The nation’s weak economic footing
over the last three years has had a profound impact on state
budgets. In Michigan, declining tax revenue has plunged the state
into the red, and state programs have seen their funding slashed.
Nonetheless, Lansing continues to be mired in deficit concerns, and
earlier this year, Gov. Jennifer Granholm announced a plan to
rescue the state from a projected $1 billion shortfall for the
coming year. However, an core element of the plan — the
acceleration of property tax collection — was killed by a
state House vote just last week. This decision may be the vise
needed to force Granholm into taking decisive action and finding a
viable, long-term solution to the state’s budget
difficulties.
- Janna Hutz
Initially, the failed bill was designed to give the state about
$183 million to use for the coming budget year. Unfortunately,
because the bill was designed simply to tackle the immediate budget
crisis, it did not address the root causes of the state revenue
shortfalls, merely shifting the shortfall to another budget year.
The linchpin of this scheme was an acceleration of county property
tax collection. Taxes would have been collected six months earlier
than usual
Fortunately, when this bill came to a vote in the state House,
the majority of Democratic legislators did not follow their
governor and support the bill. Numerous Democrats justly indicated
that earlier tax collection would blindside unsuspecting
homeowners, many of whom are currently living from paycheck to
paycheck, and would therefore be unfair to the state’s
citizens. In essence, unsuspecting homeowners with insufficient
financial resources would first be unable to comply with the new
tax schedule, and then secondly face additional fines for not
having enough money to comply with the tax shift.
Rescheduling tax collection is not a legitimate fix for
Michigan’s budget woes. Instead of encouraging shortsighted
fiscal planning, Granholm should persevere to find a tenable
long-term solution to the state’s fiscal problems. Because
successive years of deep budget cuts have failed to temper the
state’s budget deficits, Granholm should consider increasing
state tax revenue. Republicans and others who have been
historically opposed to increases in taxation will inevitably
oppose any attempt to raise taxes. This is not sufficient reason to
discount the possibility of a tax increase altogether. Although
instituting such a policy will not make her popular with the
voters, Granholm should realize it may be time to re-evaluate her
fiscal options; at this point, a tax increase may be necessary.
Unfortunately, Granholm has been put in this precarious position as
the result of Republican obstinance.
It is commendable that Granholm has spent the last two years of
her term attempting to grapple with Engler’s budget deficit
through a wide array of policy tools. At this point, however, it is
clear that her efforts have not had their intended impact. Instead
of searching out fiscally irresponsible, short-term solutions such
as the proposed tax schedule change, Granholm should look into
taking sweeping action that stands a chance of truly solving
Michigan’s budget woes.