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MICHIGAN |
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The Capitol Record Since 1906 |
REPORT NO. 139, VOLUME 48-- WEDNESDAY, JULY 22 2009
HOUSE G.O.P. SAYS BUDGET PROPOSAL WILL HELP REINVIGORATE STATE
Saying the state can resolve its budget problems without raising taxes and with putting more federal stimulus funding towards actual economic development, House Republicans outlined their proposal to balance the 2009-10 budget that would result in some $1.4 billion in cuts and savings.
But the proposal, if adopted, would result in thousands of persons being taken off welfare and with individuals getting assistance having to pay more in Medicaid co-pays. The proposal would also delay expanded tax credits to the low-income under the earned income tax credit.
In dollar amounts, the proposal is close to the more than $1.2 billion in cuts the Senate Republicans adopted as that chamber passed its budget proposal last month. The House GOP version, however, contains a number of policy proposals that the Senate did not undertake, including some of the limits on welfare assistance.
House Minority Leader Kevin Elsenheimer (R-Bellaire) said some of the proposals would be difficult, but that they would help get the state out of a budgetary cycle that is continuing to dig the state into a budgetary hole. Plus they would allow the state to institute reforms that could help generate business development as well as use some $700 million in federal stimulus money to help generate economic growth.
Most of that money would go for state and local road projects, the Republicans said at a press conference held Wednesday afternoon. Some $200 million that would be used for state highway projects would be able to leverage as much $1 billion in federal money for highway and bridge projects, Mr. Elsenheimer said. Another $200 million would go to local governments for their road projects.
Rep. Chuck Moss (R-Birmingham) called it a bold proposal that "breaks out of the box" and will use the federal stimulus for what it was intended to be used for instead of simply as a "state budget bailout."
And coming hard on the heels of the California budget resolution, Mr. Elsenheimer said if the Golden State could resolve its better than $26 billion budget deficit without raising taxes, then Michigan should be able to resolve its $1.7 billion 2009-10 budget deficit without tax increases. (California's proposal also will call for the release of what some estimate could be more than 20,000 prisoners, institute as much as one month's worth of furlough days for state workers, and boost borrowing to help control the costs.)
In sum, the proposal calls for $878 million in general fund cuts, $180 million in reduced earned income tax credits, and another $302 million through annualizing the savings implemented in May with the executive order cuts on the 2008-09 fiscal year.
Among the largest individual cuts the Republicans call for in their proposal is $150 million in reductions to non-Medicaid mental health services and substance abuse services. Mr. Elsenheimer said since the persons affected are not on Medicaid, some might have access to other insurance.
The proposal also calls for $90 million in Medicaid savings by implementing Attorney General Mike Cox's plan for a Medicaid fraud inspector general.
By setting a limit of four years on welfare for able-bodied and work-ready adults, and making that provision retroactive, the state could save $51 million. Mr. Elsenheimer said he wasn't sure how many people that might affect, but he estimated it could be as many as 17,000.
The state now has one of the longest time frames for persons to remain on welfare, Mr. Elsenheimer said, and it was time for the state to set a firm limit on how long able-bodied persons could receive benefits.
The proposal also calls for freezing the number of state workers and instituting a strict ban on out-of-state travel by state workers.
The proposal also calls adjustments to the statute that requires binding arbitration between local governments and police officers and fire fighters. It also calls for eliminating requirements that school districts pay prevailing wage on construction projects. Both proposals are ideas that Republicans have taken aim at for years, but have failed to win approval on, and like the rest of the package are expected to be part of the negotiating process on the 2009-10 budget.
The proposal also calls for the state to have one standard on inspections, which should help businesses minimize costs on state inspections.
Asked why delaying the enhanced EITC credit for the low-income should not be considered a tax increase, when Republicans in the early part of the decade were quick to call any delay of an income tax cut a tax increase, Mr. Moss said the times have changed. Back then General Motors and Chrysler had not declared bankruptcy and the state wasn't "facing a structural shutdown of the economy," he said.
Matt Marsden, spokesperson for Senate Majority Leader Mike Bishop (R-Rochester), called the House GOP proposal well thought out and providing a lot of ideas that the two caucuses could work on together as they negotiate with Governor Jennifer Granholm and Legislative Democrats on the budget. Republicans were especially enthusiastic that the House GOP version includes the same level of cuts that its caucus called for, and agreed with proposals to invest in small business, Mr. Marsden said.
A spokesperson for the Michigan Catholic Conference said that group would oppose any effort to limit or delay the full implementation of the state's earned income tax credit.
House Speaker Andy Dillon (D-Redford Twp.) said while he commended Republicans for putting serious proposals on the table, he was concerned the proposal could hurt the state's economy,
"Aspects of the proposal will undermine Michigan's ability to turn our economy around. The plan seems to gut the very retraining and job creation programs that are essential to getting our workers back on their feet. I'm also deeply concerned that the proposal appears to cut scholarships for students. Access to college is critical for maintaining and expanding our middle class and preparing students for future jobs," Mr. Dillon said.
A spokesperson for Governor Jennifer Granholm said only of the proposal, "Very tough decisions are ahead" on the budget. "Our work with the Legislature to reach a comprehensive solution continues."
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
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