‘Yes’ on road funding is right direction

From the League’s First Tuesday newsletter
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It’s a pivotal time for Michigan public policy. Decisions made in the next few months will determine the path Michigan takes into the future.

In three short months, voters on May 5 will decide Proposal 1, the road funding package. There’s no doubt that this is Michigan’s single best chance to raise sorely needed money to pay for road repairs and put new dollars into school classrooms all while protecting families earning the least.

A ‘yes’ vote on May 5 would end the era of delaying needed road repairs or paying for them with borrowed dollars. All with a penny sales tax increase. The sales tax increase to 7 cents will put Michigan in the middle of the pack of states — the same as Indiana’s.

For working families earning the least in Michigan, the penny tax will be offset by a full restoration of the state Earned Income Tax Credit to 20% of the federal credit.

The EITC is the best tool we have to reward work and lift families from poverty. More than 1 million Michigan children will benefit. What a win-win!

Also, this month, on Feb. 11, Gov. Snyder will unveil his executive budget, offering both challenges and opportunities.

The governor, in his State of the State address, announced the merger of the Department of Community Health and the Department of Human Services to a new Department of Health and Human Services under the leadership of Nick Lyon, the director of DCH and interim director of DHS.

At DCH, Lyon continued impressive strides in implementing the Healthy Michigan Plan so that a half-million previously uninsured or underinsured adults in Michigan get wellness care and care when they are sick.

Lyon has kept the League and other advocates informed about the merger and he seems sincere in efforts to help Michigan families and children. I pledge to work with him to find solutions that will make a positive difference in the lives of Michigan’s economically vulnerable kids and adults.

As the new department works to streamline programs with a “people first” rather than a “programs first” approach, we’ll monitor with this principle in mind: True efficiency must be found in making sure services match the needs of families rather than measuring success by the number of kids and adults dropped from programs.

In addition, there will be strong pressure to cut programs as the deep business tax cuts from 2011 resulted in revenue shortfalls that are now apparent.

Next year, business tax revenue is projected to contribute a small share (8.3%) of Michigan’s General Fund — the state’s main checking account that covers public safety, higher education, healthcare and other needed services.

That’s a far, far cry from two decades ago when business revenue contributed nearly a third (29%) of the General Fund. To succeed, businesses need those public services, and it’s a reminder, once again, that business tax cuts do not grow the economy.

So buckle your seat belts as we head into 2015 public policy debates! It’s going to be a bumpy ride. The League will keep you informed of developments, and we hope you will be engaged in these important decisions ahead.

– Gilda Z. Jacobs

Tax policies gone wild

Shortsighted tax policy decisions by Michigan lawmakers have created a budget shortfall of $325 million in the current fiscal year, despite growth in the state’s economy.

Because Michigan must balance its budget every year, cuts will be made in the state’s General Fund, the major source of funds for health and human services, higher education and public safety – before the end of September. The 2016 budget, scheduled to be released by the governor on Feb. 11, has an additional revenue shortfall of $532 million.

This was the consensus of state economic and fiscal experts who met with lawmakers last week to determine how much the state has to spend for the remainder of this year and the upcoming year. They all agreed that although the economy is growing, revenues are not following suit.

At first blush, it is difficult to understand how state revenues can be dropping so quickly in a time of economic growth. One of the justifications for the 80% cut in business taxes approved by the Legislature in 2011 was that lower taxes would attract new businesses, create jobs, and ultimately increase state coffers by spurring economic growth.

So what happened? Why the budget gap?

  • Business tax cuts don’t grow the economy. With the 2011 changes, taxes on businesses were cut by $1.6 billion, placing Michigan 49th in the U.S. for business tax contributions to the state. Michigan businesses are now the source of only 2% of total state revenue, despite the fact that employers rely on many essential state services, including police and fire protection, the roads and bridges needed to transport their products, and a good educational system that can create the workforce they need. A major cause of the state’s current budget problem was the deep cut in business taxes in the face of known outstanding business tax credits that are expected to be a drain on the budget for many years to come. Net business refunds could exceed $680 million in 2015, and rise to more than $800 million in 2016.
  • Tepid economic growth. Michigan suffered a 10-year recession from 2000 to 2010, and while the state economy has strengthened in the last several years along with the rest of the nation, we have not yet regained lost ground. The state has recouped less than two-thirds of the jobs lost during the recession, and too many of those jobs are low-wage. And, while Michigan’s unemployment rate has dropped significantly, much of that decline can be attributed to nearly 90,000 discouraged and other workers leaving the labor force.

The state budget director has made it clear that there will be “real cuts.” We should be clear when we talk to our lawmakers that those cuts are the result of tax policies that have benefited Michigan businesses, but have not led to economic recovery for all of the state’s citizens. Government restructuring and efficiencies, while commendable if they can increase opportunities for families who are struggling to make ends meet, are not going to fill the gap.

– Pat Sorenson

More child care oversight needed

Every day in Michigan, parents head out to work with their young children in tow, dropping them off at local child care centers or homes. Child care is a necessity for many working families because they rely on two incomes to make ends meet or because they are raising children as single parents.

Yet oversight of health and safety requirements is stretched far too thin in Michigan, a new policy brief from the League concludes.

Child care centers and homes are required to be licensed or registered with the state to ensure that basic requirements are met. Two federal audits and national studies have found that Michigan falls short in its efforts to inspect child care settings. The unacceptable reality is that parents cannot rest assured that their children are spending their days in care that consistently meets state licensing standards.

The risk to children is greatest in families earning low wages, including parents who are required to work 40 hours a week as a condition of receiving public assistance. Low-wage families have fewer options and face difficult choices because they cannot afford higher quality child care that comes at a higher cost.

These are the facts:

  • Michigan cannot provide adequate oversight of child care because the state’s child care inspectors have caseloads that are more than three times the national standard. Child care inspectors in Michigan have average caseloads of 153, with a nationally recommended ratio of 1 worker for every 50 child care programs.
  • In unannounced visits, federal auditors found that child care providers failed to comply with one or more state health and safety requirements. Most disturbing was the fact that half of the family and group child care providers had not done required criminal and protective services background checks, and none of the child care centers had completed those checks on their employees.
  • A national report gave Michigan a “D” grade for its child care centers regulations and oversight, citing ineffective monitoring.
  • Michigan was one of eight states that received a score of 0 out of a possible 150 points for its licensing of child care homes, primarily because of a failure to inspect homes before they are registered and children are placed into care.

The state inspects a range of services in order to protect the public including restaurants, roads and bridges, and grocery stores. Certainly the state’s youngest children, who are in child care so their parents can work to support them, deserve to be at the top of the list.

– Pat Sorenson

High poverty, unemployment harm economic growth

Often touted as the “Comeback State,” Michigan’s economic recovery has not included everyone as reflected in the state’s high poverty and unemployment rates. Leaving people behind will only hinder Michigan’s potential economic growth, which has already showed signs of slowing.

A recent report ranking states based on multiple indicators of economic security and opportunity reveals the state’s major lack of investment in its people. On almost every factor from poverty to education to affordable housing, Michigan is ranked worst or second-worst among the Midwest states. (more…)

Oh Michigan!

From the First Tuesday newsletter
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‘O’ stands for October — and it also stands for Opportunity.

With just a few short weeks before the Nov. 4 election, now is your best chance as a concerned Michigan citizen to make a difference. (more…)

Small problems get big with misplaced priorities

In kindergarten classrooms in one Michigan school district, work tables are now cleaned only weekly instead of daily due to severe budget cuts that have reduced cleaning staff and supplies. Teachers must buy their own cleaners and wash the tables to maintain sanitary conditions for the youngest students

The dirty tables was one of the anecdotes offered about Michigan’s misguided spending priorities during a news conference held at the Capitol this morning by Priorities Michigan. (more…)

A stronger Michigan economy is within reach

Yes we can grow Michigan’s economy, create good jobs and expand opportunities for all Michiganians with the right public policy decisions. A new report by Erica Williams at the Center on Budget and Policy Priorities outlines how policymakers can make that happen.

Williams explains that states need to invest adequately in education, healthcare, transportation and workforce development. And in order to do that, they need to make decisions about how to raise and spend revenues with an eye toward the future. (more…)

State budget must offer economic opportunity

Join us in urging state lawmakers to support the investments in children and families that are needed to reduce poverty, help low-wage workers, restore funding for public schools and universities, and ensure that communities have the revenues needed to provide the basic services that residents and employers need to thrive and help the economy grow.

Joint House/Senate conference committees are beginning to meet today to resolve differences between the House and Senate versions of the Fiscal Year 2015 budget. After conferees sign a negotiated conference report, the budgets are sent to the full House and Senate, where they can be approved or rejected, but not amended. (more…)

Bad for MI: higher ed less affordable

Those of us moving our college students home for the summer this week probably are not surprised by a new national report showing that Michigan has made deep cuts in funding for colleges and universities, leading to steep increases in tuition.

Compared with other states, I’m afraid Michigan doesn’t look so good. Policymakers in Michigan cut per-student state spending more than 37 other states from 2008 to 2014—a 28% cut in state support. Michigan’s average tuition increase of over $2,000 (a 21% increase) during that time is higher than 34 other states. (more…)

Can you talk effectively about the state budget?

As many of us know, it is not just about what you say, but how you say it.

We can agree that the state budget is an important issue, but often times eyes glaze over when we talk about it. This can be because people do not understand the budget and find it much more enthralling to talk policy.

However, it is important to realize that most policy decisions are made through the budget process. For example, you cannot create policy on education, without first knowing how much money will be allocated towards the area for each budget year. Creating that budget is the first step. (more…)

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