Michigan Budget Helps the Afflicted

Gov. Rick Snyder's proposed Michigan budget would make substantial changes to the levels of funding for K-12 education in addition to major changes to how businesses are taxed — careful changes that consider where Michigan stands compared to the rest of the country. But opponents deride the changes as hurting schools to help businesses. While that makes a nice talking point, a deeper look shows the budget proposal helping the afflicted at the expense of the protected.

It’s no secret that the state economy has struggled in the past decade. In response to deep and broad economic problems, Michigan became a national leader in tax hikes and raised taxes on all businesses while favoring a select few. The Michigan business tax, created in 2007, contained dozens of credits for targeted firms and preferred activities, paid for by generally higher taxes on other businesses. And even before it took effect, the state added a 22 percent surcharge on top of it.

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In the meantime (some would say as a result), overall private-sector employment fell 10.8 percent. Yet as Mackinac Center analysts have noted elsewhere, "Since the early 2000s, state and local government jobs as a percentage of total Michigan employment increased from around 13 percent to a high of 15.5 percent in 2009."

There was one area of the state that was largely protected from Michigan’s economic collapse: the state’s public school system. In particular, the wages and benefits of school employees have only increased in the past decade. Nationally, Michigan has the 8th highest average public school teacher salary, and from 2003 to 2009 salaries were the highest in the nation when controlling for state per capita personal income. Since 2000, Michigan private-sector wages have fallen 25 percent while benefits have decreased 6 percent. In the same time period, public school teacher wages and benefits increased by 1.8 percent and 56 percent respectively.  

The latest protest from public employee unions and their advocates has been to claim that cutting spending to provide a tax cut for job providers won’t “guarantee” that new jobs will be created. Undercutting this argument, they are at the same time calling for increased educational expenditures even though more spending will not guarantee better educational outcomes.

There has been some pressure on schools to control their costs, but looking at the dollars coming into schools shows no decrease in actual per-pupil funds over the past decade. While the proposed budget’s $300 per-pupil cut takes Michigan schools back to 2006 levels of state funding, a careful look at the evidence shows that public employees have, in fact, been remarkably unscathed during Michigan’s decade-long recession.

Public employee unions and some politicians would have citizens believe that proposed budget cuts hurt afflicted schools in order to help businesses. In fact, it is clear that businesses and private-sector citizens are the afflicted.