Fast track but off course

Added June 4th, 2013 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs

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Before leaving town for the annual Mackinac Policy Conference and fudge fest last week, state lawmakers finished their work on the FY 2014 state budget, making decisions on the allocation of approximately $48 billion in state and federal revenues at nearly breakneck speed.

So how did low- and moderate-income families and children, the unemployed, seniors and other vulnerable residents of Michigan fare in this fast-track budget? On the positive side, the Michigan Legislature adopted several of the governor’s initiatives that serve to improve children’s health and school readiness.

With a new investment of $65 million in the Great Start Readiness Program, up to 16,000 low-income 4-year-olds will enter kindergarten better prepared to learn and succeed. In addition, 70,000 more children will have access to basic dental care, reducing dental emergencies and related costs. We applaud these initiatives!

Lawmakers also righted a wrong by restoring the school clothing allowance for 30,000 very poor children receiving assistance from the Family Independence Program — the only direct client benefit that the Snyder Administration chose to eliminate in response to federal sequestration cuts. Sadly, an additional 120,000 children will still be left without the resources needed to purchase school clothes because of earlier budget cuts.

On the decidedly negative side, the most incomprehensible and indefensible decision in this year’s budget has been the Legislature’s refusal to accept 100% federal funds to expand the state’s Medicaid program. This decision denies healthcare coverage and mental health services to more than 400,000 uninsured low-income parents and childless adults by 2015, and limits the preconception health care needed to ensure healthy births in a state that ranks 37th in infant mortality, with very high death rates for African American infants.

The failure to expand Medicaid also exposes large employers to penalties for not providing affordable coverage and is expected to cost an estimated $320 million in uncompensated emergency room care by 2022.

Also on the negative side, state lawmakers did little to reverse the damaging cuts to education and human services that were made to balance the budget and provide business tax cuts during the last decade—despite the rhetoric about Michigan as the “comeback state,” and the last-minute news about $700 million in unexpected revenue in the state coffers for this year and next.

During the Great Recession and the state’s subsequent slow and uneven recovery, the sacrifices Michiganians have been asked to make have not been evenly shared.

As a result of the Great Tax Shift of 2011, a significant portion of the “new” revenues now available to the state flow from the loss of tax credits and deductions previously available to low-income working families, pensioners and other individual taxpayers—rather than businesses. In fact, the Senate Fiscal Agency reports that the 2011 tax changes will increase individual income tax revenues in 2014 by $1.5 billion, and reduce business taxes by $2 billion.

Tax policy choices, and the budget decisions that followed, disproportionately hurt hard-working, low-income families in Michigan.

Very poor children are denied income assistance as a result of changes in lifetime limits, fewer low-income families have access to federally funded food assistance because of the state’s decision to impose an optional asset limit, public schools and universities have suffered deep cuts, and low-income working families struggle to maintain their low-wage jobs after a 70% cut in the Michigan Earned Income Tax Credit.

It is a truism that the state budget is a clear expression of the state’s priorities. While there are some gains in the FY 2014 budget, they are not enough to compensate for the erosion of state investments in critical public services over the last decade.

Michigan will be a “comeback state” only when it invests in its current and future workforce by providing access to health care, a top-notch education, and the basic public services needed to fuel economic growth.

— Gilda Z. Jacobs

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