Despite all manner of hijinkery, the budget will be badly out of balance for FY 2008.

About half of that imbalance results from business tax laws expiring with no replacement. That's one thing. But even if you replaced all the business tax revenue and then some with a new tax structure, there's still a big imbalance.

Granholm's proposed a new "services" tax.

Lots of people have bitched.

Of those that have bitched, most of them don't suggest any alternatives, afraid they won't pass the "laugh" test and|or will seriously piss off some constituency or other. DeVos tried that shit and was defeated. The state Senate majority leader Bishop has been trying that same shit and really hasn't gotten his way on much, thus far.

Of those who have proposed alternatives, most don't comprehend that the bulk of a state's spending dollars comes from the federal government, with strings (more like titanium cables) attached. Money we get from the federal government for, say, road repair can only be spent on road repair and not diverted to other functions. The state has a $40-odd billion budget, but $30+ million of that comes from the federal government, which is why a billion or two is a big deal. (Note that we are a donor state, paying more in taxes to the federal government than we get back from them in services.)

No one that I'm aware of has seriously suggested getting rid of Michigan's balanced budget amendment. "Borrow now, pay later" voodoo like, say, Reaganomics don't work with a balanced budget. The state's most recent windfall came in the form of tobacco settlement $, most of which is going to college education (scholarships for HS graduates), some of which went to economic stimulus (MEDC). Is there a better use, or better way to deploy that? There's no obvious windfall on the horizon.

No one that I'm aware of has seriously suggested significantly jacking up currently-existing business taxes, enough to cover the imbalance. It may not even be possible to bump business taxes up enough to cover that, realistically speaking. You can't just double taxes and get double the revenue, as businesses will leave and fold.

Do people agree with and understand the above?

What would you do to fix Michigan's budget woes?

Shit, if I knew what to do I'd be running for office.

All I know is I agree with you on the taxes. The point of getting rid of the SBT was to make it more enticing for businesses here. The solution of jacking up taxes on other shit only makes the tax base poorer and eventually makes them leave. It's a short term fix that will cause an even bigger problem down the road IMO. I really don't have any answers I hate to say.

I don't think the services tax will work because most people I know are just like me. Once things become more than you want to spend, you cut back on those services. Instead of going to a movie you wait a couple weeks for the dollar show. Or you wash your car at home instead of taking it somewhere. You might go to a few less ball games, or sit in cheaper seats. When prices go up, people spend the same amount on those services (by doing them less frequently). So while the state might make money off those things, businesses will lose money from reduced spending. It's essentially the state taxing the business.

^^^Good point on taxes Chris.
Last year in Omaha, when the gas hit three bucks a gallon, people conserved. They conserved so well that after about three months the state had to raise the gas tax a penny to make up from the revenue shortfall that the conserving of gas created! Ain't that some shit. People got smart and then got slapped upside the haid for it.
That's one of those taxing conundrums that won;t work. Tax the services, and a whole lot more people become less lazy in a hurry.

Imagine if they put a 50 cent tax on fast food orders. Doesn't seem like a whole lot, but I bet people simply stop buying them as often. Eventually they conserve (like you said) to the point that it kills the business itself. While McDonald's probably wouldn't go down the crapper, the mom and pop restaurants will.

I agree again. I forgot to add that after the state raised the gas tax, people conserved more because that pissed them off and it went up another penny six months later.
Nebraska instituted one of those "service taxes", and guys with lawn services and such had to add tax onto their prices. They simply adjusted their prices down so they could keep the prices about the same (for instance, instead of charging $25 plus tax, they charged, say, 23 and added the tax to keep it at 25), and the tax they thought it would generate was short of predictions. OOPS!

I really don't know how to fix Michigan. All I can do is identify the problems, which are many.

1. Michigan is handing over its abundant natural resources to be shat upon by the highest bidder.

2. For some reason, when a political gadfly has proven that they don't know shit and can't do shit, they end up managing a school district somehow. Our schools have suffered BADLY due to poor management. Add that to the typical Republican "make the government so small you could drown it in a bathtub"* attitude, and you have completely ineffective public schools. Completely ineffective schools means kids who are not confident enough to succeed in college. And even those kids who succeed in college have to struggle. At what point do you just say, "fuck this, it's not worth it"?

3. The goddamn corruption is out of control. It happens on every level, from the guy who uses his travel budget to send his family on vacation, to the county commission guy who votes to award road work contracts based on the kickback he'll receive, to the Legislature who cares not to spend time listening to anyone who won't line their pockets. The "system" (too generous a word) does not care about you. It does not work for you, unless you can somehow align your interests with a gigantic corporation.

4. Bring back manufacturing. You can only trust a civilized nation to manufacture safe and strong products. This whole "service economy" thing is utter bullshit and we all know it.


* Actual quote.

The point of getting rid of the SBT was to make it more enticing for businesses here.
No, it was to encourage the replacement of the SBT with a better tax model. The SBT had two key design points that are no longer a factor: moneymaking automakers, and small businesses preparing taxes by hand. As those factors stopped being true, the SBT devolved into a big mess over time, and needs modernization and streamlining. Note that we've had many businesses leave despite waiving the SBT for them, so it's far from the only issue.

As far as people cutting back as a result of a tax, it really depends on how price sensitive the customers and services are. It took a BIG swing in gas prices before people became sensitive enough to them to cut their driving, rather than drive an extra 10 miles to save maybe a nickel/gallon at the el cheapo gas station. I could believe that, say, a ticket price tax might make people do a little bit more price shopping and weed out the gougers without cutting down overall consumption.


Imagine if they put a 50 cent tax on fast food orders. Doesn't seem like a whole lot, but I bet people simply stop buying them as often. Eventually they conserve (like you said) to the point that it kills the business itself. While McDonald's probably wouldn't go down the crapper, the mom and pop restaurants will.
How many mom-and-pop "fast food" places are there? Aren't they dead? I don't count those hot dogs at a gas station as "fast food" (fuck, I don't even count them as food).


Michigan is handing over its abundant natural resources to be shat upon by the highest bidder.
Do you think there's a way to better monetize that to make the budget work? I dunno. Our biggest natural resource is clearly shared with other states and Canada, so we're only really as strong as the weakest link.

Fixing the schools? I guess the question I have is -- how much does the state spend on schools, and how much should it spend? Schools get a lot of unfunded and underfunded mandates (e.g. NCLB, special ed) which make the comparisons with "the good ol' days" difficult. I wouldn't consider Michigan's schools problem strictly as a Republican issue. Detroit schools have been a giant clusterfuck run under multiple different groups of Democrats.

How many mom-and-pop "fast food" places are there? Aren't they dead? I don't count those hot dogs at a gas station as "fast food" (fuck, I don't even count them as food).

I'm talking restuarants in general. Like the coney shops, sandwhich places, etc. Heck, even chains will suffer. When the prices go up, people cook at home more. Sure, there is an amount that starts that...and I'm not sure the tax would be enough to cause that. Some people will simply stop going to those things out of anger or spite, regardless of the amount of cost. Most probably won't change any habits. Look at smokers still paying those taxes. However, what happens when the tax isn't enough? Make it more? Find another source? Eventually it reaches the cut off amount (unknown amount) where people get pissed off and stop spending on those services. The question is whether we'll get there.

And like Zip said. The business often ends up just eating the cost themselves to keep their prices. That cuts into their profits and ultimately hurts small businesses in general.

anyone know a link to the state budget? maybe to past state budgets also? hard to really say how to fix it without knowing the problems. not sure about the state, but atleast the city of detroit has exhorbitant taxes, for seemingly not much in return. is detroit bringing down the whole state? i do believe alot, but not all, of our problems could be solved with more effective gov. freeman hendrix mentioned in his campaign for mayor that the overhead for detroit schools was something like 27 cents of every dollar. florida used to be that way, and then they got it down to something like 6. whats the saying "the beuracracy is expanding to meet the expanding needs of the beucracy"? something like that. definitly detroit's problem, and my guess the state's too.

seems to me we need alot of help from the fed. things like universal health care would be a great start. discouraging outsourcing would be good too. why not gamble on flex fuels? we've got a ton of space, definitly the labor force, and a leading agricultural school. its not like we've got anything better on the horrizon.

http://www.senate.michigan.gov/sfa/

http://www.senate.michigan.gov/sfa/Publications/BudUpdates/EconomicOutlookJan07.pdf

I can fix Michigan's budet in a hurry: Everyone move the hell out of there before you're all broke and out of a job.

freeman hendrix mentioned in his campaign for mayor that the overhead for detroit schools was something like 27 cents of every dollar. florida used to be that way, and then they got it down to something like 6. whats the saying "the beuracracy is expanding to meet the expanding needs of the beucracy"? something like that. definitly detroit's problem, and my guess the state's too.
It really depends on how one defines "overhead". Comparing Detroit city to Florida state is "apples to oranges" territory.


seems to me we need alot of help from the fed. things like universal health care would be a great start. discouraging outsourcing would be good too. why not gamble on flex fuels? we've got a ton of space, definitly the labor force, and a leading agricultural school. its not like we've got anything better on the horrizon.
What's Michigan's record as a private equity/venture capitalist, picking winners and losers? The 21st Century Jobs Fund has avoided investment in Oakland County, richest county in the state, arguably the best area to take money and turn it into "mo' money". It's clearly politically motivated, crap a real VC wouldn't give a flying fuck about.

I can fix Michigan's budet in a hurry: Everyone move the hell out of there before you're all broke and out of a job.

A pretty big part of Michigan's job problems come from the workers themselves: no one here actually knows how to fucking do anything. We all move out of here and into North Carolina or Austin, and we're not going to find any work there either. There's an attitude you get when the last 4 generations have fed at the teat of the auto companies, and it doesn't go away overnight.

Your "there's an attitude" remark confuses me. Are you bitching about work ethic or work ability or what? And how does that relate to doing something about Michigan's budget woes? I've seen an awful lot of people everywhere that lack work ethic, across many geographies and business segments. Auto manufacturing doesn't have any monopoly on time-wasting compared to, say, federal government or Silly Valley jobs. And Florida? Hoo boy...

Easy...bring in good businesses. Its that simple and its that difficult. I wish the economy could get going back home.

Your "there's an attitude" remark confuses me. Are you bitching about work ethic or work ability or what? And how does that relate to doing something about Michigan's budget woes?

I'm just responding to Zip. It's not relevant to the budget at all.


I've seen an awful lot of people everywhere that lack work ethic, across many geographies and business segments. Auto manufacturing doesn't have any monopoly on time-wasting compared to, say, federal government or Silly Valley jobs. And Florida? Hoo boy...

Just calling it as I see it. I've worked in a lot of cities, and I've compared Michigan people to other people. There are only a few places where you get that "I'm on my break" attitude from people at their jobs, and this is one of them.

You sure that's not just fatalism, or perhaps other slackerism of the latest generation that you're seeing? The auto business has been on a downswing since the early '80s. For a generation or so, it's been "working hard does not matter, I'll get fucked -- outsourced, retirement, medical, etc." Incoming twentysomethings are not as motivated as they were even 10-20 years ago, for a host of reasons. I'm not big on excuses, but it was sad today hearing polls saying that people think they kids won't have it as good as they will. Check this out:

http://www.salary.com/aboutus/layoutscripts/abtl_default.asp?tab=abt&cat=cat012&ser=ser041&part=Par485

i dont know about kids not working as hard. theres a TON of pressure on kids these days. top tier colleges are more competitive, a degree is expected and grad school is becoming much more commonplace. i have no evidence to back this up.

i just read an article the other day about how college grads are now expecting to make 6 figures. i cant imagine why. i agree, most people are useless fucks that deserve a slap to the back of the head more than a by-weekly $4,000 paycheck.

I don't think it's a young work force that isn't motivated. If anything, it's the opposite. A young educated work force (we have some of the best schools here), and no jobs for them. So they pack up and leave. We have more college grads from the area, but the job base is still largely blue collar.

My answer: spend less in lansing. All the other suggestions involve taking even more money from me and giving it to Jenny.

I don't think it's a young work force that isn't motivated. If anything, it's the opposite. A young educated work force (we have some of the best schools here), and no jobs for them. So they pack up and leave. We have more college grads from the area, but the job base is still largely blue collar.

Actually, the percentage of young adults who become college graduates is lower in Michigan than in many other states.

Lazy punks. The point is that there is probably more educated college grads then there are jobs here. And I'm not sure that the universities in other states compare to those here. Michigan is one of the best states in terms of university quality.

Actually, the percentage of young adults who become college graduates is lower in Michigan than in many other states.
That's probably because Michigan has among the lowest % of people who enroll in college, despite all of our fine universities. Roughly half graduate no matter where they live. It's the "getting there in the first place" part that's rough. Only 51% of Michigan's high school graduates go to college.

The interesting part is that all the west coast states are basically the same way that Michigan is. California, with its famously-cheap tuition for residents, only has 51% of their high school graduates entering college, and other west coast states are lower than that. It's 60+% along much of the east coast and nearly that in most of the Midwest and South. Hell, even Florida hits the U.S. average of 55-56%. But the trend is for many graduates east of the Mississippi and abroad to relocate to the west coast.

Going back to the initial subject, that's what makes Granholm's investment in education "interesting" to me. It's not clear at all that, even if you bump up the college graduates in Michigan that they'll stay here, invest here, make it happen here. Is that the right starting point?

It's interesting to re-read this thread a couple years later, amidst more crisis.

What prompted me to dig it up was the talk of scrapping Michigan's "Promise" grants. As you can see, I never thought that they were a great idea for their intended purpose. The local punditocracy still seems to think that home-grown is the only way for that to happen... <groan>

Election-year politics are making things ugly. Dillon and Bishop both want to cut deals and not look like impediments as they plot for state-wide election. Granholm doesn't want to dirty her Lt. Governor's chances any more than she already has. Michigan suffers, as usual.

As far as I'm concerned, the biggest problem with Michigan is that people's local property taxes are insanely out of proportion with reality. There's no reason in the world for people to pay that much in property taxes, when you think about what they're getting in return.

And when the state, which is incredibly underfunded, comes asking for money, everyone goes "I'm not putting up with any more taxes." The state really does need to increase taxes, but since everyone is already up in arms about their other taxes, they resist it.

And when the state, which is incredibly underfunded, comes asking for money, everyone goes "I'm not putting up with any more taxes." The state really does need to increase taxes, but since everyone is already up in arms about their other taxes, they resist it.

At what point does Michigan, with all of it's unemployed workers and cheap land, put out a call to both foreign and domestic companies for "ready-made factories with well-trained employees at bargain-basement prices". I would assume that former UAW members would finally say "fuck it" and land themselves a decent job, albeit without all of the former perts of the automotive industry.

At what point does Michigan, with all of it's unemployed workers and cheap land, put out a call to both foreign and domestic companies for "ready-made factories with well-trained employees at bargain-basement prices". I would assume that former UAW members would finally say "fuck it" and land themselves a decent job, albeit without all of the former perts of the automotive industry.
Actually, I've been thinking about this quite a lot lately, and I'm beginning to think that the state government should strongly consider a return to the sort of "frontier" or "homestead" laws that originally allowed people to settle in Michigan in the first place. In a state with tons of unused land, it should not be difficult to purchase that land, and it should not be that difficult to pay local taxes on that land.

I propose that any real estate that is for sale or lease but has stayed vacant (vacant meaning physically unoccupied, or under the ownership of a real estate holding company) for longer than a year should have its cost automatically reduced to a predetermined, calculated state maximum; and if it is put up for sale or lease again within a year, it must also be sold or leased at the state maximum again. Property taxes will be assessed based not on the estimated value of the property, but rather on the state maximum price.

State maximums may not exceed 70% of the prevailing mean real estate costs for the municipality or township.

My proposal does a lot of good - it allows businesses to open at a much lower investment cost, and reduces their taxes going forward, which would provide incentives to development. It gives a shot in the arm to towns that need an infusion of business fast. It restricts itself to only situations in which real estate is not being sold; it would not take effect in situations where real estate is in high demand. It prevents companies from profiting from a "shell game" in which the same property is shuffled around to different companies owned by the same corporation until it can be sold at premium prices. And it provides a little more pride to neighborhoods that are sick and tired of looking at empty buildings.

The only losers in this scenario are real estate companies who are depending on their high amount of capital on hand to allow them to sit on overpriced properties indefinitely. But seeing as how they are the ones largely responsible for the situation, I think it's a win-win proposition.

There were some interesting ideas in the Time magazine article about them buying that house in Detroit (just got it a couple days ago). Not sure if it is also online.