Gov. delivers budget proposal

In her Feb. 11 address, Gov. Granholm introduced her budget recommendations to the legislature.

Granholm said her budget will focus on three main points.

“This budget cuts spending, while still investing in job creation and education, modernizes the state’s tax system to stabilize funding for schools and create jobs and reform the budget process,” Granholm said.

Granholm predicts her government reforms will save the state $7.8 billion over the next 10 years.

The governor is encouraging state employees and public school employees to consider buyouts that will additionally help decrease the amount of money spent on government employee health care.

In addition to the 11,000 state jobs that she said have been removed since 2001 in Michigan, she is proposing $566 million more in cuts to the state government this year by adopting her reforms.

Granholm’s proposal to revive the Michigan economy centers on education as a means of job creation.

“One of the most important needs of a 21st century business is having a 21st century talent pool,” Granholm said. “And that means education. Education directly correlates to job creation. Therefore, despite declining state revenues, my budget recommendation maintains per pupil funding for K — 12 education at the same level as in the current state budget.”

She also called for reinstating the Michigan Promise scholarship as a $4,000 tax credit for students who complete a college degree and work for one year in the state.

“The old Michigan economy, which provided a middle-class standard of living for so many, is gone,” Granholm said. “We are now transitioning to a new Michigan economy — an economy requiring knowledge, speed and efficiency.”

She placed heavy emphasis on the Pure Michigan tourism campaign.

“Like some other states that consistently fund their tourism ads, I propose relying largely upon a small fee from out-of-state tourists or business travelers who rent cars at the airport,” Granholm said. “160,000 Michigan jobs depend on it.”

The budget recommendation includes decreasing sales tax rates from 6 percent to 5.5 percent, but widening the amount of services taxed. Granholm cited survey data from the Federation of Tax Administrators that state Michigan taxes only 27 of 168 transactions classified as services. This makes it the 39th lowest in the nation.

“All of the revenue would go to the School Aid Fund to ensure that we have the stable funding necessary for our children to receive the world-class education they need to compete in a global economy,” Granholm said.

The final portion of the governor’s address focused on changing Michigan’s budget to a two-year budget cycle.

Following a recommendation by a group of bipartisan freshmen legislators, the governor is calling for the legislatuure to finalize the budget by July 1. If the budget is not completed by then, she said the pay of the legislators, as well as her own pay, should be docked each day until the budget is done.

A review of tax breaks, which added up to $36 billion for the 2010 fiscal year, is also on Granholm’s list. While she said tax credits are helpful to creating jobs, the government should use them sparingly. 

“We need to periodically scrutinize them to make certain we’re getting the benefits — in job creation and economic growth — that we expected, that they’re not just permanently baked in to the tax structure if they are not creating jobs,” Granholm said. 

Toward the closing of her address, Granholm also requested that all legislation include full information on the financial impact of the legislation on the government and the state as a whole.