Monday, Apr 23, 2018
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Jack Lessenberry

Michigan's bills have all come due

DETROIT — People across Michigan were shocked when details of Gov. Rick Snyder’s proposed new state budget were revealed.

If the Legislature goes along, private and public pensions will no longer be exempt from state income taxes. Tax credits for lower-income people will end. Spending for colleges and universities will be slashed by 15 percent. State aid to public schools will be cut by hundreds of dollars per student, which likely will push some districts over the edge.

The carnage doesn’t stop there, but nobody should be surprised. Everyone should have seen it coming.

In some ways, this is exactly the budget Michiganians deserve. We didn’t want to pay more in taxes. We didn’t want to give up any services. We didn‘t choose leaders who asked us to make hard choices, even after the bottom dropped out of the auto industry.

In 2002, Michigan voters elected a weak, vacillating, Democratic governor who was long on charm, but short on strength. They also elected a narrow-minded, inflexible Republican majority in the state Senate.

Neither side asked us to make the hard, necessary choices. Even before the auto industry collapsed, it was clear that Michigan was running out of money. The budget process was guaranteed not to produce enough revenue to do what the state had promised to do, in good times or in bad. So year after year, state lawmakers struggled to balance a budget that always had large deficits.

Did we demand that leaders do something about this? Did we listen to the voices that told us we needed serious restructuring? No.

Part of the reason is that, starting with Ronald Reagan in 1980, we had been told over and over that taxes were not just sometimes too high, but bad. So we cut taxes, then cut them again and again.

But government didn’t stop spending. Michigan voters really didn’t want it to. They didn’t want to give up any services or “entitlements,” and state lawmakers were afraid to ask for sacrifices.

We could have avoided the huge pain that’s coming by making moderate sacrifices as recently as three years ago — such as bumping up the state income tax rate by a percentage point or so.

But we were like people addicted to sugar who don’t want to pay for dental insurance or visit the dentist twice a year.

Now it is multiple root-canal time, and we are going to have to pay out of pocket.  Pay far more, in fact, than if we had gone to the dentist in the first place. What’s worse, the state and federal governments are out of painkillers, not to mention laughing gas.

When the budget details became clear, some voters went ballistic. Seniors were especially incensed about the idea of taxing pensions. 

“We will be leaving the state as soon as possible if this tax goes into effect,” Lawrence Gibson of Charlotte wrote to me. 

He will have a limited choice of places to move. The only other states with an income tax that don’t tax pensions are Alabama, Mississippi, and Pennsylvania.

Those who disagree with Governor Snyder are wrong to be outraged. Unlike many politicians, he did what he said he would.

The governor is a businessman. He thinks Michigan’s best hope is to slash business taxes to attract jobs and job creators.  His budget cuts them by nearly $1.8 billion.

To his credit, that’s what he said he would do when he was running for governor last year. Democrats failed to articulate a coherent alternative.

The deficit disaster lawmakers are now grappling with is no surprise to anyone in Lansing. For years, Michigan had a governor and lawmakers who ignored the laws of arithmetic. They knew the budget process was fatally flawed.

They knew this day would come. But they also knew that because of term limits, they could avoid taking responsibility if they stalled long enough.

So they used up the state’s reserves and pushed the problem down the road. When President Obama gave the state stimulus money to invest in the future, Michigan lawmakers just threw it at the deficit.

There were alternatives. They could have raised the state income tax on people — like me — who are still working. We would barely have noticed it and the state would be better off today.

Economists such as Michigan State University’s Charlie Ballard still think they should do that. But we’ve been told that taxes are bad. And so our roads are crumbling and our schools are falling apart.

All bills eventually come due. Most of us, including those who can’t afford it, soon will pay more taxes of one kind or another.

Governor Snyder evidently believes that government shouldn’t try to pick winners or do social engineering in the marketplace. So tax credits for things such as battery development, the movie industry, and brownfield redevelopment will end.

He also will slash spending for schools and universities, gambling that this won’t destroy the next generation’s prospects for the future. The Legislature will quarrel with some of this, but I haven’t heard anyone offering an alternative.

You get what you pay for, but in the end, you do pay. We weren’t willing to pay for years. Now, we can’t.

 That’s what got Michigan to where it is today.

Jack Lessenberry, a member of the journalism faculty at Wayne State University in Detroit and The Blade’s ombudsman, writes on issues and people in Michigan.

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