Michigan Faces Larger-Than-Expected Deficit

By: Liam Martin Email
By: Liam Martin Email

LANSING -- Michigan's lawmakers seem to be running out of options.

A new report out from the nonpartisan Senate Fiscal Agency shows an estimated $1.85 billion deficit for the 2011-2012 fiscal year -- leaving some wondering, How soon until we raise taxes?

"The revenues aren't growing fast enough to keep up with the spending demands in the budget," says Craig Thiel, analyst with the Citizens Research Council of Michigan.

In fact, Michiganians are paying less in state taxes then a decade ago, and the SFA notes in its report that, "absent significant tax increases, a very significant imbalance will exist."

"It's going to come down to some very difficult decisions," says state Rep. Barb Byrum, D-Onondaga. "There are going to be some tough votes, but we are at a crossroads."

Governor-elect Rick Snyder, for his part, has yet to make a no-tax pledge, though members of his party say they're preparing to dig in their heels.

"Every possible avenue must be taken to make cuts and balance the budget without raising taxes," says state Rep. Rick Jones, R-Grand Ledge.

And yet, there is, even among some Republicans, a willingness to come to the table on some tax increases, namely expanding the state's limited sales tax.

"That would be one avenue that a lot of people would be supporting," says state Rep. Paul Opsommer, R-DeWitt. "You could look at fees for some of the departments. Again, I think that's the last item on the table."

The other option is cuts, and most lawmakers News 10 spoke to Wednesday say there's no doubt there will be reductions.

But they also note that $1.8 billion would be a massive reduction, especially for a state that has already lost 11,000 state workers in the past 10 years and cut funding for education, corrections and state revenue-sharing.

In addition to expanding the sales tax to services, some lawmakers are considering a move to close tax loopholes in the current system.

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  • by Nate on Jan 1, 2011 at 04:12 PM
    To build on Myrons comments below about Byrum's trial lawyer legislation - there was recently a speech from the CEO of Intel stating that it costs an extra 1 billion to build a factory in the US. He goes to great lengths to indicate that this is not a result of increase labor/wages, but increased costs due to regulation due to lawsuits...... Thank you Barb Byrum and lawyer buddies
  • by John Location: Mason on Dec 31, 2010 at 02:38 PM
    When will the legislative community put forth proposals worthy of comment as opposed to rhetorical hot air? The belief that there is a "silver lining" with the current budget situation is extremely scary. It would be nice at least to see my rep. (Byrum) put forth something more sophisticated than feeding prisoners cheap bologna
  • by Bret on Dec 31, 2010 at 11:53 AM
    Is there any evidence of realistic, creative thinking on a balanced budget? After reading previous articles and posts, saving a few pennies at prisons will not allow Michigan to save itself to prosperity.
  • by Ricardo Location: Lansing on Dec 31, 2010 at 07:49 AM
    There is more than one way to make the budget balance. All the politicians can think of in raising taxes. Why not drasticlly reduce expenses? Most families have to cut back these days, so the government can bite the bullet and follow this trend too. Thank you. Ricardo
  • by Zoie on Dec 30, 2010 at 08:54 PM
    We need to ensure that we learn from history. All one needs to do is review the impacts of historical deficits from the UK in the 1970s and later Yugoslavia. This is an extremely serious issue. It would be nice to see if we had elected officials that could state a more substantial statement beyond the need for "difficult votes" as stated by Byrum - Lets get real.
  • by Jim Location: Lansing on Dec 30, 2010 at 06:02 PM
    If we are truly moving towards a service based economy, then we should be taxing services. Seems like the idea of expanding the sales tax to services and lowering the overall rate by a penny or two makes some sense.
  • by Myron on Dec 30, 2010 at 05:44 PM
    It would be nice to see our State government move beyond populist sound bites. It is surprising that no one seriously discusses economic growth programs. Everyone states they are pro-business. Who isn't pro-business. Its a nice populist sound bite by State government representative. When our reps get a chance they act against economic growth. A great example is how Barb Byrum helped create the Trial Lawyer Enhancement Act which opened up Michigan's life sciences companies to thousands of lawsuits. Not a great move to spur economic growth. This is basic high school economics
  • by Anonymous on Dec 30, 2010 at 04:39 PM
    It would be wonderful to see representatives such as Barb Byrum to put forth solutions to the State economic and financial challenges as opposed to offering simplistic rhetoric
  • by steve Location: fowlerville on Dec 30, 2010 at 01:48 PM
    and lets see Mr. Snyder you are so quick to give the businesses a tax break. How are you going to make up that lost revenue- Hopefully not on the backs of Michigan citizens who are struggling already
  • by Anonymous on Dec 30, 2010 at 06:54 AM
    Michigan is racing to the bottom. The big question is where is the bottom? For those people who think everything is okay. Think again! I'm very worried that Michigan might not make it, this could go on for 10-20 years?
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