As we find ourselves two weeks past the original, October 1st deadline for a state budget deal, many of the remaining disputes have crystalized into a sharp, partisan divide over how to deal with six crucial budget bills. On one side, you have the Republican Senate, led by Senator Mike Bishop, who wish to bridge the remaining gap using spending cuts to major government programs. On the other hand, Governor Jennifer Granholm would like to use revenue increases (tax increases) to fill the budget hole, saving what in Democrats minds are vital government programs from damaging cuts. But what does this debate mean to you?
Senate Republicans have steadfastly refused to pass budget legislation including major tax increases. Senator Bishop and others believe that legislation without spending cuts would pass a burden on to the next generation, forcing future legislative bodies to make new cuts. On one hand, this hardline refusal makes sure no new state taxes are imposed upon a state with a 15% unemployment rate. On the other hand, it creates two problems. According to Democrats, large cuts to programs like the Michigan Promise Grants and Medicare act as hidden taxes on Michigan's citizens, placing a larger financial burden on families without the necessary state support services. Additionally, the cuts to local aid may force municipalities to either raise revenues using local property taxes, or enact cuts to local services like firefighting and police work. Overall, the Republicans might keep tax rates lower, but the true cost of such a move is debatable.
Democrats, meanwhile, maintain that a balanced budget must include both spending cuts and tax increases. The Michigan House, controlled by Democrats, passed new tax legislation through committee on October 6th. This legislation would raise tobacco taxes, push up personal income and business tax rates, and impose a 4% fee on doctor's levys. Although most Together, the governor and key legislators say the measures would raise 400 million dollars in new revenue, allowing crucial government services and educational funds to avoid devastating cuts. But Republicans quickly counter that tax increases are the last thing Michigan's citizens need during an economic downturn. In total, the Democratic option would be less painful for segments of the population that rely on the threatened government services (the elderly, students, local government service users). However, to pay for these programs, Michigan's citizens would take on added tax burdens.
Overall, which position will win out? All that is clear today is that, after a 70 minute long conference, Republican Senators and the Democratic Governor remain far apart on the important issues affecting Michigan. Either way, Michigan taxpayers will have to share in the state's budget problems, whether it be through direct tax increases or indirect loss of state services. However, the longer the debate drags out, the larger cost Michigan's citizens will have to pay, regardless of the eventual outcome.