Fiscal Procrastination

Gov. Granholm and our state legislators shouldn’t wait for a deadline to tackle Michigan’s next budget.
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The silence coming from Lansing these days is deafening. After Gov. Jennifer Granholm and the state Legislature missed two deadlines last fall — the first to balance the budget, the second to fix a bizarre array of service taxes — our policymakers left for the holidays, patting themselves on the back for a job well done. After all, they managed to raise state spending 8 percent, much to the delight of Granholm, who has been unwilling to curtail spending and upset her constituency.

Michigan’s budget mess reminded me of a class term project that’s put off until the last minute, followed by a scurry of activity. In both instances, Granholm and the Legislature got a failing grade. The governor’s inability to lead and her penchant to disguise or avoid the truth has hurt the state badly (recall that a sizable portion of the state deficit was caused by increased spending under her watch, which she neglected to make public until after the 2006 gubernatorial election).

Now another state deficit is looming in the current fiscal year, which ends Sept. 30. Media reports have pegged the deficit as high as $500 million, but who knows? We can’t be sure. Whatever the deficit might be, it’s fairly clear that voters and businesses won’t put up with a new round of taxes to support what is still a bloated state government.

Not when the Detroit automakers are replacing high-paying union jobs with more realistic wages, as is now allowed under the recently completed UAW bargaining sessions. And yes, the service industry is growing, but the new jobs don’t pay particularly well. Of course, the health-care sector is expanding, but the increased demand is really due to unhealthy lifestyle choices and an aging population, not anything the governor or Legislature have done.

So how can the state improve its fortunes? The governor and Legislature should roll their sleeves up immediately and deliver a budget outline by Memorial Day. The budget should include spending cuts, privatization of some services, lower taxes, and fewer fees. The final budget should be completed by Labor Day, well before the election season heats up. Anything less would mean a repeat of the state deficit fiasco we experienced last fall.

R.J. King
rjking@dbusinessmag.com

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