Snyder budget means more pain for Michigan workers

DETROIT – It’s as bad as expected but seeing it in black and white is jarring. The budget unveiled by Republican Gov. Rick Snyder yesterday creates winners and losers. The losers, working families and the poor, are many. The winners, the wealthy and big business, are few.

State budget cuts and belt tightening by state workers have been ongoing during the last ten years. However this budget takes it several steps further with another $1.5 billion in cuts. Vital government services – state parks, pothole repair, and fire and police protection, for example – will be cut.

The budget proposal is “trickle-down” but worse. Give tax breaks for those at the top and hope it trickles down. It didn’t work under Ronald Reagan and it didn’t work with the bailouts that have banks sitting on billions of dollars they refuse to lend.

The “worse” part is that not only are tax breaks given to those at the top but the budget deficit created by this wrong headed approach will be paid by working families and the poor.

The budget does not cut Medicaid, financial aid and a few other things, but it is not the “shared sacrifice” Republicans talk about.

The budget reduces business taxes by $1.8 billion. This deficit-creating proposal is made up for by increasing taxes on seniors and families by $1.7 billion.

As feared, the budget calls for the elimination of the Michigan Earned Income Tax Credit.

The Michigan League for Human Services issued a statement saying, “The elimination of the Michigan Earned Income Tax Credit would mean that 782,000 lower-income families will see their taxes rise dramatically. It would also return Michigan to a state that taxes people into poverty and taxes families already living below the poverty line. Some 14,000 children would be shoved into poverty with the elimination of the EITC.”

The League vows the fight to save the tax credit is not over.

The budget also slashes revenue sharing with cities by 40 percent, cuts funds for higher education by 15 percent, cuts per pupil education funds an additional $300, on top of the $170 cut already budgeted, and reduces the state child credit thereby increasing the tax burden on families. The list goes on and on.

“This budget violates the principles Gov. Snyder set forth of shared sacrifice and leaving no one behind,” Michigan Democratic Party Chair Mark Brewer said in a press release. “Balancing the budget on the backs of our kids, seniors, middle-class and low-wage workers while wealthy corporations and CEOs get billions in tax breaks is unfair. We should be investing in our kids and our future, not slashing education budgets.”

With the income tax rate in the budget being reduced from 4.35 to 4.25 percent, Karen Holcomb-Merrill, director of the League’s state fiscal project wrote, “Modernizing the tax system by pausing the income tax rate reduction, enacting a graduated income tax and adding a sales tax on services would have positioned Michigan to solve its structural deficit and provide needed services in the future. We have missed a historic opportunity to do this.”

Image: John Stavely // CC BY-SA 2.0