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February 2011

 

I’m sure all of you have heard stories about the Governor’s budget plan. Always remember, “One side seems right until you’ve heard the other side.�

Government has gotten itself into great trouble by not dealing with spending issues in the past. For example, last year all government workers got a 3% pay raise in a bad recession. Why? It bought votes for politicians even when they knew they couldn’t afford it.

What the Governor has done this year has not been done for a very long time. There will be many departments begging not to get cut and asking for someone else to take the hit or taxes to be raised for their benefit. State workers get benefits, retirements, and pay beyond what the private sector gets, yet will beg for more. Teachers will say it’s all about the kids but it’s really about their pay and benefits since 85% to 90% of the K-12 budget is teacher pay and benefits. Benefits that are well beyond what Michigan can afford and beyond what those paying for them can themselves afford. While we all appreciate and value the jobs these groups do, the current structure is simply unsustainable.

Here’s a quick summary of the Governor's budget:

1. A $1.4 billion deficit looming for the state − he addresses it.

2. Our Michigan Business Tax plus its surcharge and regulatory structure stink for businesses that want to come to or stay in Michigan − he eliminates it. This will be replaced by a fair and simple flat 6% tax for all corporations.

3. A 4.9% cut to K-12 budgets. If every teacher agreed to benefit and minor pay reductions no teacher needs be laid off or class sizes increased.

4. A 15% cut to universities, with extra money given to those that find ways to be efficient and don’t raise tuition above certain levels. Ask yourself why same sex benefits are being paid against the Supreme Court ruling if money is so tight, and how many hours each professor actually spends in the classroom teaching. There are savings to be had.

5. Lifetime limit of 48 months on cash assistance for welfare recipients, with some hardship exceptions.

6. Elimination of the EITC (Earned Income Tax Credit). Much of this is not earned or paid by the individuals receiving it. Most simply get more back than they paid in taxes in the first place, plus possibly receiving other welfare benefits.

7. Saving in the Department of Corrections. Savings can be found by closing inefficient prisons, allowing competitive bidding of food service and prison stores, and eliminating some state police buildings while keeping the officers.

8. Reduction in the personal income tax from 4.35% to 4.25%.

9. Elimination of the tax exemption on private and public pensions. I’ll look at this closely as well. The rationale is that people with 401(k) plans and other retirement savings all pay taxes when withdrawing from those accounts, as do private pensioners over a certain rate. On the other hand, state and federal pensions are not taxed at all. The Governor indicates that the tax will not directly impact incomes that do not eclipse $40,000 per year.

10. Increase of $25.5 million in constitutional revenue sharing over the current year, but eliminate statutory revenue sharing for cities, villages, and townships. It will be replaced with $200 million that will be available to municipalities that adopt best practices to achieve savings. County revenue sharing will be appropriated at $100 million, a reduction of $14 million.

11. The budget assumes $180 million of employee concessions by state workers.

12. Elimination of six trial court judgeships in the Judiciary budget, thanks to case load reductions.

13. Cuts film incentives to only $25 million. I want them eliminated completely because our 42% kickback to that industry is losing money every time a movie comes to Michigan.

14. Increases to $25 million the funding for Pure Michigan advertising. Like the film tax credits, I don’t believe this pays for itself. If it did, the hotels, ski resorts, etc. would be advertising themselves and taxpayers wouldn’t have to do it. I already voted against this portion of the plan in early February.

15. Adds $25 million to attract new businesses to Michigan and $25 million for entrepreneurial activities.

16. The budget will be done by May 31 and an estimated budget for 2013 will be done at the same time. If this happens, Michigan will be one of the best states to do business in, drawing job providers back to Michigan. Our state as already gotten kudos from the Wall Street Journal for attacking spending and getting our fiscal house in order. This should bring our bond rating back to AAA, which means we pay less debt interest.

The new director of the Michigan Department of Human Services notified me that my suggestion to stop giving certain college students Bridge Cards (food stamps) saved the taxpayers $48 million. Michigan was not abiding by federal standards, making it so that any student attending college with “an approved education plan� would be eligible to receive assistance. I believe strongly that our assistance programs need to be upheld with integrity to reduce abuse of the system and ensure that only those truly in need receive aid. Additionally, working directly with the director of the department, we were able to make the change quickly and without the need for legislation. The changes will be effective as of April 1st 2011.

As your state representative, I look forward to finally shrinking the size of government and getting our spending under control so we can all keep more of our own income instead of working for the government half of our lives. I will also continue to attempt to stop illegal immigration into our state so our jobs go to legal Michigan residents.

 

Sincerely,

 

Rep. Dave Agema

P.O. Box 30014

Lansing, MI  48909

Daveagema@house.mi.gov

Toll-Free: 1-800-968-2320

Fax:  517-373-8697

 

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