Local leaders, State Sen. Rebekah Warren criticize Gov. Rick Snyder's budget at panel discussion
Less than a week after Governor Rick Snyder made the case for his controversial budget at Washtenaw Community College, State Sen. Rebekah Warren chose the same venue for a panel discussion on what the budget means for residents.
The message Warren, D-Ann Arbor, and several local leaders sent — the budget is bad for Michigan’s schools, municipalities and poorest residents.
Rebekah Warren
Warren and the panelists largely argued against Snyder's proposed budget during a nearly two-hour discussion and took questions from the approximately 150 attendees.
Critics say the state budget cuts Snyder has proposed — partly to close a $1.4 billion deficit and partly to finance $1.8 billion in tax breaks for businesses — would negatively impact schools, universities, cities, townships, counties, senior citizens and low-income wage earners, among other groups.
Snyder has acknowledged the cuts are painful but says they're necessary in order to close the state's gaping budget hole.
A controversial proposal in the budget that Warren charged would unfairly affect poor residents is the elimination of the earned income tax credit. Dowell said the EITC is an offset to a regressive state tax system that already favors wealthy residents
According to League for Human Service’s statistics, families currently earning $15,000 to $32,000 pay 10.1 percent of their income in state and local taxes, while those earning over $365,000 pay 5.6 percent. Eliminating the credit would force poorer residents to pay an even greater percentage, the league says.
Warren and Dowell said the credit keeps 25,000 residents — including 14,000 children — above the poverty line annually.
“That’s money that’s spent quickly and spent locally on a car repair or utility bill for the winter — this money really helps makes ends meet,” Dowell said. “It’s a proven and effective anti-poverty tool that has seen support at the federal and state level until recently.”
Schreiber discussed how proposed changes to state revenue sharing would affect Ypsilanti. Snyder proposes eliminating nearly $300 million in statutory revenue sharing payments for cities, villages and townships in the fiscal year that starts Oct. 1.
In its place, he is proposing a $200-million pot of money from which communities would have to compete for funds. How much a municipality receives would be based on performance metrics Snyder outlined on Monday.
Paul Schreiber
“Not only is it regressive on individuals, but the same is true for cities — cities with less income end up paying a higher percentage,” Schreiber said, adding Ypsilanti would also be significantly affected by the elimination of several redevelopment incentives.
Under the proposed changes, Ann Arbor would lose $1.7 million, or 18.3 percent of its revenue-sharing funds; Ypsilanti Township would lose $447,000, or 12 percent; Saline would lose $124,000 or 18.9 percent; Chelsea would lose $63,000, or 17.7 percent; Milan would lose $29,311, or 12.6 percent and Manchester would lose $26,000, or 15.2 percent.
Snyder’s budget also proposes a $470 per pupil cut to local school districts and recommends using $896 million of restricted school aid fund dollars to pay for community colleges and universities beginning in fiscal year 2012.
YPS has already consolidated transportation, closed two schools and laid off teachers over the last 18 months, Martin said. Under the new budget, the district would have to find another $1.8 million to cut. If the cuts are approved, Martin said the district will have cut $11.5 million out of a $50 million budget over the span of several years.
He said the loss of revenue would likely mean significantly increased classroom sizes and reductions in staff, pay, athletic programs, fine arts programs and after-school activities, among other cuts.
“We’ve reached across district lines to consolidate in a multitude of areas, but even if we were to consolidate more, that would not solve our dilemma,” Martin said. “We are going to be faced with making drastic changes in coming months to get these latest cuts through.”
According to the Senate Fiscal Agency, the proposed cuts, along with federal reductions, will mean significant losses to Washtenaw County districts including
- $6.9 million in Ann Arbor Public Schools
- $1.3 million in Chelsea Public Schools
- $1.8 million in Dexter Community Schools
- $2.7 million in Saline Area Schools
- $2.4 million in Lincoln Consolidated Schools
- $1.4 million in Milan Area Schools
- $1.2 million in Willow Run Community Schools
The proposed budget also includes a 15 percent reduction in appropriations to state universities.
“Very simply, this is going to mean increased tuition,” for the 259,000 students at Michigan’s 15 public universities, Bunsis said. He said EMU only receives 19 percent of its funding from the state and is “barely a public school” any longer.
He said Michigan already has the fourth highest tuition in the country, but ranks 48th in appropriations to public universities. Bunsis and Warren said Michigan spends $1.2 billion on universities and $1.9 billion on prisons, and Snyder’s proposed budget includes an increase to the prison budget.
“This budget seems to indicate that what we want is more prisoners and fewer college students,” Bunsis said. “I think what we need is fewer prisoners and more college students.”
Speakers at the meeting said the proposed budget reduces taxes for businesses while increasing them for individuals — specifically, Michigan’s poorest residents and the elderly.Aside from eliminating the earned income tax credit, Snyder is proposing taxing all pensions to generate an additional $900 million, something he says is necessary as the percentage of retirees in the state grows. Currently, public pensions aren’t taxed, and those private pensions providing under $42,500 are exempt.
Warren cited statistics from the Institute on Taxation and Policy that say the proposed budget represents an 86 percent tax cut for businesses and 32 percent increase for individuals.
Warren said she would like to see the state generate revenue by implementing a graduated income tax, which would require Michigan’s wealthier residents to pay a greater percentage of taxes than they do now.
She said Michigan is one of the few states in the country that doesn’t have a graduated income tax, and it’s prohibited by the state constitution. Warren said she is introducing legislation that would put in front of voters an amendment to the constitution allowing for a graduated income tax.
Schreiber and Warren both argued that businesses come to Michigan for more reasons than just the tax rate, and Schreiber said residents need to stop thinking of “tax” as a dirty word.
“We’ve got to stop thinking that it’s the only thing driving people to a state or out of a state,” Schreiber said. “And we need to raise taxes on people that can pay them.”
Warren fielded several questions on legislation allowing newly created emergency financial managers to take over municipalities and school districts Snyder’s administration considers financially distressed. The managers are given broad powers, including the ability to throw out union contracts and dissolve elected governments.
All those on the panel voiced concern over the legislation, which Warren called “pretty scary” and gave “unprecedented authority to an unelected person”.
Some at the meeting asked Warren how Snyder could be recalled, but Bunsis pointed out a recall election is expensive and highlighted the importance of voting in the 2012 midterm elections.
“Change who is elected, and this all gets overturned,” he said.
Comments
Dilbert
Wed, Mar 23, 2011 : 5:25 a.m.
Ideas such as a graduated income tax or increasing the sales tax can't be used for the budget starting October 1 because voter approval is first required for such changes.
Bertha Venation
Tue, Mar 22, 2011 : 5:43 p.m.
Rebekah Warren! She's our lady!!! If she can't do it.... Nobody... er.. um... uhhhhh
cinnabar7071
Tue, Mar 22, 2011 : 3:50 p.m.
"The problem with socialism is that eventually you run out of other people's money to spend." And the fact it has never worked.
Kelly Davenport
Tue, Mar 22, 2011 : 3:40 p.m.
As a reminder, please avoid writing comments in all-capital letters. It's considered the online equivalent of shouting.
macjont
Wed, Mar 23, 2011 : 2:09 a.m.
Sometime we want to SHOUT!
JSA
Tue, Mar 22, 2011 : 2:52 p.m.
Talk about a non story. More Democrats complaining with no alternatives to offer. What a waste of time.
macjont
Wed, Mar 23, 2011 : 2:09 a.m.
We had an alternative in the previous governor. But stupid A$$ed term limits ended that.
SonnyDog09
Tue, Mar 22, 2011 : 2:36 p.m.
The problem with socialism is that eventually you run out of other people's money to spend.
macjont
Wed, Mar 23, 2011 : 2:08 a.m.
What in depth thinking! My God, you have awakened me to reality. But still can't figure out why it works so well in Sweden.
Dante Marcos
Tue, Mar 22, 2011 : 2:25 p.m.
An insightful piece here about where Governor Snyder is getting his ideas from—ALEC, or the American Legislative Exchange Council (who's on ALEC's board? Koch Industries, Altria, Pfizer, GlaxoSmithKlein, Pfizer, R.J. Reynolds, Energy Future Holdings, Peabody Energy, PhRMA, AT&T, UPS, Wal-Mart Stores Inc., and State Farm Insurance): <a href="http://www.dailykos.com/story/2011/03/21/958745/-Michigan-emergency-manager-law-could-bring-privatizedjails" rel='nofollow'>http://www.dailykos.com/story/2011/03/21/958745/-Michigan-emergency-manager-law-could-bring-privatizedjails</a>
L. C. Burgundy
Wed, Mar 23, 2011 : 5:22 a.m.
Oh goodness - considering job creators' ideas! Outrageous!
xmo
Tue, Mar 22, 2011 : 2:20 p.m.
"what the budget means for residents" Hopefully, voting this kind person (Warren, D-Ann Arbor) out of office in November of 2012.
Dilbert
Wed, Mar 23, 2011 : 5:20 a.m.
being a State Senator, Ms. Warren's term is up in 2014.
outdoor6709
Tue, Mar 22, 2011 : 2:16 p.m.
As always the progressive solution is more taxes, more welfare. Governor Grahoolm was a great politician, but a governor who had no vision for Michigan except passifying the voters who helped get her reelected. In 2001 we were told by various think tanks we would have structural deficits for ever if we did not change the way government services were delivered/paid for. However when politicians cannot/will not look past their reelection we see get the results of inaction. Maybe if we had elected someone else in 2006 we would not have had to make the drastic changes we need to make to change things.
macjont
Wed, Mar 23, 2011 : 2:06 a.m.
Mississippi here we come.
David Briegel
Tue, Mar 22, 2011 : 3:21 p.m.
You mean the "genius" of term limits didn't fix all that? They don't work! We have term limits, they are called election. Elections aren't fair because of the massive fundraising required and the resulting purchase of the outcome!
David Briegel
Tue, Mar 22, 2011 : 1:39 p.m.
And a graduated income tax and/or a small increase solves all the "problems" created by the so called "fiscal conservatives" and they won't even talk about it! We can afford tax cuts for those who have benefitted the most but we can't afford anything else. Wouldn't be prudent? Good post Glen! The only solution currently being proposed is to steal the future of the middle class! As if the poor have a future no matter what anyone does!
DonBee
Tue, Mar 22, 2011 : 5:13 p.m.
David - I started out in an area that was considered a deep pocket of poverty in the state, I think I was 10 or 12 before both of my parents had jobs and I get a second pair of school pants. I worked my butt off, joined the military, got a commission and ended up out on a medical, slept where I could find space, too odd jobs and finally made it back into society. Just because you are somewhere on the economic ladder does not mean you have to stay there.
fjord
Tue, Mar 22, 2011 : 1:35 p.m.
The only solution is more revenue, and the only place we're going to get more revenue is from increased taxes. That's not opinion, that's cold, hard reality. But who can best bear the pain of a higher tax burden? Hmmm, let me see... "According to League for Human Service's statistics, families currently earning $15,000 to $32,000 pay 10.1 percent of their income in state and local taxes, while those earning over $365,000 pay 5.6 percent." Seriously, why do we let the wealthy get away with it? We keep hearing that we all need to sacrifice. Those of us who are poor or middle-class have already done so — a lot. When will the wealthy take their turn?
L. C. Burgundy
Wed, Mar 23, 2011 : 5:21 a.m.
Because there aren't walls on the Michigan border. You cannot punish the rich into a balanced budget in Michigan. They will simply leave and take the jobs with them. Also, raising taxes does not actually raise revenue as much as you think. Remember when Gov. Granholm fixed the budget issues for us with a nice income tax hike? Here we are, in deeper than before.
outdoor6709
Tue, Mar 22, 2011 : 10:55 p.m.
Unfortunately you are incorrect. Studys indicate for each new $1 of revenue raised by taxes, politicians spend $1.17. Isn't fun spending someone elses money?
cinnabar7071
Tue, Mar 22, 2011 : 6:17 p.m.
Sorry jford I'm only talking about whats fair, is it fair that I spent many years in school while working full time, and what about student loans. The way I see it if a person is paying $20k in taxes I feel as tho thats more then enough. Where as the left sees this as free money. And to top it off I might be a little more on your side if the gov't didn't waste the money we did give them. I'm with Rick on this one CUT CUT CUT CUT!
fjord
Tue, Mar 22, 2011 : 6:03 p.m.
@cinnabar7071, you don't really have a point. $3,232 is a heck of a lot more to someone who earns $32,000 than $20,440 is to someone who earns $365,000. That's how percentages work, or did you miss that bit of basic mathematics? Even with a flat tax at the rate that the poorer person pays, the person who earns $365K still only pays $36,865, leaving $328,135. Progressive income taxes are fair. Those who benefit the most from a economic system should bear a greater financial burden for the perpetuation of that system.
DonBee
Tue, Mar 22, 2011 : 5:10 p.m.
The state tax rate is the same regardless of income and the folks in the $15,000 range probably pay little or no state income tax, give the standard deduction. So where is the increase - lets see - sales tax - Check - low income folks buy more retail stuff as a percentage of their income. license fees for cars and drivers - Check - the fees are the same for everyone (so long as you drive a similar car) Franchise fees - Check - if you get an electric, gas, cable, or telephone bill you pay the same regardless of your income Property taxes - ?? - depends on what you own. Low income folks probably own less in total value, but as a percentage of income, I suspect for many it is more. For many small farmers, their property greatly exceeds the annual income. So yes, the bundle of taxes is regressive. I don't hear any solutions, and a progressive income tax is not enough to address the other regression.
cinnabar7071
Tue, Mar 22, 2011 : 3:59 p.m.
32,000 pay 10.1 percent. 10.1% X $32,000.00 = $3232.00 $365,000 pay 5.6 percent . 5.6 x $365,000 = $20,440 Your right that isn't fair, the only solution is to raise taxes on the poor.
Ignatz
Tue, Mar 22, 2011 : 1:53 p.m.
Be careful, fjord, you obviously know too much and the oligarchs are on to you by now. I remember when the college students, many of whom would have otherwise been sent to Viet Nam, began to protest the war. Soon after, Congress started to cut Pell and other grants. Can't afford to go to college? Then go to war!
Stephen Landes
Tue, Mar 22, 2011 : 1:29 p.m.
All the education and environment in the world won't put food on the table if we don't have JOBS. Jobs come from businesses wanting to locate here. If we only address social issues and the environment without addressing competitive financial issues for business we will not have a sustainable system. That is where we are now -- unsustainable spending, declining employment, and businesses leaving. We cannot continue the same old tax and spend policies that are represented by the comments of this "panel". We need to get our State back in balance. This is not easy -- maybe that's why previous administrations have failed to tackle it AND why we need someone as independently minded as Governor Snyder.
macjont
Wed, Mar 23, 2011 : 2:05 a.m.
Why would a business want to locate in a state and community that is gutting its education? I'll take higher taxes in exchange for an educated work force. Snyder is taking Michigan to a place now named Mississippi.
ypsituckian
Tue, Mar 22, 2011 : 1:46 p.m.
My comment is pretty much with Glen. We have to start with education before we run around shouting "Jobs" unless we're talking about building Sweat Shops in Michigan that our poor uneducated children can one day work at for pennies on the dollar. Putting a nice comfortable padding on businesses and rich people is nice and all...but at the expense of our children's education? That's just sad. We can create jobs, jobs, jobs but how will our children be able work at these jobs without an education?
Glen S.
Tue, Mar 22, 2011 : 1:37 p.m.
"All the education and environment in the world won't put food on the table if we don't have JOBS." You have it exactly backwards: Without education, there will be no jobs ... and without the "environment," there will be no food.
LarryJ
Tue, Mar 22, 2011 : 1:11 p.m.
Rebekah Warren for goverrnor, once we get rid of Snyder (recall, anyone?). We need a governor whose concern is the people of Michigan, not the corporations. One whose vision includes the long term (think EDUCATION and ENVIRONMENT), not this year's business profits.
DonBee
Tue, Mar 22, 2011 : 5:05 p.m.
LarryJ - The stimulus funds have been spent (2009 &2010), the medicaid requirements from the Federal Government are up $700 million and the retiree pension funds are short by about $400 million this year. Tell me where you going to get the money. OBTW - next year the Medicaid and Retiree demands will go up again.
LC
Tue, Mar 22, 2011 : 1:40 p.m.
With communities running short on money to provide funding for fire and police, the most important thing we need in a governor is one who values the environment over public safety.
lumberg48108
Tue, Mar 22, 2011 : 12:51 p.m.
I agree with many of the commenters - what is their alternative plan? Business as usual? Keep spending money we dont have? The auto industry was FORCED to deal with reality - and some (Ford) did it on their own and others waited for the shoe to drop but they made changes ... this panel just whined ---- no other ideas floated (unless I missed something) there is a rally in Lansing - for students to complain about education cuts... they too will cite stats about cuts but no one will offer an alternative!
Top Cat
Tue, Mar 22, 2011 : 12:42 p.m.
As for this "panel".....The don't have a plan. They don't have a solution. They don't have a clue. Just more of the same that got us here and keeps us here. They are a rear guard action that protects their favorite interests as the downward spiral continues and young people keep up their exodus.
LC
Tue, Mar 22, 2011 : 12:39 p.m.
At a time when our communities need leaders the most Ms. Warren and Mr. Schreiber offered nothing of substance on these issues. The evening was a waste of time. Rather than complain, we need solutions. If our elected leaders are incapable of offering solutions, they need to step aside.
InsideTheHall
Tue, Mar 22, 2011 : 12:21 p.m.
Howard Bunsis: Higher tuitions eh on the backs of students and their parents??????? Not gonna happen. It is high time that the feather bedding in higher education be stopped cold in it's tracks. The airline, steel, and auto industries have all hit the reset button and now it is the education industry's (the last protected bastion in America) time. Howard, you and your membership are about to get a shave and haircut that is long overdue.
Glen S.
Tue, Mar 22, 2011 : 11:06 a.m.
Thanks to Senator Warren, Mayor Schreiber, Superintendent Martin, and Mr. Bunsis and Ms. Dowell for taking the time to share this information, and their thoughts about the current budget crisis. Governments and school districts need to do everything they can to be efficient, and to use taxpayer dollars wisely. That said, if we want to maintain government services that support a decent quality of life in our state, and our communities -- including providing decent K-12 education, supporting high-quality universities, maintaining police and fire services, protecting our environment, and lending a hand to seniors, the working poor and to our most vulnerable neighbors -- we need to have a reasonable level of taxation. What's "reasonable" is what's at issue here -- but the truth is that Michigan's income tax rate has been dropping for years. Our tax rate is already lower than many of our Great Lakes state peers, and we are among a minority of states that don't have a graduated income tax. A major consequence , as one of the panelists noted last night, is that although Michigan's Headlee Amendment, passed decades ago by Michigan voters, provides one of the most conservative taxation "caps" in the nation -- state revenues are currently around $10 BILLION under that self-imposed cap. Now, on top of that (and, in order to give corporations an unnecessary $1.8 BILLION tax giveaway) Snyder and the Republican majority in Lansing are planning the deepest cuts in Michigan's history -- pushing many seniors and working-poor into poverty, bankrupting our cities and school districts, gutting our once exemplary system of public universities, weakening protection of our precious Great Lakes, and leaving nothing to maintain our already-crumbling infrastructure. A very modest increase in state income taxes -- and one that would merely bring us into line with our neighboring states -- could help us avoid the worst of this scenario. So, why is that option not even being c
1bit
Wed, Mar 23, 2011 : 11:56 p.m.
DonBee: Sometimes I feel that you and I are the only ones who understand the MBT. The ignorance on this issue is astounding to say the least. Even Mr. Perkins, in writing the article, appears to be complicit, misled, or unaware of what exactly Gov. Snyder is proposing regarding the business tax reform.
DonBee
Tue, Mar 22, 2011 : 5:02 p.m.
Given the increase in corporate taxes and the reduction in loopholes, give backs and abatements for corporations the net change is about $700 million, not $1.8 billion. Some of that will be made back when small business people have an increased income (since they did not pay it in gross receipts tax - the one that is going away) and can pay themselves and their employees. The $1.8 billion number is misleading at best.