michigan’s comeback plan a balanced approach. the current problem since 2001, michigan has...
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Michigan’s Comeback PlanA Balanced Approach
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.
Median Income Declines Below National Average
Source: House Fiscal Agency Presentation, 11/2009*2009 and 2010 are projected estimates
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%
GF/GP Revenue by Tax Source--FY 09-10 ($7.7 bil)
Sources: House Fiscal Agency
Tax Policy Impacts Available Resources
Source: House Fiscal Agency
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
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
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
Support to Communities and Services Falling Fast
GF/GP Appropriations
Source: House Fiscal Agency Presentation, 11/16/09
The Comeback PlanA Balanced Approach
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.
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
Rising Cost of Loopholes
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
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
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
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
Public Support for a Balanced Approach
Impact of Budget Cuts
Support for a Balanced Approach
Accountability and Transparency
Sources: Progress Michigan/ABMF Poll, July 2009
Accountability and Transparency
Fairness in Taxes
Fairness in Taxes
Partner Organizations
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