Latest road funding plan offers more problems than solutions

Added November 4th, 2015 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs

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After years of debate and months of gridlock, the Michigan Senate and House passed a “new” road funding plan yesterday. Unfortunately, this final proposal contains many of the same ill-advised components that have stymied bipartisanship and drawn opposition from business and advocacy groups alike.

One of the reasons our state had so much trouble finding revenue for roads to begin with is that the Legislature passed $1.6 billion in business tax cuts in 2011 that hurt our budget and our economy, leading to less money for the state’s roads, cuts to schools and communities, and higher taxes on individuals. And now, the Michigan Legislature has passed a roads proposal that will again devastate the state budget and inordinately hurt low-income families.

There are two main sticking points with this final roads plan that the League adamantly opposes: $600 million in undisclosed future state budget cuts and an income tax rollback.

The state budget has barely recovered from the drastic cuts caused in part by the $1.6 billion tax breaks in 2011. Our schools, state services, public safety and local communities have also yet to rebound from the cuts they have endured over the last four years. And now some legislators want to cut the state budget even more by $600 million. Scratch that, they want future legislators to cut their budget by $600 million, and in ambiguous and subjective cuts.

This concept is doubly bad, as it passes the buck and puts the responsibility to pay for that $600 million on future legislators. And by leaving the potential budget cuts open-ended, it doesn’t clarify what in the state’s General Fund would be protected, and what would be in jeopardy. As we have already seen over the last few years, nothing is safe or sacred when it comes to budget cuts, and that’s why we oppose this piece of the plan. The League believes our roads should be funded with more new revenue than additional budget cuts, and we also believe that funding earmarked from the state budget should be identified and important programs protected.

We appreciate the recognition of the Legislature that a roads plan should include some tax relief for those who are struggling to counteract any other tax increase. But we apparently disagree on who is actually struggling.

As part of the 2011 tax breaks for businesses, individual income taxes were hiked by around $1.4 billion, disproportionately hurting low- to middle-income families and seniors. Nearly 1 in 6 Michigan residents, and 1 in 4 children, live below the poverty level ($24,000 a year for a family of four). One in three children lives in a household where neither parent holds a full-time job or is forced to piece together part-time jobs that do not provide stable employment. Low-wage, low-skill jobs make up 46% of Michigan’s employment, and about 63% of all jobs pay less than $20 per hour.

Taking into context how hard it’s been for low earners in Michigan, it’s disturbing that an income tax rollback is the so-called relief being offered. When your income is very low, getting a rollback of the taxes you pay isn’t significant. A majority of Michigan workers have seen their taxes go up while their wages haven’t kept up, and an income tax rollback will do nothing to change that. Additionally, an income tax break will cut into state revenues and again put important programs at risk.

Our roads are certainly in desperate need of repair, and Michigan residents want resolution. But we have to remember that any plan is not the same as a good plan, and relying heavily on murky future budget cuts and giving income tax breaks that do little to help low earners are not the solution. We urge Governor Rick Snyder to veto this roads plan.

 

 — Gilda Z. Jacobs

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