For Immediate Release
January 11, 2018
With revenue numbers in place, League releases 2019 state budget priorities to invest in Michigan
LANSING—According to today’s Consensus Revenue Estimating Conference (CREC), Michigan’s General Fund revenues are remaining relatively flat, while School Aid funds are growing slowly. The Michigan League for Public Policy says that the decline in the purchasing power of the state’s General Fund—which is now estimated to be nearly 6 percent lower than the level in 1968 when adjusted for inflation—is bad news for tax cut enthusiasts.
The CREC numbers speak strongly to the need to manage the state’s finances carefully and make sound investments, but mathematically counter any ideas that Michigan can afford to rollback or repeal its state income tax—costing between $250 million to $9 billion annually. The state roads plan is also starting to ramp up and affect the state’s General Fund growth, further iterating the need for caution and strategic investment in the budget.
“This morning’s numbers show that lawmakers need to carefully consider what lies ahead. The state’s General Fund will be strained over the coming years by potential federal cuts and by funds already committed to roads and tax relief for businesses,” said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “Some elected officials in Michigan still have tax cut fever in 2018 and are thinking more about the ballot box than balance sheets, but they need to understand that there’s no money or political will to do that.”
The revenue estimates outlined by the Department of Treasury and House and Senate fiscal agencies today did not take into consideration any of the federal tax changes passed in December while their full impact is still being analyzed. This includes the supposed “windfall” of $1.5 billion coming from state income tax increases caused by the federal GOP tax plan. However that gets resolved—and the League believes that simply eliminating the personal exemption is a regressive move that hurts families with low incomes—Michigan still has many threats to providing basic services. The League supports Governor Rick Snyder’s proposal to restore the personal exemption.
Today’s estimates also do not incorporate any potential changes to the upcoming federal budget that could have a fiscal impact on the state, and those could be significant. Roughly 40 percent of Michigan’s state budget comes from federal funds, so cuts to the Affordable Care Act, the Children’s Health Insurance Program, Medicaid, the Supplemental Nutrition Assistance Program, the Low Income Home Energy Assistance Program or block granting of federal funding for states could put a significant strain on state coffers.
As CREC kicks off the annual state budget process, the League has released its 2019 state budget priorities, budget advocacy tips and timeline and data-driven fact sheets. The League’s priorities and related fact sheets outline investments needed in child care, education, healthcare, juvenile justice, immigration, and more.
“If the goal of elected officials is to help Michigan kids, families, workers, seniors and people with disabilities have a better life, the League has outlined a number of ways to do that, but it requires stewardship and investment, not shortsighted tax cuts,” Jacobs said. “Last year, we were honored to have some of our budget priorities included in the governor’s budget presentation and many passed with bipartisan support by the Legislature. We hope that the needs of our residents can stay above the political fray and our analyses can continue to speak up for them in the budget process.”
The League also encourages lawmakers to heed a new poll from EPIC-MRA that came out this week revealing what issues Michigan voters truly care about—and what ones they don’t. Just four percent of voters said that “Keeping state and local income taxes low” was a top priority. Results of the poll showed instead that Michiganders strongly support investment in our state and many of the League’s budget priorities.
The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.