Governor presents state budget for next fiscal year

Gov. Granholm delivered her budget proposal for the 2011 state fiscal year on Feb. 11, to a joint meeting of the House and Senate Appropriations Committee. It was a bit unusual for the governor to personally present her own budget. Typically, the budget presentation duties fall to the state budget director (Bob Emerson). The budget director was alongside the governor and helped with many of the details. It was the governor's eighth and final budget proposal, due to term limits.

 

On a positive note, the budget is calling for a freeze on state revenue sharing payments to local governments. The proposed budget would maintain overall revenue sharing payments next year at the current year level for all townships, cities and villages, even if sales tax collections decline due to the economy. She is also calling for an additional $115 million in revenue sharing to fully fund the three counties eligible in fiscal year 2011. The budget also calls for a significant change in the sales tax: a plan to lower the sales and use tax from 6 percent to 5.5 percent but expand the base of goods and services to which the tax applies. MTA was pleased to hear State Treasurer Robert Kleine, who was also available at the appropriations meeting, comment during the presentation that the sales tax proposal would not have a negative effect on revenue sharing. Kleine was responding to a question raised by Rep. Darwin Booher (R-Osceola Twp.) about whether the plan would cause a 12.5 percent hit to constitutional revenue sharing. MTA is working to find language of the proposal to verify that it doesn't undermine revenue currently dedicated to revenue sharing in the constitution.

 

Further, the budget proposal includes the elimination of the Michigan Business Tax (MBT) surcharge by 2012, $140 million in corrections reforms that will reduce prisoner population numbers and allow for the closure of up to five additional prisons and maintaining current Michigan State Police trooper strength. The governor's budget plan is built on a variety of revenue enhancers. Local governments have significant state funding at stake in the budget and are encouraged to contact legislators in support of revenue increases.

 

The governor is also asking for the Legislature to complete the budget each year by July 1 or be subject to cuts in their wages, and endorsed a two-year budget cycle for the state. She also warned that she would veto any cuts to K-12 or higher education.