In releasing his first budget, Gov. Snyder indicated he wanted to avoid picking winners and losers. Unfortunately, he did just that.
At first blush, almost everyone takes a hit in the budget, except for businesses. The reduction of business taxes, meaning that 95,000 companies will not have to file state income tax forms, will reduce state revenues by $1.8 billion. That shortfall is made up by tax increases affecting families, seniors and kids, to the tune of $1.7 billion.
One of those tax changes, eliminating the Michigan Earned Income Tax Credit (EITC), will cause 25,000 people, including 14,000 kids, to fall into poverty. This is puzzling as the governor has identified reducing child poverty as a key goal.
Seniors will also be hard hit by the budget proposal outlined today. The League has recognized the need to look at our state’s generous senior tax preferences. However, the governor’s proposal fails to protect low-income seniors.
On the heels of 10 years of cuts to the state budget, the governor’s proposed budget contains $1.5 billion in cuts.
While we applaud the governor for his commitment to early childhood education, we are disappointed that other education funding is reduced substantially. K-12 schools will see their per-pupil funding cut by an additional $300 for each student. Our state colleges and universities are slated for a 15 percent reduction in their operations funding.
And then there are the cuts to public safety. Local government Revenue Sharing is set to be slashed by 40 percent. That equates to a lot fewer police officers and firefighters in our local communities.
Not only does the governor’s budget create winners and losers, it also misses a key opportunity. Gov. Snyder could have used his first budget to modernize Michigan’s antiquated tax system to capture growth in the economy.
Moving to a graduated income tax and extending sales tax to services could have been part of a balanced approach to addressing the ongoing budget gap. It would have increased revenue, without targeting vulnerable populations, while ensuring that needed services would be properly funded.
Instead, families, seniors and kids are finding themselves on the short end of the stick.
— Karen Holcomb-Merrill