Thursday, March 15, 2007

Budget Talking Points

The Governor has proposed a package of revenue enhancements and budget cuts to balance the budget for this year and into the future. Below are some talking points to support the Governor’s proposal.

• The governor’s budget proposals provide the right balance between investment, budget cuts, reforms and revenue increases. It is a package that MEA supports.

• Gov. Granholm’s vow to invest in education and her refusal to make mid-year cuts reinforce what MEA members have believed for years: an investment in education is an investment in Michigan’s economic future. It shows our students – and every other Michigan citizen – that education is the foundation of our economic plan. Education today will lead to jobs tomorrow.

• Education has suffered enough cuts. Additional cuts will mean even larger class sizes, fewer critical educational programs and further reductions in the number of qualified staff to help students achieve.

• Since 1994 when Proposal A was adopted, the Legislature has enacted some $3 billion in tax cuts, always with the promise that these tax cuts would result in economic development, job growth and a healthier, more diverse economy. Obviously is hasn’t worked

• The $3 billion of tax cuts has resulted in an enormous structural budget deficit. For four years K-12 has taken hits every year while higher education has had huge reductions over the past five years. It is time for the Legislature to step up and find sufficient revenue to provide the education that will be the engine of growth for the future.

• If the governor’s budget package is not enacted by this spring, the future of public education in Michigan is doomed. Legislators must solve our state’s financial crisis now – and not leave it for future lawmakers to fix.

• The Michigan economy now depends more on services than on manufacturing. We must look to the service industry to generate more revenue. The new 2-cent tax on services is set up to do just that.

• The proposed Michigan Business Tax includes a tax break for Michigan businesses to help offset increases they would experience under the 2-cent service tax.

Monday, March 12, 2007

Governor's Budget Proposal

In February, the Governor presented her proposal for adjustments to the 2006-07 budget and for the 2007-08 budget to the Senate and House Appropriations Committees. Below are the highlights that have an effect on education.

Implement a 2% sales tax on nearly all services in the State, to commence in June, 2007. The exceptions to this sales tax would be for educational and medical services.

Implement a new business tax to replace $1.5 billion of the $1.9 billion lost by repeal of the Single Business Tax.

Meet the shortfall in the School Aid Fund (SAF) in two ways:
• First, revalue the pension assets and reduce the pension contribution from school districts by $180 million, and then reduce state aid by a like $180 million
• Second, apply some $180 million of the revenue raised by the sales tax on services to the SAF to make up the remainder of the shortfall.

For community colleges, reduce the pension contribution by $10.9 million and reduce state funding to community colleges by the same amount.

For community colleges and universities delay the August state payment until October.

For 2007-08, increase aid to education at all levels (K-12, community colleges and universities) by 2.5%. For K-12 this means an increase of $178 per pupil with the basic foundations allowance going to $7,286 per pupil. The 07-08 proposal also contains $36 million for declining enrollment districts, increase pre-school funding by $200 million (targeted to full day kindergarten and pre-school programs), $1.4 billion for special education, $750 million for at risk programs, and $10 million for promoting cost sharing agreements and consolidation of service.

It is important to promote this budget and revenue proposal. Without them the state faces huge shortfalls this year and catastrophic deficits next year. The deficits will result in massive reductions in funding for education at all levels. It is finally becoming apparent to most responsible leaders in the state that the enormous permanent tax cuts enacted when the economy was thriving did nothing to enhance economic growth in Michigan. All they did was starve the state when the economy turned down and make it impossible to provide essential services to our citizens.

As more detail is available, we will disseminate it to you. In the meantime, here are links to the 2007-08 budget proposal of the Governor.,1607,7-157--134602--,00.html