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<http://www.gongwer.com> MICHIGAN REPORT The Capitol Record Since 1906 REPORT NO. 135, VOLUME 48-- THURSDAY, JULY 16 2009 BUDGET DISCUSSIONS DEAL WITH REVENUES Legislative and administration leaders continued discussions on the 2009-10 budget Thursday and at least part of that discussion dealt with whether revenue increases could be part of the final resolution. Sources said no decisions were made and that there is no consensus on any part of a budget solution at this point, let alone an agreement on raising revenues, but so far administration officials have put out proposals that could raise as much as $1 billion if they were adopted. The proposals being suggested at this time range widely, sources said, and include possible tax increases on food and drinks sold in vending machines, to cutting the level of tax credits the state offers. That could include making cuts to the earned income tax credit that will aid low-income people. The administration fought for an earned income tax credit, but sources indicated if tax credits to businesses would be cut then the administration has to show it is willing to call for shared burdens to resolve the budget crisis. Officially, state leaders will only confirm that a meeting between the legislative quadrant leadership and the administration to discuss the budget took place Thursday. The talks are being kept confidential, officials said. Sources, however, said that the administration did outline a series of ideas that could raise revenues to help mitigate the need for massive budget cuts. The proposals could raise anywhere from $500 million to as much as $1 billion in revenue, if they were all enacted. However, Republicans, especially at this point, Senate Republicans, are still resistant to the idea of raising any revenues as part of the budget solution, the sources said. Many of the revenue-raising proposals focus on the idea of limiting tax credits, especially those granted businesses for expanding in Michigan or locating their firms in the state. The concept is seen as more palatable than raising tax rates and closing loopholes because companies would still get tax cuts for economic development purposes; the cuts would not just be as large as they might have been. The reduced credits would also be temporary, sources said, to get the state through the current fiscal situation and then be restored to the level they were before. Business officials are apparently urging lawmakers to tread carefully on cutting credits. They worry that doing too much would hurt the state's ability to compete for new business. Sources also said that much of the talk on budget cuts so far has focused cuts to the Department of Corrections, the State Police, local government revenue sharing and K-12 School Aid. In terms of school aid, most the cuts discussed involve eliminating general fund monies to the School Aid Fund, sources said. In terms of corrections and the State Police, one source said Senate Republicans are concerned about making more cuts to public safety. The fact that prison escapees from Indiana were caught in Michigan (one near the summer home of Chicago Mayor Richard Daley) highlights for the Senate GOP the need for the state to maintain security spending, the source said. Rep. Richard LeBlanc <http://www.gongwer.com/index.cfm?link=bio.cfm&nameid=168001&locid=1> (D-Westland), who heads the State Police budget in the House, said discussions are ongoing regarding what to do with the new headquarters in downtown Lansing, which is why the subcommittee did not act on that budget this week (SB 253 <http://www.gongwer.com/index.cfm?link=legislation_billdetail.cfm&code=S B%20253&billid=2009SB25301&locid=1> <http://www.gongwer.com/index.cfm?link=legislation_querymanager.cfm&loci d=1&SR=1&Session=2009&BillType=SB&BillNum=253> ). He said there are more issues to consider than just whether State Police will or will not move into the new building. "We're being deliberative," he said. Pamela Ann Martell Higher Education Consultant King-Chavez-Parks (KCP) Initiative Michigan Department of Energy, Labor & Economic Growth 201 N. Washington Square Victor Office Center, 3rd Floor Lansing, MI 48913 Direct Line: (517) 335-3009 Main Line: (517) 373-9700 Fax: (517) 373-2759 Email: [log in to unmask]