of Corrections.

State employee unions say state government is currently top heavy with managers and has too many contracts – and the Snyder administration should look those first before looking to squeeze more from frontline workers or lay them off.

michigan.gov

State workers are scheduled to rally in Detroit tomorrow to protest wage and benefit cuts. Governor Snyder is seeking $145 million in concessions from state employees for the fiscal year that starts in October.

An official with one of the largest state employee unions, Ray Holman of UAW Local 6000, says over the last decade the state has shed more than 12,000 positions.

"And what that means for the average, for example, Department of Human Services caseworker, is they may have 700 to 1,000 families they’re responsible for."

gophouse.com

The speaker of the Michigan House has ordered representatives to cut their office budgets by almost 14 percent. Smaller cuts were also ordered for Democratic and Republican party staff and non-partisan House of Representatives staff.

House Speaker Jase Bolger says the cuts are necessary to keep the state’s budget balanced. He says the reductions do not necessarily mean there will be layoffs.

Snyder signs budget

Jun 22, 2011
Photo courtesy of the Snyder administration

Governor Rick Snyder has signed a budget for the coming fiscal year. He says the spending plan includes some tough-but-necessary choices that were necessary to retire a deficit and to set Michigan on a path to fiscal responsibility.

Now for the Hard Part

May 27, 2011

When Governor Rick Snyder took office in January, he said he wanted to have the state budget signed, sealed and delivered by the end of May.

Nobody in Lansing took that seriously. In fact, if the budget had in fact not been completed until July, that would still have been seen as a remarkable victory. 

After all, we’ve become accustomed to lawmakers frantically struggling on September 30th, the last day possible, to pass a budget before the state would have to shut down.

True, this year is different in that the governor’s party controls both houses of the legislature. But the reforms that Snyder was calling on them to make were so revolutionary it was hard to see how he could possibly win early passage.

Well, we were wrong. Rick Snyder may officially be a “non-politician.” But he is in fact one of the shrewdest political operatives I have ever seen. People have consistently underestimated him, beginning with the famous “nerd” commercial which launched his candidacy. Everybody scoffs at Snyder, and he smiles and keeps on winning. Primaries, general elections, legislative fights. The governor got virtually everything important he wanted here.

Where he did have to compromise - on the pension tax, for example - one got the feeling that he had planned on compromise all along. With a series of wrenching moves, he changed the way the system works. He seems to have eliminated the structural flaw that for years has caused automatic billion dollar deficits. He did so at a terrific cost, balancing the budget, and providing huge tax breaks for business by cutting aid to the poor, to children, and to education.

But he got what he wanted, and now we’ll see what happens. Make no mistake: This is entirely a Rick Snyder, Republican Party budget. It did not get a single Democratic vote. If this pays off, if the lowered business taxes do create new jobs, Snyder should be able to waltz to re-election, and the political culture of this state may be forever changed. But if it fails - if the promised new jobs don’t materialize, and people keep falling through the tattered safety net - well, it will be clear who to blame. It will take awhile to know exactly what’s happening. But what does the governor do next?

(photo by Steve Carmody/Michigan Radio)

There’s one week left for the legislature to meet the governor’s deadline for passing a state budget before the end of May.  Governor Rick Snyder says negotiations are still on pace to wrap up by May 31st .   

“There are still lots of things…because it’s a very large document…that we need to get through.  But that’s all part of the process….and its coming along in a positive way.”     

But if the final deal isn’t ready until a few days later, Snyder says that would be OK.  

Legislative leaders meet to finalize budget targets

May 19, 2011
Flickr User Thetoad / Flickr

Governor Rick Snyder met with legislative leaders to refigure budget plans, now that the state is expected to collect more tax revenue than originally predicted.

An application on Snyder’s i-Pad reminds him every day of a looming, self-imposed budget deadline of May 31st. He says he and lawmakers are going to meet that deadline.

"There’s still work to be done, but we’re moving in a very positive direction, and we’re moving on a path to have the Legislature get the budget done by May 31st – so those countdown clocks could pay off.”

Details could be made public as soon as today.

Part of the deal appears to include about $25 million in tax credits for the film industry, and rolling back cuts to K-12 schools. That’s more money than Governor Snyder or the Legislature had originally proposed.

(photo by Steve Carmody/Michigan Radio)

Budget officials were briefed Monday on how Michigan’s economic recovery is shaping up, and what that means for the state budget. The news was mostly good – it appears there’s another $430 million available to help balance the budget. 

 Now that it’s agreed Michigan’s economy is improving and there’s more revenue, the arguments have started about how to use that money.  

(Official state portrait)

The state is on track to bring in about $430 million more than originally forecast for the coming fiscal year. That’s according to state officials and economists who met today at the state Capitol for a revenue estimating conference.  

Governor Rick Snyder says he’s happy to hear the state is on the track to economic recovery. But he does not want to spend the money too quickly.  

A budget panel will meet this morning to consider economic forecasts and project how much money the state has to spend in the coming fiscal year.

Michigan’s economy is in the early stages of rebounding and it appears the state is bringing in the tax revenue to prove it. Many lawmakers want to use the windfall - half a billion dollars or more - to reverse cuts to K-12 schools.  And Governor Snyder says some of the money could be used to roll back the size of proposed budget cuts:

“If there’s funds are available, we should be looking at how we deal with some of these cuts. These were tough calls.”

But Governor Snyder and other Republicans also say they want to be careful about spending additional revenue instead of fixing ongoing budget pressures. The governor says some of the money could also be used to shore up the state’s emergency savings in case the economy takes a another tumble.

A leader in Michigan’s higher education community says state universities may urge the governor to veto the state education budget bill.   He says it’s a question of ‘micromanaging’.    

Michael Boulus is the executive director of the President’s Council, a group that lobbies on behalf of Michigan’s public colleges and universities. 

There is some good news for Michigan school administrators worrying about the outcomes of today’s  school millage votes. A new Michigan State University poll of nearly a thousand state residents finds  most want education protected from state budget cuts.   

The State of the State survey finds education is the highest priority among Michiganders. The poll found support for state education funding consistent across all demographic groups and political affiliations.

William Schmidt is a statistics and education professor at MSU. He says the poll shows the importance that people place on education. Though he admits people often vote their own economic interest when asked to decide on school millages. 

 “They seem…conceptually at least…to think education is important.   And should be front and center.  But then…very often they vote their economic concerns…which is they don’t want their taxes raised.”  

Education spending is expected to take a big hit as state lawmakers deal with Michigan’s massive budget deficit. They are talking about slashing per-pupil funding by $300 to more than $400.

(photo by Steve Carmody/Michigan Radio)

Governor Rick Snyder heard from his critics as he delivered the University of Michigan’s commencement address today.  

A grey, overcast, chilly morning welcomed graduates and their families  to Michigan Stadium for the Spring commencement.  Later the sun came  out  and warmed the crowd, though Governor Rick Snyder probably still  felt a slight chill from part of the crowd. 

A new poll finds parents want more physical education in school.  The U of M C-S Mott Children’s Hospital National poll asked parents of 6 to 11 year olds about their children’s access to gym classes and recess.

  A third of parents say their children get too little physical education.  

Sarah Clark is the associate director of the poll. 

Corrections Department budget may see big cuts

Apr 24, 2011
Jackson State Prison
STEVE CARMODY

Michigan Senate Republicans say the Department of Corrections could save tens of millions of dollars by making sure all prisoners are parole-eligible as soon as they have served their minimum sentences.  

Republican state Senator John Proos says that means making sure prisoners have taken their necessary prisoner reentry programs in time for their parole hearings. 

 “Are they getting the proper education so they can be eligible for parole at their earliest release date? The longer we keep somebody past earliest release date, the most costly it is to us."

Proos says additional savings can be found in the department by privatizing food services and mental health services for prisoners. Proos chairs the Senate panel that oversees the Department of Corrections budget. The panel approved a spending plan that is well below Governor Rick Snyder’s proposal.

Early drafts of Republican budget plans include some measures that Governor Rick Snyder did not call for in his proposal for the coming fiscal year. Among them are new rules on embryonic stem cell research conducted at state universities and publicly funded clinics.  

Similar measures were blocked in recent years by Governor Jennifer Granholm and Democrats in the Legislature. New Republican majorities are renewing efforts to enact new restrictions and reporting requirements over the objections of researchers. They say the proposed rules would quash their work.

Governor Rick Snyder supports embryonic stem cell research and the voter-approved amendment that allows it at publicly funded facilities. The governor has not taken a position on the budget language. Sara Wurfel is the governor’s press secretary.   

“We’re going to be looking at everything closely when it comes through. The governor’s been very clear and consistent that he respects the Legislature and the legislative process. It’s still got a long way to go. It’s just one step.”   

And legislative leaders say these early versions of the budget bills do not necessarily reflect what will come from the final round of negotiations. The governor and legislative leaders say they’re on track to wrap up the budget by their self-imposed May 31st deadline.

Drunken Sailors

Apr 15, 2011

I’ve been following the Michigan legislature’s attempts to approve various sections of the state budget, and the cliché that first came to my mind this morning was the wrong one. I was tempted to tell you that they have been behaving like drunken sailors.

Pace of state budget talks picking up in Lansing

Apr 11, 2011

Budget talks are ramping up at the state Capitol with just more than a month and a half left before Governor Rick Snyder’s self-imposed budget deadline.      

Governor Snyder still stands by his May 31stbudget deadline, even as many lawmakers say they do not think a deal will be reached before this summer. Legislative leaders point out that the earliest a budget has been done was in June. That was back in the early 1990s, when the state was flush with revenue. But Governor Snyder says there’s no reason he and lawmakers cannot reach a deal before the Legislature’s summer break.     

One area of the budget that appears to be a sticking point is education spending. The governor has proposed deep cuts to per-pupil funding for K-through-12 schools, and a 15% reduction to state payments for public colleges and universities.

A state House committee is debating a tax-reform package that includes eliminating the state’s business tax and replacing its revenues with a corporate income tax and taxing pensions. Governor Snyder says he wants a state budget in place by the end of May.

However, fierce divisions over how and where to reform taxes – especially over whether to tax pensions – are slowing negotiations.

Snyder’s pleased with the progress on the budget so far:

“Things are going reasonably well in terms of that process.   And we’re working on a very fast time frame.  We’re well ahead of the way things traditional done in past years.  And we’ll still on a path to get fundamental reform done."  

Snyder says he's not put off by the harsh criticism that his budget and tax plans have generated: 

“That’s part of the legislative process.  That’s part of democracy.   But as a whole, I believe the framework we put out there will go ahead and if anything I hope it could be an improved product with the good dialogue we’re having today.”  

Some Senate Republicans have said they will not vote for any pension tax. And many Democrats are upset, claiming they have been locked out of negotiations altogether.

"The business incentives are just one small part of what our economic development effort is overall," said Steve Arwood, the CEO of the Michigan Economic Development Corporation (MEDC)
MEDC

Together the projects will generate up to $602 million in new investments and create close to 2,000 new jobs.

By far the biggest project approved by the board this month is in Charlotte. Spartan Motors Chassis designs and manufactures a variety of special products for vehicles. They’re expected to add 450 new jobs along with an expanded facility.

George Bosnjak manages business development at The Right Place. It’s an economic development group in West Michigan. He helped two companies expanding in Grand Rapids get the tax breaks. Atomic Object LLC will expand its current location over a site in California. They expect to launch two new programs that’ll add 30 high tech software design jobs. Knape & Vogt Manufacturing Company makes all kinds of storage related components in Grand Rapids. They purchased a company in Illinois and will move production to Michigan, creating more than 120 new jobs.  

Bosnjak is optimistic about industry growth in West Michigan.

 “We really see a positive trend across all sectors, certainly nothing where it’ll turn around and change what’s happened over the last three years overnight but I feel that our economy and companies here are certainly moving in the right direction.”

However, Governor Rick Snyder is proposing to eliminate these and many other tax breaks. Bosnjak says they’re playing it by ear.

“I don’t think anyone really knows exactly what the programs will be and what the changes will be and how it’ll affect companies. But we’ll certainly deal with the tools that we have and make the best and do the best job that we can.

Snyder says the incentives inherently pick winners and losers when he says the state needs to create a simple and fair tax structure so all businesses are on an even playing field.

Carmen Seaby / Flickr

Grand Rapids Public Schools is hosting a meeting Wednesday night and Friday morning to discuss Governor Rick Snyder’s state budget proposal. The district would face a $25 million budget shortfall if lawmakers approve Snyder’s budget.

Snyder is asking lawmakers to approve cutting $470 per student for all public school districts. That’s roughly a 4% cut from what the state sent them last year.

Governor Rick Snyder is looking for allies in his fight for deep state spending cuts. The governor received a warm reception at a Chamber of Commerce luncheon today in Kalamazoo. 

Governor Snyder spoke to an audience that largely backed his candidacy last year  and is very receptive to his budget plans that call for revising d Text - 16 lines]the state's business tax and deep cuts in spending. But many are also concerned some the governor's plans might hit close to home.

Snyder urged the business leaders to accept part of the sacrifice.

"The only way we are going to do this is talk together and help those people who think they didn't get a fair shake or that they're being disadvantaged when they probably were not." 

Labor unions and social service groups worry that the poor, children  and others might pay a bigger price under the governor's budget plan. Snyder says the state must address its billion and a half budget  deficit now and now just kick it down the road.

Michigan Radio

Update 3:45pm

Governor Rick Snyder’s budget proposal calls for eliminating millions of dollars in business and personal tax breaks; big cuts to schools, universities, and local governments.  The governor says it is bitter medicine necessary to cure the state’s budget troubles, and set the foundation for an economic recovery. 

Governor Snyder says everyone will have to sacrifice to fix massive fiscal problems that have built up over decades under Republican and Democratic administrations. That includes growing pension and healthcare liabilities that the state will start to pay down.

 “We are going to take responsibility for a legacy of debt that has built up over decades.”  

 To pay for that, balance the budget, and cut taxes for businesses, Snyder wants to shut down state police posts and at least one prison; start taxing pensions; cut money for schools, universities, and local governments; and ask public employees to pay more for their benefits. 

Critics already say the budget will force more school districts and local governments into insolvency and families into poverty. The governor, who is a millionaire, says he will share in the sacrifice by working for a dollar a year.    

Budget Director John Nixon says the administration’s proposal will end the state’s string of budget crises and will send a message that Michigan is managing its finances.

“A lot of people are going to be upset with this budget. We understand that. But it’s the right budget. It’s a responsible budget that takes into account the needs of our citizens and taxpayers’ ability to pay.”

About two dozen state employees protested in Lansing today as Governor Rick Snyder presented his budget plan to state lawmakers. They complained about plans to roll back public employee benefits and tax pensions.         Tammy Warner works in the state Department of Human Services.

“The state is cutting all kinds of services not just to the poor – they’re actually decimating the middle class. They’re also decimating the state workers and they are making it impossible for us to live in this state.”

Public employees say they’ve already made concessions and accepted unpaid furlough days to help the state through earlier budget crises.   Advocates for low-income families say ending state the earned income tax credit for the working poor will result in more children living in poverty. School and city officials say cuts will force more local governments into insolvency.

Update 1:22

Democratic leaders in the Michigan legislature are reacting to Governor Snyder's budget proposal.

Senate Democratic Leader Gretchen Whitmer called the Governor's budget "the same old politics of putting corporate tax breaks ahead of the people. From Whitmer's statement:

"Governor Snyder's idea of shared sacrifice seems to mean that working families will do most of the sacrificing while companies continue to reap the rewards," said Whitmer. "He is balancing this budget on the backs of our kids, working families, and our seniors. Contrary to his rhetoric about 'moving all of Michigan forward,' this budget picks out who he's willing to leave behind."

Update 12:43 p.m.

Governor Snyder has placed his budget recommendations to the Michigan legislature online.

Update 12:11 p.m.

"The day of kicking the can down the road is ending," declared Governor Snyder in calling for tax and budget changes that he says should have happened twenty or thirty years ago.   

Snyder says he used the principle of fairness in arriving at some changes, for example, an end to the Michigan Business Tax, the tax on unincorporated companies in the state.   Snyder says the tax is unfair because it's a form of double taxation, since the business owner already pays personal income tax. 

And he says individual pension income should be taxed.  Snyder says it's not fair to tax the income of senior citizens who are still working, and not tax retired senior citizens living on pension income.

Snyder wants to eliminate many individual tax credits, such as the deduction for donations to public universities.  But he would keep the deduction for personal property tax, although he says the property tax system will need to be overhauled at a later time.

Snyder says his budget keep the safety net for Michigan's poorest citizens intact.

Update 11:23 a.m.

Governor Snyder says he will share in the sacrifices he's calling for in the state budget by working for one dollar a year. The governor is presenting a budget that includes big cuts to schools, local governments, and public universities -- as well as eliminating many personal and business tax breaks. The governor's budget proposal also calls for an overall one-point-eight (b) billion dollar cut on businesses. - Rick Pluta

Update 10:48 a.m.

Michigan Government Television will carry Governor Snyder's presentation of his budget proposal live at 11 a.m.

The Michigan Senate will also live stream the presentation from their website.

7:11 a.m.

These details of Michigan Gov. Rick Snyder's $45 billion budget proposal were outlined to The Associated Press on Wednesday.

- 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.

Michael Caven / flickr

The details of the United States and Michigan budget cuts are beginning to leak out.  The United States Congress is trying to come together on a plan to cut a huge amount of spending. Governor Rick Snyder will be delivering his budget proposal for next year on Thursday.

One area of debate is how the Environmental Protection Agency can regulate greenhouse gas emissions. A new statewide poll shows voters in Michigan would support these rules, but Republicans in the US Congress are moving against them this week.

Al Quinlan conducted the poll funded by the Energy Foundation, a pro-renewable energy group.

"We asked people simply whether they favor or oppose the EPA regulating these emissions the results were 64% favor, 27% oppose. And there was broad based support across partisan lines."

Michigan Congressman Fred Upton is a leading opponent of EPA regulation of greenhouse gasses.

Sarah Alvarez-Michigan Radio Newsroom

Next week, Governor Rick Snyder will deliver a budget plan that his own Lt. Governor has described as an ‘atomic bomb’ of spending cuts. Michigan’s Corrections Department is expected to be a prime target. 

Michigan is facing a state budget deficit next year estimated at $1.8 billion. 

Michigan spends nearly $2 billion a year housing more than 44,000  inmates. The number of inmates has declined by more than 7,000 during the past five years.  And the number of prison employees has shrunk by nearly 4 thousand in the past decade.  

Still, conservative groups say more savings can be wrung out of the Corrections Department with privatization.

Mel Greishaber is with the prison guards union.  He warns privatizing some prison jobs might save money, but it will increase security problems.  

“Often...civilians who come in and work are not as sensitive to the safety issues and security issues that they need to be.”  

Greishaber is also worried about the level of experience state lawmakers have with Michigan's prison system.  A large percentage of state lawmakers are new to the job.   Greishaber notes that few members of the largely first term legislature have ever even visited a state prison.

 “Everyone comes in with preconceived notions.  They’ve watched movies which almost always are not the real life situation."

Lester Graham / Michigan Radio

Reactions are coming in after some intense--maybe radioactive is a better word?--comments made by Lieutenant Governor Brian Calley on the governor's budget proposal, which will come out next week.

On Tuesday, Calley compared next week's budget announcement to an atomic bomb. Calley's comments, from WKZO:

"Here's why I think that our message on the 17th of February is going to be dropping an atomic bomb on the city of Lansing: We're going to do an all-cuts solution to our budget deficit."

Sara Wurfel, Governor Snyder's press secretary, claims that Calley misspoke. From the Detroit News:

"This was an extremely unfortunate choice of words," she said.

"It certainly doesn't take into account the very difficult decisions that are being made and the extensive efforts we are taking to help protect citizens and ensure we leave no one behind. We are doing everything we can to address the state's fiscal crisis and trim spending in all areas of the budget, but also to help preserve critical services."

Also, "this is not an all-cuts budget," she said.

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