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Michigan’s Comeback PlanA Balanced Approach
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The Current Problem•Since 2001, Michigan has experienced cumulative projected deficits in
excess of $10 billion--exhausting nearly $6 billion in fiscal reserves.
•Today:
•$1.78 billion deficit
•Nearly $2.5 billion w/o federal stimulus dollars
•Tax structure based upon a 1960’s economy
•An unbalanced approach to the state budget continues disinvestment in infrastructure needed for the 21st Century economy, including public safety, transportation, and education.
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Median Income Declines Below National Average
Source: House Fiscal Agency Presentation, 11/2009*2009 and 2010 are projected estimates
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Share of Family Income Paid in Taxes
% of Income
Source: Institute on Taxation and Economic Policy, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, 3rd edition, 11/2009
8.9%9.9%
9.8% 9.6%8.9%
8.0%
6.4%
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GF/GP Revenue by Tax Source--FY 09-10 ($7.7 bil)
Sources: House Fiscal Agency
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Tax Policy Impacts Available Resources
Source: House Fiscal Agency
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A Decade of Decline•Police and fire funding reduced by nearly $3 billion
•Higher education funding reduced by 17.8% per student
•Early-childhood programs reduced by 32%
•Environmental protections reduced by nearly 60%
•State workforce reduced by 11,000 employees
•Concessions by public employees has saved the state $3.7 billion
•Roads and infrastructure continue to decline
•Unemployment benefits frozen and retraining programs cut
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State Government is SmallerFYFY GovernorGovernor # State Employees# State Employees
1973 Milliken 52,673
1978 Milliken 64,456
1989 Blanchard 64,560
2000 Engler 61,493
2008 Granholm 50,799
% Change 78-08 -21%
% Change 00-08 -17%
Source: Department of Civil Service State Workforce ReportsChart Prepared by Michigan League for Human Services
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MI Expenditure Growth Lowest Among States
GF GrowthGF Growth Total Expenditure GrowthTotal Expenditure Growth
2001-072001-07 RankRank 2001-072001-07 RankRank
Illinois 18% 42 23% 45
Indiana 20% 40 28% 41
Michigan -7% 50 12% 50
Ohio 12% 46 26% 44
Wisconsin 18% 43 22% 47
Missouri 3% 49 26% 42
U.S. Average 33% -- 40% --
Source: NASBO State Expenditure Surveys 2001 and 2007
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Support to Communities and Services Falling Fast
GF/GP Appropriations
Source: House Fiscal Agency Presentation, 11/16/09
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The Comeback PlanA Balanced Approach
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Audit Government Contracts
•Private contracts account for nearly $15 billion--twice the GF/GP budget--or 35% of the total state budget
•Currently, no process exists for annual review for efficiency and accountability.
•Legislators have a responsibility to demand that taxpayers are receiving the most value for their dollar.
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Close Tax Loopholes and Giveaways
•Only 45% of potential revenue was collected in 2008
•Tax credits accounted for $35.8 billion in 2009--five times the state’s general fund
•Close credits not creating and retaining jobs; provide for annual audits
•Limit future credits and ‘pay as you go’
Total 2008 Potential Tax Revenues = $57.9 billion
Sources: Michigan Department of Treasury Executive Budget Appendix on Tax Credits, Deductions and Exemptions FY2005 - FY2008 and Department of
Management and Budget Comprehensive Annual Financial Reports. Calculations by Michigan League for Human Services
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Rising Cost of Loopholes
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Are They Working?
Sources: U.S. Bureau of Labor Statistics and University of Michigan RSQE September 2009 Forecast*Average Annual Job Growth 91-00
**Projected RSQE Forecast
Thousands
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Expand Sales Tax to Services
•Current sales tax based off a ‘goods-based’ economy
•Michigan taxes only 26 of 164 identified services, ranking it 38th in the country.
•Expansion would generate up to $1.65 billion with future growth
Sources: Federation of Tax Administrators and US Census BureauChart Prepared by Michigan League for Human Services
Tax Structure Misses Growing Sector of Economy: % of Potential Sales Tax Revenue
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Implement a Graduated Income Tax
•Current flat tax: 4.35%--rate falls each year until it reaches 3.9% in 2015
•Seven states, including Michigan, have a flat tax
•Percentage represents a greater share of disposable income for low- and middle-income workers
•Income growth has been concentrated among top wage earners
•90% of tax filers would see a tax cut, while generating $600 million in new revenue
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Income in Richest Households Grew 5Xs Faster
Source: Pulling Apart: A State-by-State Analysis of Income Trends, by the Center on Budget and Policy Priorities and the Economic Policy Institute. Chart prepared by Michigan League for Human Services
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Public Support for a Balanced Approach
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Impact of Budget Cuts
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Support for a Balanced Approach
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Accountability and Transparency
Sources: Progress Michigan/ABMF Poll, July 2009
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Accountability and Transparency
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Fairness in Taxes
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Fairness in Taxes
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Partner Organizations
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Campaign Contactswww.abettermichiganfuture.org
Campaign Director
Cyndi Roper
517.490.1394
Campaign Spokesperson
Lynn Jondahl
517.402.7090
Legislative Coordinator
Patrick Schuh
517.214.4288