Yesterday, Governor Granholm released her proposal for the 2009-10 and 2010 budget resolution. Each year, the governor is required to balance the budget, and at a time of such economic crisis, she has been under a lot of pressure to bring some kind of resolve to our deficit.
Overall, her proposal would raise state revenues to $546.3 million by cutting tax loopholes by up to 12%. She also stated a 12% cut in general fund spending..
Some of her other proposals include:
-Raising the tax on cigarettes a quarter, bringing the tax to $2.25 a pack
-Putting a 1 cent increase on the cost of each bottle of bottled water
-$22 million taken from the recently established 21st Century Jobs Fund
-$12 million trimmed from road improvement funds
-Phasing out the 22% Michigan Business Tax over a three year span
-Applying the state sales tax (of 6%) to live entertainment (i.e. concerts, sporting events)
-Allowing bars to buy a permit to stay open longer than 2 a.m.
-A freeze in the amount of personal exemptions on state tax income
To gain revenue Granholm has proposed a reduction in tax credits given to film production, which she estimates would generate around $8 million. She also included limiting next year's proposal of increasing the earned income tax credit for low wage workers.
There have been mixed emotions regarding her plan. When asked about the upcoming deadline for the budget plan, and on Granholm's proposed budget, House Speaker Andy Dillion stated "The governor should know that showboating a proposal that has no chance of passing is not a way to solve the state's fiscal crisis", calling on the legislature to put away the "theatrics" and get down to work on what could really work for Michigan. Later today he clarified that "currently are no votes for the proposal in its entirety, but there is support for some components."
Oakland County Executive L. Brooks Patterson also had a lot to say about the proposal of raising more taxes. He recalls in 2007 when Granholm promised not to raise taxes and remarks “She's gone back on her word, and I take great offense to that,". He continues to discuss the problem with cutting the tax credits to the film industry, “We can't keep promising significant rebates to lure business in and then changing the game book".
It will be interesting to see in what direction the legislature takes us with regards to taxing for the 2010 Fiscal Year. The deadline for the state budget to be set is only 22 days away.