Budget Negotiations Lurch Forward

On Friday the legislature passed legislation to protect schools, revenue sharing and Medicaid from cuts scheduled to take effect on June 1. Senate Bill 436 also prevents the layoffs of 29 State Police troopers. Resolutions were also passed to express the legislature’s intention to fund these programs by (among other things) securitizing $400 million in tobacco settlement money and re-allocating $100 million from the Higher Education Loan Authority.

Although it is a big relief that this action saved our schools and Medicaid in the current budget year, many painful cuts were made in other areas. Payment delays and cuts for universities and community colleges, a 38 percent cut to arts and cultural grants, cuts to most state departments, and cuts to Healthy Michigan Fund (which funds things like immunizations, cancer prevention, dental, diabetes, infant mortality, etc.) make up a large part of this legislative deal.

It also drained $30 million from the 21st Century Jobs fund.  This is money earmarked to attract and retain businesses in Michigan, specifically the high tech, advanced manufacturing and life sciences areas. Taking money from this fund is tantamount to spending our seed corn.  It is the hope of the future to diversify our economy and develop the 21st century economy.

I voted against this bill because I do not support these cuts and because I believe that we need a comprehensive solution that includes cuts, reforms, and revenues.

Over the past five years we have already cut $3 billion out of the state budget.

We have an ongoing structural budget deficit because of the 1999 cut in the income tax from 4.4 to 3.9 percent, costing the state about $900 million a year. This causes the better part of the ongoing structural budget deficit.  The Single Business Tax, due to expire on December 31, brings in $2 billion a year, one-fourth of the state’s general fund.  Whatever tax replaces it needs to fully replace the revenue it produces.  This too needs to be part of a comprehensive solution to the state’s budget crisis.

Because of the use of gimmicks and one-time fixes for so many years to balance the budget, the bond rating agencies have downgraded the state’s bond rating.  For the third time this year, Wall Street has downgraded Michigan's credit rating. Standard and Poor's has recently lowered Michigan's General Obligation Credit Rating to AA- from AA. As with previous downgrades from Fitch and Moody's, S&P cites delays in securing budget agreements and the legislature's elimination of the Single Business Tax without replacement revenue as key factors. This results in increased borrowing costs to state and local government and schools, further straining our fiscal position.

I am committed to supporting some form of revenue, whether it be a restoration of the half percent of the income tax, or some form of sales tax on services, in order to restore the state to sound fiscal footing.

I am also committed to looking for reforms that could save the state money.  Currently, $1.9 billion a year, or 20.1 percent of our general fund, is spent to fund our corrections system. Michigan has one of the highest incarceration rates of the states in our region, but not a commensurately lower crime rate. We incarcerate 51,000 people in our prisons, at the cost of $31,000 per prisoner. A large percentage of those imprisoned (national estimates range from 16 percent to 56 percent) are people with mental illness, many of whom are nonviolent offenders. Outpatient mental health services cost $8,000-$11,000 (depending on the county) per person, making it a far more humane and economical option than our costly prison system.

We must solve this budget crisis immediately with a sensible mix of revenue enhancements and reforms. Our economic future depends on a plan that creates jobs, good schools, affordable higher education and a safe, clean environment.

Leave A Smaller Foot Print

I know many of you are interested in reducing your personal contribution to global warming.  One great way to do this is to sign up for DTE Energy’s GreenCurrents renewable energy plan for residential and business customers.

This voluntary program will allow you to purchase blocks of energy credits.  These energy credits will ensure that electricity generated on your behalf will come from renewable energy sources like wind, sun, water, biomass and other environmentally friendly sources.

The voluntary program will cost residential consumers $2.50 extra a month to buy a block of 100 kilowatt-hours of renewable energy, which represents about 15% to 20% of a typical home's monthly electric usage. Residents interested in purchasing a 100% match of their home's electricity consumption with renewable resources can do so by paying an additional 2 cents per kilowatt-hour, or an extra $10 to $15 a month.

DTE's GreenCurrents program hopes to sign up as many as 22,000 customers in the next three years.

For more information on the GreenCurrents program, go to www.dtenergy.com or call 866-207-6955.

Phosphorus Elimination Bills Pass Senate

I recently sponsored Senate Bill 152, which prohibits the sale of laundry and dishwasher detergents containing phosphorus. Last month, the Senate voted to pass this important piece of legislation.

Recent changes in the Great Lakes ecosystem have caused the reoccurrence of algae blooms and require these reductions. Phosphorous acts as a fertilizer when introduced into waters. This, in turn, promotes excessive growth of algae and seaweed. Previous regulations reducing phosphorus use have shown great success in reducing harmful algae blooms and the resulting problems of fish kills and unswimmable waters.

SB 152 is supported by the Michigan Environmental Council, Michigan Department of Environmental Quality, Proctor and Gamble, Soap and Detergent Association, Alticor, Michigan Manufacturers Association, Sierra Club, and Michigan United Conservation Clubs.

I anticipate that members of the House will soon vote to pass this legislation, which will then head to Governor Granholm, who is expected to sign the bill.

Construction Road Map Now Online

Paving the Way 2007, MDOT's road repair map, will help you locate major road and bridge projects on state roads. The map covers state trunkline (I, M, and US) routes. Separate Detroit and Grand Rapids maps detail construction projects on state roads in these cities.

The map is available at:
http://www.michigan.gov/mdot/0,1607,7-151--112453--,00.html