Gov. Jennifer Granholm presented what she termed a “lean but not mean” budget yesterday which, if approved by state Legislature, will institute massive cuts in government services across the board, including a 6.5 percent slash to higher education, an 80 percent cut to the Michigan Merit Award Program, and a 69 percent cut to the Life Sciences Corridor. She did not increase taxes.
Granholm emphasized K-12 education, which actually received additional funding, restoring it to its original allocation of $6,700 per student. But this was one of very few programs that benefited from a budget plan that is sure to affect every level of life in Michigan.
“It isn’t hard to choose between the effective and the ineffective, or between the useful and the useless. But to balance this budget, more often than not we’ve had to choose between the very important and the vital,” Granholm said yesterday. “In order to keep the full funding for K-12 education, we had to cut a portion of the funding for adult education.”
“We all understand the importance of higher education funding,” she added. “But for people across the state, higher education funding is perhaps not critical in the same way that preparing a child for college in the first place or protecting that child from abuse and neglect.”
The governor’s proposed $154 million cut to higher education has struck a cord at the University, which endured a 3.5 percent cut last year, University President Mary Sue Coleman said.
“What this represents for us is that if you combine the 6.5 percent proposed cut for this year with the 3.5 percent cut last year, then that’s a 10 percent cut to higher education.” she said. “That takes us back to the level we were at five years ago.”
“I’ll make the point when I go to talk to the state Legislature that higher education is a benefit to the state far beyond the individual student that comes here for a degree … we’re a part of economic development,” Coleman added.
While some legislators like Senate Majority Leader Ken Sikkema (R-Wyoming) understand this is a hard cut, many Republicans feel both higher education and the Merit Scholarship should receive more funding.
“We’ve increased the appropriation for higher education every year since 1994. …It’s certainly not a trend,” said Bill Nowling, a spokesman for Sikkema. But “it’s not fair for Michigan students to balance the budget on their backs. (Cutting higher education and the Merit Scholarship) is a double-whammy.”
Among the proposed cuts affecting the University is the $35 million slash to the LSC’s funding. While there is no question as to its value to Michigan’s continued economic growth, many are glad that any funding for this program will be maintained.
“The whole purpose of the Life Sciences Corridor was to create the research infrastructure that Michigan lacked,” Nowling said. “We’ve probably invested about $100 million dollars in the Life Sciences Corridor over the past couple of years. That’s a lot of money.”
Coleman also expressed a positive reaction, saying that she’s “heartened that there is funding for the Life Sciences Corridor.” She added that while it is not directly associated with the University’s Life Science Initiative, it is the mechanism that will help to integrate that program and local businesses.
Granholm proposed a way to create an estimated $200 million in additional revenue by closing obscure “loop-holes” in certain tax codes.
“I’m glad to see her opening up some new revenue in the form of fee increases and tax loop-holes,” state Sen. Liz Brater (D-Ann Arbor) said.
“We’re giving up as much money in tax breaks to special interest groups as we’re collecting in the areas of sales and income tax.”
But many are concerned cutting these breaks will hurt Michigan’s economy.
“The tightening of the tax loop-holes – we want to look at every one of those,” Nowling said.
“One man’s loop-hole is another man’s tax incentive, and we want to make sure we’re not cutting off our nose in spite of our face. … A lot of tax incentives help to create jobs and help grow the economy.”
“We’re not saying that there aren’t any loop-holes that people are taking advantage of, but there are some tax incentives that we’ve written into the tax code for very specific reasons,” he added.
Michigan’s economy will require a great deal of improvement for the budget to recover, said Ellen Jeffries, deputy director of the Senate Fiscal Agency.
“We’re already predicting a 4.3 percent growth, which is a pretty normal increase, and we’re still dealing with these budget cuts,” Jeffries said.
“Unless we start getting much bigger growth than that, we are not going to see big changes in the budget.”