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Michigan's budget is heading down a dangerous path

Jack Lessenberry

Most people don’t know this, but both branches of the Legislature have nonpartisan fiscal agencies that analyze the economic impact of bills on the Michigan economy.

Five days before Christmas, the Senate Fiscal Agency published a short book that was guaranteed not to become a best seller: Michigan’s Economic Outlook and Budget Review.

My guess is that you didn’t curl up under the Christmas tree with it. But I had breakfast this week with an economist who worked for the Legislature for many years.  She told me to look a little closer at the numbers in the report. They show our state headed for budget disaster.

Here’s why. More than two years ago, thanks to intense pressure to do something about Michigan’s terrible roads, the Legislature finally passed a bill that, after a few maddening years, is supposed to generate $1.2 billion a year in new money to fix them.

That’s only about half of what was needed, and comes at what will be a terrible cost in terms of what government needs to do.  Starting in state fiscal year 2019, which begins this October, money begins to be sucked out of the state’s already tight general fund to pay for road repair.  Next year, that’s $150 million. The year after: $325 million.

Eventually, $600 million a year will come out of the general fund. Now, the general fund pays for everything from prisons to aid to education, health care, and public safety. 

You don’t have to be a math whiz to know that unless new revenue is found somewhere, that’s going to mean massive cuts to programs that have already been cut, make the schools worse, and make higher education even more expensive.

The legislature is controlled by people who say they hate government, and they have done much to give us a government we will hate.

There was a much better way to fix the roads, the one Governor Snyder wanted in the first place – simply raise the gas tax by, say, 20 cents a gallon. That would have generated more revenue in a much better way. The price of gas fluctuates all the time, consumers would have barely noticed, and essential programs would have been unscathed.

But the Legislature is controlled by people who say they hate government, and they have done much to give us a government we will hate.  My friend directed my attention to another chart. “Take a look at the year-end balances for the coming fiscal years,” she said.

The figures were frightening.

Last September, we ended the fiscal year with a healthy $643 million in the general fund. By the end of this fiscal year, that’s projected to fall to $285 million. So the state will operate by burning through a bunch of money we had left over.

“Politically, the messaging will be that our budget will be balanced and everything is great,” she said.  But it won’t be. By October 2019, the general fund balance will be almost completely wiped out. And then will come the time of massive deficits.

“What do we do then? Will anyone say, 'Hey, we need more money to run our state?'"  

She didn’t think so. But they should. Taxes are the price of civilization.

And if you think we are overtaxed, projected state revenues in 2020 are lower than they were in 1968, when adjusted for inflation. We have some hard choices to make.

Choices that really shouldn’t be hard at all.

Jack Lessenberry is Michigan Radio’s Senior Political Analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.

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