Mackinac Center Agrees With Governor That State Budget Cuts and Reforms Are Needed, Not Tax Hikes

“Transformational state budget savings are possible, but we should get started now,” says Center’s fiscal policy director

For Immediate Release
Thursday, Dec. 6, 2007

Contact: Michael D. LaFaive
Director of Fiscal Policy
989-430-8669
Contact: Jack McHugh
Senior Legislative Analyst
517-749-1129

MIDLAND — Responding to Gov. Jennifer Granholm’s statements in an Associated Press story today that, “I’m not ever going to raise taxes again,” and, “It has to be cuts and reforms,” Mackinac Center Fiscal Policy Director Michael D. LaFaive said, “Let’s get started now.”

Gov. Granholm noted that the time for tax increases had passed “especially in light of our economy,” adding, “And there’s got to be some creative partnering with the private sector.” LaFaive noted, “Creative private-sector partnering is precisely the kind of reform the Mackinac Center has recommended for prisons and mass transit, and we have strong evidence that privatizing school support services could reduce school costs at a time of lower-than-projected state revenues.”

“There are, of course, other long-term reforms open to the state, such as pension plan changes for new public school hires and voucherizing aspects of Medicaid in order to increase recipients’ choices and improve spending discipline,” LaFaive added. “The key point, however, is that transformational cuts take time. They’re usually too complex to introduce and push through at the very end of the fiscal year, and the savings often won’t begin immediately anyhow. But if we start now, we can implement efficiencies that improve service delivery and start reducing the state’s long-term spending liabilities, making Michigan a more promising place for residents and businesses to invest in.”

The Center’s suggested spending reductions can be found in a 2004 budget study that contained more than 200 ideas for saving the state’s general fund more than $2 billion at http://www.mackinac.org/6545, or in a more recent Op-Ed at http://www.mackinac.org/8798.

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