Whichever candidate wins the governorship will preside over a growing state budget. Michigan’s budget has grown by $10.8 billion over the past eight years, a 9 percent gain when adjusted for inflation. State revenue — not including federal transfers or the small amounts of local and private dollars in the state budget — increased $6.8 billion, an 11 percent boost when adjusted for inflation.
There are 545,500 more jobs in Michigan than there were in 2010. Inflation-adjusted personal income is up by 19 percent. The growing economy means more money coming into Lansing.
An expanding state budget makes policy priorities more affordable. State estimators project that revenue to the state’s two largest funds will increase $1.7 billion over the next three years.
So it’s odd when tax cuts are treated as unaffordable to the state budget while spending is not. Republican gubernatorial candidate Bill Schuette’s call to lower the income tax rate prompted one reporter to observe, “Schuette has not identified how he’d fill that shortfall; $1 billion represents roughly 10 percent of the state’s general fund revenues.”
On the other hand, spending advocates have not explained how they have paid for the $10.8 billion increase in state revenues.
They don’t have to. Every year, policymakers set budgets, in which they negotiate over scarce resources. If tax cuts are a priority, then it’s no different from the hundreds of other compromises that go into a budget. The budget dictates who gets the gains from economic growth, and lawmakers have concluded that there are better uses for taxpayer dollars in the state government.
With the expanding economy and the growth of the state budget, however, the next governor can afford to let residents keep more of what they earn.
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.
Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.
Get insightful commentary and the most reliable research on Michigan issues sent straight to your inbox.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.