Friday, May 11, 2007
Simple reforms make tax hike unnecessary
My take on the state budget
By REP. ARLAN MEEKHOF
January projections had the state of Michigan spending almost a billion more dollars than it was taking in.
Since then, Gov. Granholm has worked with the Legislature to reduce this year's deficit to $383.8 million. Unfortunately, Gov. Granholm refuses to consider further restructuring and reforms to balance the budget. Instead, she wants you to make the sacrifice and give the state even more money so she can continue to spend it irresponsibly.
If the state of Michigan was a corporation, CEO Granholm would never even consider raising taxes. Any good CEO will tell you that when times are tough, the last thing you do is raise your prices. Yet raising prices is exactly what the governor is trying to do.
It looks like she might get away with it. She recently said that if the Legislature doesn't agree to raise taxes she will cut school funding $125 a student. Oh, and she'll have to cut funding to local governments for public safety programs, health care to needy families, universities and libraries, too. She is counting on the fact that many people would rather pay more taxes. Well, guess what? We can fully fund these programs without raising taxes.
The deficit in the school aid fund has been reduced to just over $60 million. The governor's solution to this problem is to either raise taxes or cut $125 in funding per student. But are those the only two options? Absolutely not. Last year the governor vetoed a bill that would have limited able-bodied welfare recipients to four years of benefits. This would have saved the state $75 million per year. That $75 million could have fully funded schools and our libraries, but Gov. Granholm would rather raise your taxes.
The governor also recently threatened to cut Medicaid payments by 6 percent if the Legislature does not raise taxes. She says this is the best way to save $120 million. I disagree. If the governor would place just 5 percent of Michigan's prison population in privately run prisons, the state could save as much as $192 million annually. This would allow the governor to fully fund Medicaid and avoid a $41 million cut to local governments. But she would rather raise your taxes.
There are even more ways to save money without reducing the quality of state services. We could save up to $422 million a year by reforming public school health insurance benefits. By opening insurance contracts to competitive bids and requiring reasonable co-pays and preferred-provider networks, we could realize enormous savings. Gov. Granholm has hinted that she may be willing to do this in exchange for a tax increase. But why would we need to raise taxes if we are making all of these common-sense reforms?
By implementing all of these reforms we can collectively save $689 million a year. This would fix the deficit and leave us with a surplus of over $300 million. There have also been proposals for $1 billion in other savings and reforms suggested to the governor, but she has not seriously considered any of them.
Gov. Granholm says we need a tax increase to invest in the state. A tax increase is not an investment. A tax increase takes more money out of your pocket, which seems a lot like a disinvestment to me. A real investment would be to make these necessary reforms, keep taxes at the current rate and use the surplus to improve the quality of our roads, schools and health-care systems.
Gov. Granholm needs to step up to the plate and act like the CEO of a multibillion-dollar corporation. It's time for real leadership. The Michigan Constitution requires her to balance the budget and she is refusing to do so. It is irresponsible to ask the citizens of Michigan for more of their hard-earned money when she continues to waste it. There will be no incentive for the governor to institute any reforms or efficiencies if she succeeds in raising your taxes.Gov. Granholm needs to make common-sense reforms and start saving money for the taxpayers immediately. Then we can talk about how we can invest in Michigan.-- Arlan Meekhof, R-Olive Township, represents the 89th District in the Michigan House of Representatives.