By Peter Luke/Bridge Magazine correspondent
Determined to measure their work against the bipartisan legislative train wrecks of past years, Republicans who run the Legislature are pretty close to their goal of closing up shop for the summer by the end of the week (June 1). That’s three weeks ahead of last year when they overhauled the business tax code and closed a $1.8 billion budget deficit.
If they wanted to make it official, lawmakers could lock their part-time work schedule, along with the requisite pay cut, into the Michigan Constitution. Voters would happily ratify.
But Michigan’s economy demands more — and so too should Gov. Rick Snyder.
A balanced budget, more money in the state rainy day fund and reductions in unfunded retirement liabilities are laudable fiscal achievements. But they’ll be short-lived without a reversal of the short-sighted neglect of state assets required for sustained economic growth. For without that sustained growth, the budget again will soon be out of balance. A quarter-billion in budget stabilization funds can be erased with one quarter of negative economic growth. Or a million fewer sales of cars and light trucks.
Snyder last year made a critical mistake by decoupling the New International Trade Crossing (Detroit-Windsor bridge proposal) from the budget process. No bridge? No signature on a Michigan Department of Transportation budget. Since that ultimatum wasn’t made, momentum that might have been fueled by the pressure of budget deadlines was never given time to develop.
While Snyder may be able to authorize the NITC on his own, he can’t reconfigure the gas tax or double registration fees without 56 votes in the House and 20 in the Senate. That’s why, with the support of both business and labor, he called on lawmakers in his State of the State address to tackle road funding for the first time in 15 years. It makes little sense to come out in favor of significant fee increases if you’re not willing to announce you’ll veto a road budget that perpetuates long-term failure without them.
Though the 2013 budget finds the minimum amount of cash required to match available federal funds for another year, it puts off for yet another year the $1.4 billion annual fix really needed to keep the state’s infrastructure in decent repair. Without that kind of money, the decline accelerates. Because Snyder again demurred in lashing a top priority to the on-time completion of the budget, the economic gains from a big boost in infrastructure spending in 2013 and beyond are lost.
Snyder didn’t propose a fix for a higher education budget that will be 29 percent smaller in 2013 than it was in 2003. (As opposed to the Department of Corrections budget, which is 24 percent bigger during that period.) But he might have agreed to one, if Republicans in charge of the budget process thought it important.
When the last all-Republican regime in Lansing produced its final budget, for fiscal 2003, higher-ed spending totaled nearly $1.85 billion. The fiscal 2013 plan devotes $1.4 billion, $36 million more than last year. At that pace, repairing a decade of fiscal damage will take years. Particularly if universities are going to be taking a back seat to last-minute, politically motivated $100 million income tax cuts of dubious economic value.
In its presentation on May 31 at the Detroit Regional Chamber’s Mackinac Policy Conference, the Business Leaders for Michigan is reiterating its position of greater taxpayer support for higher education conditioned upon rational performance standards that measure Michigan schools against their appropriate national peers.
From the start, the aim of the 2013 budget process should have been to recognize that Michigan will soon be short more than a million workers for jobs that require a two-year degree or more, and then to construct a financial and policy structure that fills the expected demand.
Snyder and lawmakers have sought to reward entrepreneurial aspiration with a business tax policy designed to spur job creation by reducing, if not eliminating, the financial and administrative burdens of compliance.
And it’s being done at some political risk — given who’s paying higher taxes instead — the extent of which won’t be known until November. But whatever the risk, it was determined that it was worth it because the public ultimately will agree to give up some income tax credits to fund a course correction they’re persuaded will lead to a better economy.
Luckily for Republicans, they at least have improving jobs and income growth numbers to back up their argument. But rather than build on a business-backed agenda that calls for tax reform and investment, they’re going home.
Is it easier to tell voters they won’t have to pay more for gas or to give them a tax cut? Sure. The hard thing is to make the case that Michigan’s competitive position demands more.
Peter Luke was a Lansing correspondent for Booth Newspapers for nearly 25 years, writing a weekly column for most of that time with a concentration on budget, tax and economic development policy issues. He is a graduate of Central Michigan University.