Where To Spend The Budget Surplus, Investments or Tax Relief?

By: Brian Johnson Email
By: Brian Johnson Email

Two very different, but important numbers-- $300 million and more than $1 billion.

$300 million is the projected surplus this year. However when you add in next year's projected surplus-- the combined total jumps to more than a billion dollars. Politicians are already describing where they want all that money to go.

"I'm a big believer in infrastructure, I think that's what government does best," said Rep. Joe Haveman, a republican who Chairs the House Appropriations Committee. "It benefits all ten million citizens if we put money into infrastructure. I think we under invested in our IT in past years and we've got some catch up to do."

"K-12, higher education, revenue to our local communities," suggested Rep. Sam Singh, a democrat from East Lansing. "We made a commitment to those groups that once things got better we would reinvest in them, and so to me, we have to take a look at that first and foremost."

"Income tax reduction because our income tax is something that taxes labor," said House Speaker Jase Bolger, a republican, who Thursday described tax relief not as a matter of yes or no, but which.

Too much money is a good problem to have, but it's still a problem.

A question a lot of folks are asking is how much of this is politics? After all it's an election year.

"This isn't just 'We have all this money because of an election year.' This isn't smoke and mirrors. A good chunk of it has already come in and materialized in 2013," said John Nixon the State Budget Director.

The state figures it has about $300 million extra dollars to spend in 2014.

"I'm cautious about using that billion dollar number," said Rep. Haveman. "That includes the 2014-2015 budget cycle which we haven't even started yet."

The opinions however, on how the $300 million should be used are very different.

"I think we need to be prudent in the way we look at it. I'd love to give some back in tax relief, but I think we've got to make sure the bills are paid first," said Rep. Haveman. "We've got to make sure that we are coming out of this recovery and this isn't a blip, it's a continuation."

The State Budget Director said the administration similarly isn't as quick to jump on tax relief as some, because it sees the bigger picture and knows the bills the state faces.

"There are a lot of different investment needs. You've got education as a priority. You have public safety as a priority. We still have some very dangerous cities in our state," said Nixon. "Really it's looking at all those strategic investments."

One priority for democrats is looking out for those in society who are not benefiting from the economic improvements.

"I think some of the distressing things are when we take a look at our unemployment here in the state, it's obviously still too high. The things that have happened over the last three years haven't actually helped people on the street." said Rep. Singh. "We have not done enough to create jobs here in Michigan and that's why we have a higher unemployment rate than the rest of the country."

There are a lot of options on the table, and a lot of voices.

So where is this extra money coming from?

Economists said additional tax revenue came as a result of the economy is picking up, additional tax revenue from businesses doing well, job growth and also state agencies didn't spend all the money they were given.

"I think that the economy is improving in general, but I do think that Governor Snyder has, with the legislature--they have developed some policies that really are putting Michigan in an area where our businesses can compete and operate, and our people can be successful," said Nixon.

The Governor will announce his budget plan the first week in February.


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