State Closer to Cutting or Ending Revenue Sharing

By: Associated Press
By: Associated Press

Michigan lawmakers scrambling to deal with a projected $1.8 billion state budget shortfall could cut tax revenue sharing payments made to local governments for public safety and other services, Republican legislative leaders said Thursday.
The Republicans, who control the Michigan Legislature, say they plan to balance the state budget for the fiscal year starting in October without tax increases, which means spending cuts in several areas of state government would be required.
That will include seeking concessions from state employees as the government seeks to lower costs.
"I've been clear: There's going to be pain," incoming Senate Majority Leader Randy Richardville, R-Monroe, said during a taping of Michigan public television's "Off the Record" program. "There are going to be difficult decisions. And for all of us to come through in the long run, all of us are going to have to sacrifice in the short run."
Richardville appeared on the program that will air this weekend with incoming Republican House Speaker Jase Bolger and new Democratic leaders Gretchen Whitmer of the Senate and Richard Hammel of the House.
Republicans will hold a 26-12 majority in the Senate and a 63-47 edge in the House when the 2011-12 Legislature convenes next week. Lawmakers will be acting on a budget proposal expected next month from new Republican Gov. Rick Snyder.
Tax revenue sharing payments from the state to local governments have been cut or frozen in recent years, forcing cities and townships to cut back on police and other services. The payments, along with local property taxes, are a key part of a typical city's budget.
Local government officials say further revenue sharing cuts would cause more police and fire layoffs, push some communities into bankruptcy and reduce money available for roads, parks, water systems and other services.
Hammel, who lives in Genesee County, noted that a spaghetti dinner was held in Genesee County's Flushing Township last year to raise money for police uniforms.
"If that's the budget that's being proposed, it's going to be a tough one for us to live with," Hammel told reporters after the program. "I just think there's a lot of trouble at the local level right now that will be created and compounded if revenue sharing is cut in a dramatic way."
Whitmer, D-East Lansing, also is opposed to revenue sharing cuts.
Specifics of the concessions that will be sought from state employee unions haven't been determined. Democrats will push to make sure that any concessions or changes come through the state's labor union contract negotiating process.
Whitmer said any attempts to force concessions by action in the Legislature could raise legal questions over authority.
It's possible lawmakers would shy away from across-the-board cuts related to pay or benefits, and instead look at specific classifications or jobs.
"However, I do think overall there are significant dollars that need to be saved through our compensation models," said Bolger, R-Marshall. "That's the entire compensation -- not just the salary."
State workers have made concessions in previous budget cycles. Lawmakers may ask for more, noting that they and many of Michigan's statewide elected officials are taking 10 percent pay cuts effective this year as the state continues to have budget problems.
Opponents of further concessions promote studies that say public sector workers are not over compensated when compared to private sector workers in jobs with comparable education qualifications.
Lawmakers might consider scaling back Michigan's generous film incentives package and other tax credit or exemption programs in an effort to preserve revenue. They'll also debate whether to allow the state's income tax rate to drop from 4.35 percent to 4.25 percent as scheduled later this year.
The rate drop could lower state revenue by more than $160 million. The rate drop was included in the legislation that increased the state's income tax rate in 2007.


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  • by Anonymous on Jan 9, 2011 at 04:56 PM
    If granholm would have cut the budget by 5% 8 years ago, we would not have these problems.
  • by Anonymous on Jan 7, 2011 at 05:50 AM
    All of us knew this was coming. I still think Michigan is dying slowly, and we haven't hit bottom yet. The question is where is the bottom?
  • by leo Location: leslie on Jan 7, 2011 at 05:50 AM
    There is nothing more to cut in the out county of Ingham co. This has gone terminal. Good luck when you call for a officer to stop the burglar that is breaking into your home in the middle of the night or the fire or medical needs your family requested may show up but is this the gamble you are willing to take with your family's life. This is the straw that will break the camels back. Departments have been doing a lot more with a lot less but you will see drastic changes if these cut happen. Ready to roll the dice with your safety.
  • by Anonymous on Jan 7, 2011 at 05:40 AM
    Will this help make bigger cities dangerous and more filled with crime?How much crime will spread out to smaller towns as well?Then they want to take a big part of the income tax away from lower income families and so that leaves many counting on this with less money to play catch up or spend the money in Mich economy.Won't this hurt the economy even more?What was the news about some interest rates going up.That may help the rich get richer but what about others?Oh the GAS PRICES,going up and up.Could reach 5$ or more a gal?So much tax per gal gained in Mich but cuts into many who are low and fixed incomes.Good buy with eating right,or paying more on our bills that keep going up plus the costs of food going up.Then their soaking business4es for the employment above what they thought it should be.No wonder companies want to leave MICHIGAN.Hello Republican rule in Michigan.More job loss and more being poorer and loosing.The rich so much more richer.
  • by Parent Location: Michigan on Jan 7, 2011 at 05:36 AM
    "Hammel, who lives in Genesee County, noted that a spaghetti dinner was held in Genesee County's Flushing Township last year to raise money for police uniforms." Welcome to the life of a school district!!!!!!! Music boosters, Athletic boosters and schools do the same thing. Oh, and teachers pay for things out of their own pockets. Hammel, get a grip and come to terms with the bake sale!!!! If you need help raising money I am sure you can get ideas from your local school district! I don't feel sorry for you and I am glad you have to humble yourself in the face of budget cuts. EVERYONE has to get creative with earning and spending money.
  • by Anonymous on Jan 6, 2011 at 10:00 PM
    Years of excessive spending made this inevitable.
  • by Mary Anne Location: Jackson on Jan 6, 2011 at 08:43 PM
    First of all, elected officials in this State are compensated much too much for their lack of work and effort. A 10 percent deduction in pay is not enough. Employees of the state are paid fairly, but retirement benefits have been overly generous over the years. There is nothing we can do about that now. They deserve what they were promised. But future contracts should show some cuts. Sen. Gretchen does not speak for the entirety of Ingham County and the outskirts of her district. She speaks only for the inexperienced, unemployed youth at Michigan State University who voted her into office and gave her that plush job she holds today. The balance of the area is rural, conservative (except for Lansing UAW members), and fiscally responsible. Please don't put much value into what she says. She only speaks for people who have Bridge Cards and WIC enrollment.
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