Michigan finally resolved it's budget crisis Monday morning at 4 am. Thus we avoided a government shutdown and took one step toward rebuilding confidence in Michigan's government and economy. After many hours of negotiations and several legislative gaffes, things came to an end by passing two tax increases, cutting spending by more than 400 million and several reforms including changes to the health care and retirement benefits for teachers and public employees.
In the end my boss did vote to raise the income tax from 3.9 percent to 4.35 percent. It was not an easy vote. In fact, without his vote the bill would have failed and the entire budget agreement could have fallen apart. People before and after the vote have asked my boss what he got out of the deal. They are stunned when he tells them that he didn't trade his vote but simply voted for the tax hike because he thought it was the right thing to do. And it certainly wasn't politically expedient because we are now facing a potential recall effort. The reality is that the state has been cutting its budget since 2000 and yet every year the hole gets bigger and bigger. In the past we have cobbled together one time solutions by selling off future money to pay the current bills and this gimmick finally caught up with us. At some point we couldn't continue to do the same thing year after year and expect different results.
A 6 percent sales tax on services also passed but without my boss voting for it. Left off the list is golf, marinas, cable TV, sporting events and movies theaters. Here are all the new services that will be taxed:
(a) Carpet and upholstery cleaning services
(b) Business service center services
(c) Consulting services
(d) Investigation, guard and armored car services
(e) Investment advice services
(f) Janitorial services
(g) Landscaping services
(h) Office administration services
(i) All of the following personal services:
(i) Astrology services.
(ii) Baby shoe bronzing services.
(iii) Bail bonding services.
(iv) Balloon-o-gram services.
(v) Coin-operated blood pressure testing machine services.
(vi) Bondsperson services.
(vii) Check room services.
(viii) Coin-operated personal service machine services.
(ix) Comfort station operation services.
(x) Concierge services.
(xi) Consumer buying services.
(xii) Credit card notification services.
(xiii) Dating services.
(xiv) Discount buying services.
(xv) Social escort services.
(xvi) Fortune-telling services.
(xvii) Genealogical investigation services.
(xviii) House sitting services.
(xix) Social introduction services.
(xx) Coin-operated rental locker services.
(xxi) Numerology services.
(xxii) Palm reading services.
(xxiii) Party planning services.
(xxiv) Pay telephone services.
(xxv) Personal fitness trainer services.
(xxvi) Personal shopping services.
(xxvii) Coin-operated photographic machine services.
(xxviii) Phrenology services.
(xxix) Porter services.
(xxx) Psychic services.
(xxxi) Rest room operation services.
(xxxii) Shoeshine services.
(xxxiii) Singing telegram services.
(xxxiv) Wedding chapel services, but not churches.
(xxxv) Wedding planning services.
(j) Other travel and reservation services
(k) Scenic transportation services
(l) Skiing services
(m) Tour operator services
(n) Warehousing and storage services
(o) Packaging and labeling services
(p) Specialized design services
(q) Transit and ground passenger transport services
(r) Courier and messenger services
(s) Personal care services
(t) Service contract services
(u) Security system services
(v) Document preparation services
(w) Miniwarehouse services and self-storage unit services
It's a really long list and I am not sure why some things are in it and some are not. It doesn't seem particularly well thought out and I doubt that anyone truly understands what the fiscal impact will be on both taxpayers and the state budget.
The reforms that passed are often overlooked but the reality is that they may have the most long term impact of anything that happened this weekend. Reforming teacher benefits will save the state hundreds of millions each year which means more money going to the classroom. It also weakens the teacher unions politically. Under the current system they make gobs of money by administrating their own health care benefits. The new law provides school districts greater ability to purchase their health care benefits elsewhere. Without the monopoly on health care, the teacher unions will not have as much money to spread around during campaign years. And since they usually spend this money against my boss, the less money they have for politics the better.
That is the update from Lansing. I am thankful we avoided a government shutdown and relieved to return to normal working hours instead of being at the capitol until 5 a.m. every night.
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3 comments:
While I'm not a fan of the tax increase itself, it's refreshing to see your boss make a decision for the good of the state and not for the good of himself. Kind of a rarity for politicians these days....
I appreciate the willingness of both sides to find a compromise. I certainly don't think an increase in the income tax helps anyone or the state, but if that is what it took to break the MESSA monopoly, then I say "Well done."
What would be the point in recalling your boss? He's term limited.
As far as taxes go, I'd rather see an expansion of the sales tax than an increase in the income tax. It's sad that we had to do both.
Enjoy your vacation.
The benefits that public school teachers in Michigan (not charter schools teachers though---my brother is one of those and there is a HUGE difference, not to his benefit) get has always amazed me compared to what we get here in Indiana.
Any power & money that can be taken from the teachers unions is good, imo. We're blessed to live in a state that does not force public institution teachers to join the state & national unions.
Glad you can get back to normal work hours.
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