SEARCH BLOG: MICHIGAN ECONOMY
With all of the crises at the national level... the economy, the war in the Middle East, climate bills, cap and trade bills, EPA mandates, health care de-privatizing... it is sometimes easy to forget that individual states are struggling.
California certainly had its share of headlines with payment by IOUs and various overstretching. Florida's housing bust was epic. North Dakota was generally spared.
Here in Michigan we grabbed headlines with the General Motors and Chrysler bailout and bankruptcy. Behind those headlines was the collapse of the housing market... a result of 15% unemployment and uncertainty about the viability of GM and Chrysler and maybe even Ford Motor Company. Nevertheless, despite all of these problems, the state government pretty much went on as if little was changed.
For the Fiscal Year 2007, the state's budget was $42.9 billion. That was before the real damage was done to the Michigan economy. Now that the state is in shambles and population is declining, the governor has a Fiscal Year 2010 budget of $44.1 billion. FY08 was $43.6 billion; FY09 was $44.8 billion [source - see page C30 at the end of a very long and verbose document] so I guess this is the government's version of sacrificing.Now there probably is some smoke and mirrors as well as Federal stimulus money in there, but it appears that the state has taken its cue from the Federal government... money is no object.
So, when I received the following email from Phyllis Browne, Communications Manager, Michigan House of Representatives [the Republican side?], my reaction was "lots of talk followed by lots of talk followed by another big budget."
Calling today's 11th-hour marathon budget session a step in the right direction, Senate Majority Leader Mike Bishop and House Republican Leader Kevin Elsenheimer today invited the governor and House Democrats to make their outline to balance the budget public and demonstrate their sincerity by moving it through the legislative process.
Bishop said his caucus already sent House Democrats and the governor their plan to balance the budget without raising taxes, noting a clear difference in priorities between Republicans and Democrats.
"The Senate Republicans have a public plan that has been vetted through committees and passed by the full Senate," said Bishop, R-Rochester. "We are looking forward to a budget process that is transparent and clear, not held behind closed doors with unaccountable and unelected mediators. As we close in on the Oct. 1 deadline, we are also looking for expedient action from the House and governor."
Elsenheimer noted the House Republican plan to Reinvigorate, Reinvest and Reform Michigan was introduced 43 days ago on July 22. The House Republican plan creates jobs, balances the budget without raising taxes, and preserves stimulus dollars to jumpstart the state's economy.
"Republicans have a plan to solve the budget crisis without raising taxes - and we're ready to balance the budget today," said Elsenheimer, R-Kewadin. "The GOP plans are on the table, before the public, ready to go. I'm disappointed that the state is in the shadows of another government shutdown after the House Democrats' summer vacation, and when the ideas proposed today start to move in the form of legislation, then we'll know they are serious."
Show me less money.... Meanwhile, if it sounds too good to be true, it probably is. Detroit's economic problems alone will siphon off billions from state coffers given the reluctance of state government to eliminate programs that aren't working and take some creative steps toward solving intractable problems.
The budget number for 2010 should be considerably less than the peak-economy number in 2007 [after adjustment for one-time Federal funds]. If it isn't, nothing has changed except government has grown while the rest of the state has shrunken. It looks as if we will tax our way to prosperity. That should drive business our way... or is is away?