At least we've stopped digging

Background: Farmington Observer editor Stacy Jenkins asked for comments from "regular" people on new Michigan Governor Rick Snyder's proposed budget. Here's mine.

As expected, Gov. Rick Snyder’s proposed budget combines good and bad elements while revealing a profound difference between himself and his predecessor. Snyder understands what this state must do in order to allow the private sector to create jobs. Unfortunately, this aspect of the budget will receive the most criticism from the usual class warfare proponents - union leaders, liberal politicians, and recipients of government handouts - who fail to recognize some simple truths. Businesses don’t pay taxes - their customers do; high costs in the form of taxes and regulations deter businesses from investing in Michigan; and until this state reduces the cost of doing business, job creation will be anemic at best. Snyder’s budget is a step toward reducing these costs.

Another positive aspect of his budget is the reduction of special tax breaks for certain industries and retirees. Granting favors to some darling special interest group forces others to pay higher taxes and creates an entrenched lobbying group that fights for those favors and encourages others to get themselves some.

Snyder’s budget pushes more responsibility onto local units of government which have been too slow in implementing structural changes as Farmington Public Schools recently demonstrated. The district is finally looking for competitive bids to save up to $4 million per year on support services. These savings have been available for years but ignored.

The two most disappointing aspects of his budget are the plan to eliminate the final reduction in the personal income tax rate and not enough specific reforms in some of the most expensive areas of the budget.

Snyder’s elimination of personal deductions should be offset with the across the board reduction in personal tax rates to 3.9 percent rather than freezing it at 4.25 percent.

As far as reforms, Snyder’s proposal appears to be lacking some details. Reduced funding for higher education should be accompanied by a change in how those funds are dispersed. Today, each university lobbies for their slice of the pie. Attach those funds to individual students and let the universities compete for those students and the funding they carry. Corrections is a costly drag on state spending and Snyder should have proposed contracting out more of the services related to it. Simply cutting the budget does not result in structural changes.

Finally, Snyder doesn’t go far enough with his cuts to special interest programs. MEGA, Pure Michigan, and the 21st Century Jobs Fund should be eliminated not just funded at a reduced level.

Snyder first budget moves Michigan in the right direction. However, the political battles to come will be the defining factor. If Snyder blinks, Michigan will continue its downward slide. If he holds firm, he will have taken the first step toward helping us forget how former Governor Jennifer Granholm blew us away.

[Commentary - Farmington Observer. Submitted 02/18/2011.]