Tuesday, October 20, 2009

* The Wall Street Journal
* OCTOBER 20, 2009

State lawmakers will soon face large budget deficits again, perhaps as much as $100 billion across the U.S. Here's some free budget-balancing advice: Steer clear of the Michigan model. The Wolverine state is once again set to run out of money, and it is once again poised to raise taxes even as jobs and businesses disappear.

In 2007 Governor Jennifer Granholm signed the biggest tax increase in Michigan history, with most of the $1.4 billion coming from business. The personal income tax—which hits nonincorporated small businesses—was raised to 4.2% from 3.95%, and the Michigan business tax levied a surcharge of 22%. The tax money was dedicated to the likes of education, public works, job retraining and corporate subsidies. Ms. Granholm and her union allies called these "investments," and the exercise was widely applauded as a prototype of "progressive" budgeting.

Some prototype. Every state has seen a big jump in joblessness since 2007, but with a 15.2% unemployment rate Michigan's jobs picture is by far the worst. Some 750,000 private-sector payroll jobs have vanished since the start of the decade. For every family that has moved into Michigan since 2007, two have sold their homes and left.

Meanwhile, the new business taxes didn't balance the budget. Instead, thanks to business closures and relocations, tax receipts are running nearly $1 billion below projections and the deficit has climbed back to $2.8 billion. As the Detroit News put it, Michigan businesses are continually asked "to pay more in taxes to erase a budget deficit that, despite their contributions, never goes away." And this is despite the flood of federal stimulus and auto bailout cash over the last year.

Following her 2007 misadventure, Ms. Granholm promised: "I'm not ever going to raise taxes again." That pledge lasted about 18 months. Now she wants $600 million more. Among the ideas under consideration: an income tax increase with a higher top rate, a sales tax on services, a freeze on the personal income tax exemption (which would be a stealth inflation tax on all Michigan families), a 3% surtax on doctors, and fees on bottled water and cigarettes. To their credit, Republicans who control the Michigan Senate are holding out for a repeal of the 22% business tax surcharge.

As for Ms. Granholm, she and House speaker Andy Dillon continue to bow to public-sector unions. There are now 637,000 public employees in Michigan compared to fewer than 500,000 workers left in manufacturing. Government is the largest employer in the state, but the number of taxpayers to support these government workers is shrinking. The budget deadline is November 1, and Ms. Granholm is holding out for tax increases rather than paring back state government.

The decline in auto sales has hurt Michigan more than other states, but the state's economy would have been better equipped to cope without Ms. Granholm's policy mix of higher taxes in order to spend more money on favored political and corporate interests. If any larger good can come of the experience, it is that Michigan is teaching other states how not to govern.
Printed in The Wall Street Journal, page A20

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Wednesday, October 14, 2009

Timing is Everything!

Mich. panel votes to end ban on duels, prizefights

10/13/2009, 2:14 p.m. EDT
DAVID EGGERT
The Associated Press

AP) — LANSING, Mich. - Dueling has become less common over the past couple centuries. Likewise, the concern about prizefights. Both those activities, along with taking a women against her will and forcing her to marry, would no longer be specifically outlawed in Michigan under measures a legislative committee approved Tuesday and sent to the full Senate.

The bills will go to the House for consideration once the Senate votes. "There may have been a time in our history that there was a need for these particular statutes, but I think that time has passed," said Livingston County Prosecutor David Morse.

The state has no need to keep such laws-dating back to Michigan's 1931 penal code-on the books because it already is a crime to kidnap, kill or hurt someone, Morse said. After hearing brief testimony, the Senate Judiciary Committee passed the bills 5-0.

Republican Sen. Bruce Patterson of Wayne County's Canton Township jokingly asked if it was wise to lift the specific ban on dueling, given the animosity inside the Capitol at present over resolving a $2.8 billion budget deficit. Much of state government is running on a one-month budget because of the standstill. Morse replied in jest that if lawmakers had pistol duels, the state could "reserve Spartan Stadium and you could sell some tickets."

The bid to scrub the books of laws that no longer apply comes up from time to time. Legislators ask the Prosecuting Attorneys Association of Michigan if the state has obsolete crimes or crimes covered by other laws. Prosecutors submit a list, and lawmakers occasionally get around to their suggestions.

Other felonies that have been considered for deletion include teaching polygamy, promising to sell grain at a fictitious price and making a false protest on a boat. Though lawmakers have been in session a lot lately voting on budget bills, legislative leaders are responsible for budget talks-freeing up rank-and-file legislators to work on other issues.
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David Eggert can be reached at deggert(at)ap.org
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The bills are Senate Bills 760-67
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On the Net:
Michigan Legislature: http://www.legislature.mi.gov

Tuesday, October 13, 2009

Response to LTE published in Birch Run Bridgeport Herald (see the letter below this post)

October 13, 2009



Birch Run/Bridgeport Herald
Craig Nelson, Editor

Dear Editor,

I learned a long time ago and from a very thoughtful man, Bishop Kenneth Untner, that with every criticism, no matter how harsh, comes at least a small grain of truth. In a recent letter to the editor, a college student was critical of a vote I recently made to balance the state budget. It was the Higher Education Bill, and it included a cut to the Promise Scholarship Program put in place in 2006.

I carefully read the student's description of her family and their struggle to pay college tuition as the bills come in, fast and furious. I empathize, as I have two kids in college today. I know that sitting around the kitchen table trying to balance the checkbook with shrinking dollars is becoming more and more frustrating. Keep in mind that as Michigan families are hunkering down in this bad economy, they fully expect their government to do the same.

The student is rightfully concerned over the cuts to scholarships, though it is fair to say that the fight to restore the grants is not over. Citizen Legislators, like myself, on both sides of the aisle are very sensitive to the needs of our working families as they struggle to pay all their bills in these harsh economic times. The student properly describes the hardship of a $500 bill from her school, but I can't imagine that a new $500 tax bill, of any kind, in 2009 is any easier for families to manage.

As Michigan struggles to reconcile a $2.8 billion debt, legislators are still working restore the Promise Scholarship. In an effort to create a safety net for students, I introduced a bill that would exchange grants for direct tax credits. The theory being simple; if we owe you Promise Scholarship money, you owe us nothing. It is simply a "Plan B" as Lansing hashes out its problems, but comes with the added benefit of keeping our highly educated graduates in the State of Michigan.

Michigan also made a promise to keep our streets safe for everyone, educate our children from kindergarten to 12th grade, and to maintain proper infrastructure to get folks back and forth to work safely. My primary objective is to ensure that these things happen while keeping government fingers out of the wallets and checkbooks of hard-working families in my district.

Unlike 2007, this budget cycle was to be about re-establishing priorities in government spending. For instance, my welfare reform bill would limit welfare to four years. With that savings, Michigan towns and cities could hire 500 community police officers. Freezing the Earned Income Tax Credit at current levels could pay for the Promise Scholarship. These shouldn't be tough decisions.

College students should have learned quickly that there's "more than one way to skin a cat". Don't turn your back on your own future. Join me in asking that HB 5376 (The Promise Scholarship Protection Bill) get a fair hearing in committee. Call your local legislators and the governor's office to tell them you support this plan.

HB 5376 will keep the Promise, keep our kids in Michigan, and keep the taxman out of your pockets.

Sincerely,
Kenneth B. Horn
State Representative
94th District

Letter posted in Birch Run Bridgeport Herald Editorial - Response posted above.


Thursday, October 8, 2009

As we wrestle the budget crocodile

BREAKING NEWS: STATE SHORT $130 MILLION IN SEPTEMBER

Today at 12:42pm

From Gonwer News Service:

Revenues Short By $130 Million General fund revenues through September are down $65 million, while the School Aid Fund is short another $65 million compared to what the state’s three fiscal experts predicted back in May for the 2008-09 fiscal year, according to a memo released by the House Fiscal Agency. The information comes as the conference committee on the K-12 budget is scheduled to meet this morning.

Income tax revenues (Raised in 2007) are down 22.6 percent compared to a year ago, while the sales and use taxes are down 15.3 percent.

The state’s business tax is down 37 percent. (This tax was raised by 22% in 2007)

Overall, tax revenues are down 14 percent through September compared to the same time last year.

It uglier every month that goes by. We need true reform in the state of Michigan.

Tuesday, October 6, 2009

Call of the House lifted

We've been sprung! The doors are unlocked and we're free to go. Perhaps it's apropos that the politicians are locked up while the prison inmates are early-released.

Either way, we have a long way to go, and while the GOP help firm for reform over taxes tonight and will go back into battle tomorrow.

See you tomorrow morning!

HB 5355 - coming up next - tobacco tax

Doubles the tax on other tobacco products (noncigarette smoking tobacco and smokeless tobacco other than moist snuff) from 32% of wholesale price to 64% --taxes little cigars like cigarettes --taxes moist snuff based on weight (a tax increase on cheaper brands) --imposes the tax increases on all tobacco inventory held by licensees and retailers --does not increase the collection allowance for licensees --creates the Michigan Future Fund and earmarks new revenue to the fund for: revenue sharing, promise grants, aid to libraries, PILT payments and school aid

Talk about watching sausage being made!

The Speaker twisted enough arms to create a healthcare tax on doctors. It was so interesting to watch the leaders work the floor on the other side.

One Rep. got many visits and a call from the governor. Some Reps. were taken to the woodshed.

The tax got raised, though, with no GOP votes.

It's down to the wire.

The vote on the Doctor's Tax is 53-56, at this point. Which means that they do not have the votes to pass this tax increase the costs of your doctor visits. They will need to flip three votes. The Speaker of the house is working very hard to coax his members to switch their votes.

These are tough votes, and no one should diminish the significance of this moment. This is where the rubber meets the road. This is very historic. Michigan could see some true reform, if this tax is denied.

In either regard, I cannot see that the Senate would pass this extraordinary tax. With all that uncertainty at hand, it seems like a waste of political capital.

The GOP took some very tough votes last week to reform the government budget, and our friends on the other side are taking their tough votes now

Doctor taxes create heavy debate

Apparently, doctors don’t understand their patients and their practices as well as politicians do. Somehow, if doctors take the patients that Lansing says it should, at 35 cents on the dollar, by the way, they will benefit if Lansing taxes them at 4%. Go figure.

This kind of fuzzy math helps prevent real reform, and is very bad policy. To create a brand new tax while lawmakers are locked behind closed doors, in the middle of the night, is never good.

Very passionate debate, for the most part; though one colleague said that raising taxes is like a "revolution" and one said, “84% of the people working need to pay for the 14% that aren't”

I'm voting no.

Taxes up for a vote!

We have lots of movement on tax votes. The first vote dealt with a tax increase on average working families. The second tax is a 4% on all doctors, which is terrible policy for the working poor and every family already struggling to pay medical bills.

A Bright Spot in the Midst of a Dark Budget Debate

New solar company could invest $250 million, create 500 jobs in Thomas Township
By Barrie Barber The Saginaw News
October 06, 2009, 12:54PM

A Georgia-based company could invest $250 million in a solar cell making plant and create up to 500 jobs within five years in Thomas Township.

Suniva Inc. would build on 40 acres in a proposed 235-acre renewable energy park near the corner of M-52 and M-46 in Thomas Township, said Saginaw Future Inc. President JoAnn T. Crary. “Those jobs are going to be well-paid positions with benefit plans and I think that’s something that any area in the country would be happy to see given the current economy of the nation,” said Thomas Township Manager Russell P. Taylor.

Crary said the deal is contingent on Suniva securing a loan guarantee from the U.S. Department of Energy. An exact dollar amount wasn’t available. “We have some momentum going, and it’s just awesome news for the region,” she said. “We’re very optimistic this project will move forward.” Hemlock Semiconductor Corp., Dow Corning and Dow Chemical Co. have invested nearly $3 billion since 2005 in solar technology in the Great Lakes Bay Region, Crary noted.

The Norcross, Ga.-based Suniva would produce high-efficiency silicon photovoltaic cells, dubbed “ARTisun,” on six production lines with the yearly capacity to produce 400 megawatts of solar power, or the equivalent of powering 100,000 households. “This is a new part of the solar value chain,” she said.

Economic boosters have touted HSC as the anchor to attract new solar companies and jobs. “Should we land this company, this is the first domino in a long chain,” predicted state Rep. Kenneth B. Horn, a Frankenmuth Republican whose district covers Thomas Township.
HSC is the world’s biggest producer of polycrystalline silicon. The raw material is used to make solar panels and computer chips.

Suniva would begin construction in 2010 on three production lines. The other lines would begin operation in April 2012, project estimates show. State and local governments have offered an alphabet soup of incentives to attract the solar manufacturer, such as a first-ever $15 million Photovoltaic Michigan Business Tax credit due for Michigan Economic Development Corp. endorsement today.

“It’s critical that we diversify our economy and Michigan has the tools and the expertise and the workforce and the drive quite frankly to establish alternative energy sectors in our state,” said MEDC spokeswoman Bridget Beckman. “We are very quickly seeking national recognition among alternative energy companies as the place to be.”

Other planned or already OK’d incentives include: A Michigan Economic Growth Authority tax credit of up to $8.6 million; more than $45 million in property tax savings as part of a 15-year Renaissance Zone; a potential $10 million Community Development Block Grant to prepare the site for construction; and a Saginaw County Community Development Block Grant loan of $500,000.

Saginaw Future estimates the project will create more than 1,625 spin-off jobs.

MICHIGAN: State Budget Delay Costs Michigan Schools (2009-10-06)#

MICHIGAN: State Budget Delay Costs Michigan Schools (2009-10-06)#

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Who Stands up for Christine?

Here's a little glimpse into what my inbox looks like. Christine talked from the heart as she responded to a previous blog.


Christine said...
Once again the people of Michigan don't matter! You want to know how to balance the budget here is a suggestion. My husband and I both work. We fed our children hot dogs and macaroni and cheese. I didn't eat. We take $75 to the grocery store every other week with our coupons because that is what we can afford and that is a sacrifice. Only to see people pushing two chucked full carts around to the register and whip out the bridge card. Refigure the welfare benefits!!! The working people are hurting and Michigan don't care about us or our children. Social Security is going to run out. But don't worry our loyal welfare recipients, you won't go hungry. But hey could you please let us come over to eat. We are!!!


I will approach the details of the budget as thoughtfully as I approach each important bill. But... there should be no doubt, as you read this, for whom I'm standing up for.

Locked in Again!

Another "Call of the House", with no way, physically, to get to the outside world. As soon as the Floor Leader announced that we were officially locked in, we decided to go "At Ease". Kind of like being on a cruise ship, I guess, but without all that pesky sun and fun.

This from the Capitol Press Corp:

The House is expected to vote on five revenue bills during Tuesday’s session.

House Democrats are expected to caucus for several hours before the vote. If all five revenue proposals were to become law they would raise an estimated $345.8 million.
The revenue proposals are a 15 percent reduction in Michigan Business Tax credits, equal to $116.1 million, raising the state’s other tobacco products tax by $41 million, an extended hours liquor license fee to raise $13.7 million, freezing some personal exemptions to the income tax to save $55 million, and raising the earned income tax credit by less than the scheduled level to save $120 million.

A sixth proposal to launch a tax on physicians at 3 percent is not expected to come up for a vote today. Gongwer News Service will follow this story during Tuesday.

____________________________________________________________________________________________________________________

Thursday, October 1, 2009

Wow! the House is adjourned!

Well... I will check in with you on Tuesday when we get back into session. In the meantime, I'll watch for your comments on facebook and in my office email.

Have a great weekend! And... Go Blue!

HB 5463

This bill just passed the House. It will match a Senate Bill 785 to define and limit the role of the Department of Environmental Quality (DEQ) in the regulation of wetlands. Michigan will draw closer to 48 other states to fall back on EPA rules for wetlands.

This will begin to make Michigan more competitive in the global job market, though, much more work needs to be done.

Saginaw News Editorial -Thursday

Editorials, Interact - Top Story »
Torn From The Front Page: Government bloggers update their constituents on the spot
By The Saginaw News staff
October 01, 2009, 5:41AM

Communication is more than a two-way street these days — with all our electronic, wireless, mobile and other options, it’s more like the traffic circle at Piccadilly Circus.

But successful transmission of information, ideas and opinions still depend on the willingness and effort put into the exchange by the parties on either end.

That’s what is so encouraging about the recent efforts to expand communication by two Saginaw-area public servants.

State Rep. Ken Horn, R-Frankenmuth, started on online blog to chronicle the making of the budget sausage at our state Capitol.

And Ron Lee, manager of Saginaw Township, has inaugurated a blog of his own to share information and his viewpoints with township residents.

For the uninitiated, “blog” is short for Web log; in short, it’s an online journal in which the proprietor can inform, entertain, share his or her philosophy and, if they choose, invite interaction from their visitors.

At best, they give insight into the motivations of the author and others, broadening our understanding of issues that normally might be beyond our grasp. Here are some excellent examples from Horn’s blog, at www.repkenhorn.blogspot.com, earlier this week:

“Human Services Budget: Voting again! This is one of the big ones. 29% cut, which is taking a lot of heat off of the K-12 education budget at 3% cut. You should know that nobody in the Capitol building is very happy about these cuts. Not that I can see anyways. This is tough, and we’re all thinking that it isn’t going to get any easier with next year’s budget.”

And: “Let’s get this show on the road, already!: Oh… good Heavens!!! Our colleagues on the other side of the aisle just called a caucus for the third time today. It’s almost 9 p.m., and we’ve had no more than three votes. Four, if you count the two times we voted on the Corrections budget.”

And: “Corrections Budget: Voting on the Corrections budget now. There are cuts in the budget, but one of the problems with this budget is that any early paroles that violate their conditions of parole, go into our jails and we’re cutting revenue sharing for Counties. Double whammy for local units of government.”

These real-time updates, perspectives and opinions are the kind of information that in the recent past would not have been available to average citizens, even those who went out of their way to keep informed.

And the beauty of the tool is that it invites and allows immediate interaction.

If you turn it on, that is. Horn’s blog allows visitors to sign on as members, or “followers,” allowing them to receive updates when he posts new items or to leave comments for the representative while he’s in the thick of the budget battle.

Over in Saginaw Township, Lee is taking a slower approach. His online foray is to blogs what the Frisbee is to flying machines: Simple, direct and headed in one direction — right at the reader.

Lee makes it clear that he is sharing “facts,” not looking for a debate.

That’s fine from the standpoint of broadening understanding of government, although it goes against the “wiki” ethic of the Web — that is, that our understanding of issues grows when everyone chips in a little bit of knowledge.

It’s all good, though. At least he’s reaching out, in a format that more and more people every day are using as a tool to navigate their busy lives.

The machinery of government may not have changed much over the ages, as Horn’s blow-by-blow blog illustrates. But by embracing new technologies, our elected leaders are wise to open the democratic process up to the greater public in ways never before possible.

The Day After!

Well... here we sit at the Capitol. The plastic cups and pizza boxes are gone, but the dust hasn't completely settled yet. We still have some work to do to clean up the budget mess we created last night.

A contingency budget is in place for a month. And, I believe a solid framework is in place to set the School Aid Budget, before their next quarterly payment in a couple of weeks.

If you followed my blog yesterday, you had a chance to see the ups and downs of government policy making (sometimes good and sometimes not). Michigan Government shut down for a couple of hours last night, but we're in business today.

One thing that really struck me yesterday, was the lack of ugly partisanship (compared to 2007). Oddly enough, the contention in the budget (Just in my opinion) is mostly driven by differences in philosophies by the majority party, on the other side of the aisle. Half the folks can't stomach such deep spending cuts and the other half couldn't get themselves to support tax increases. It left the House of Representatives frozen with inaction for hours at a time, stalemated on by their own disparities.

For me, I feel refreshed after a few hours of sleep. I've driven home each night after session and returned the next morning. In three days, I've driven 5 hours, and slept 7 hours. But, going home always re-energizes the soul. Besides, I get to see the kids, feed the pets, and bring the outside plants in from the frost. Life still goes on in Michigan, as the sun proved today, as it came up again.

I'll keep you posted as things unfold today.

Last post until noon

Senate signed contingency budget, no word from the governor's office, yet.

The House stands at ease until noon, later this day. We'll check in with you then

Signing off for the night

Michigan State Police Budget

MSP Budget passed with 55 troopers replaced after an extended lay off.

Government Operations

Government Operations budget passed with cuts. No new Taxes.

Government in Shutdown

Until the contingency budget is enacted, or we actually balance the budget, the government is officially in shutdown