The Michigan Senate Fiscal Agency expects that state government
spending from all sources for fiscal 2008 will be $42.8 billion — the highest
annual state spending in Michigan history and a $937.6 million increase over the
previous fiscal year. The vast majority of this additional spending is possible
because of the $1.358 billion tax hike approved by Michigan law-makers and the
governor last fall. However, despite an agreement to cut $433 million in
spending if higher taxes were approved, and dire warnings of "massive cuts" if
the taxes were not raised, only seven of the 17 appropriation bills enacted for
2008 carry a smaller price tag than what was originally enacted for the previous
budget year.
The discrepancy between promised cuts and the reality of $937.6
million in additional spending can be explained by the phrase "current services
budget." Simply put, this is the government assumption that the current year’s
budget should provide everything the previous year’s budget did and do it much
the same way, with whatever dollars are necessary to get it done. For the most
part, no allowance is made for identifying and eliminating needless services or
finding more efficient ways to provide services through the use of privatization
and other efficiencies.
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Last fall, 114 lawmakers voted to approve at least $1 billion of that extra spending, and 41 voted for it all. | |
Once this price of "current services" is calculated for the next
fiscal year, nearly all deviations downward are defined as a "cut," even though
total spending increases. For example, lawmakers and the governor agreed to
"cut" $55.6 million from the current services budget for the Department of
Corrections, but the reality for taxpayers is that the price tag for prisons in
2008 will be $138 million more than what was originally enacted for 2007.
The alternative is to assume that some programs can be
eliminated, that government need not do things the same expensive way every
year, and that state workers may have to share in the state’s economic
hardships, rather than receive a raise like this year’s $150 million payroll
increase. The real per-capita personal income of Michigan taxpayers fell by
almost 1 percent from 2001 through 2006. According to the Michigan Department of
Labor and Economic Growth, the average state civil service worker was paid 18
percent more than the average private-sector employee as recently as 2005. Is a
raise for state workers in 2008 an essential service?
Mackinac Center Senior Legislative Analyst Jack McHugh points
out that the 2008 budget contains only a few tiny real cost containments, such
as closing four prisons, trimming arts funding and very modest outsourcing of
foster and child adoption services. But he laments that the larger targets for
"transformational" cost savings were not considered. Two examples he cites are
prison privatization and devolving state police road patrols to less costly
county sheriff’s deputies.
McHugh asserts that neither liberals nor conservatives prefer
overpriced prisons and police, so this budget is not an ideological battlefield.
Rather, the real dispute is between taxpayers and the government employee unions
whose interests are at stake if raises are not given, or if government jobs are
outsourced to private-sector providers. While conceding that few Michigan
residents knew about it, McHugh recounts the "loud demonstrations, e-mail
campaigns, and uncompromising letters" that these unions used to exert "powerful
pressure" on lawmakers to raise taxes and increase spending. "When the governor
announced her budget back in February," he writes, "public-sector union members
in T-shirts were already handing out fliers supporting tax increases as an
alternative to budget cuts." In short, public employee unions drove the process
that led to record-setting budgets in 2008.
As noted, 10 of 17 budget bills for 2008 appropriated more money
than what was originally enacted for the previous budget year. The total
spending increase for these 10 bills is $1.47 billion. Of the 148 lawmakers in
both chambers of the Legislature, 114 voted to approve at least $1 billion of
that extra spending, and 41 voted for it all. The name of each state lawmaker
and the amount of spending above the previous year that they voted to approve
from those 10 budget bills is below.
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FOR FURTHER READING:
McHugh’s analysis of the 2008 budget may be read in its entirety at
www.mackinac.org/9122.
Cost-trimming alternatives to Michigan’s prison spending are located at
www.mackinac.org/8845 and www.mackinac.org/7083.
A proposal that would save money in the state police budget may be found atwww.mackinac.org/5949.
A comparison of state employee compensation to the private sector is located at
www.mackinac.org/8207.
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