LANSING, Mich. – With the state budget process kicking into high gear, some policy groups are praising the governor's proposals to improve the lives of Michiganders.

Gov. Gretchen Whitmer's first executive budget recommendation totals $60.2 billion for fiscal year 2020, more than 3 percent higher than the last budget.

It includes funding to improve roads, water quality and education, and help for working families.

Gilda Jacobs, CEO of the Michigan League for Public Policy (MLPP), says the budget embraces priorities outlined in the league's “Owner's Manual” for state policymakers.

"We believe it connects pretty significantly to our concerns about how we have enough money for education, that we address the need for skilled workers, for better paying jobs, for healthy communities,” Jacobs states. “There's just a tremendous connection to all of that. "

Jacobs notes MLPP is especially pleased with a plan to double the state’s earned income tax credit to 12 percent over two years. It had been cut back significantly in 2011.

The increase is meant to offset the impact of a proposed 45 cent hike in the gas tax. That revenue would be used to repair the state's busiest and most economically important roads.

Some Republican lawmakers are concerned it would burden families.

The recommendations also increase funding for early literacy, K through 12 schools and higher education. They also continue outreach and support for those affected by the Flint water crisis.

And Jacobs adds the proposal ensures budget dollars are being used for their intended purpose.

"We're looking at moving road funding out of the general fund, we're looking at moving higher ed out of the school aid fund and all those we believe are really significant kinds of changes in how we look at our budget," she states.

Appropriations subcommittees in the House and Senate will now meet to develop their own versions of the state budget.

Jacobs encourages Michiganders to get involved in the process.

"A budget is sort of the moral compass of who we are as a state,” she states. “And if legislators hear from their constituents those messages do not fall on deaf ears. So go talk to your legislators, explain to them what's important to you. "

The budget must be approved by the end of June.


get more stories like this via email

A new report found Connecticut's fiscal controls on the state budget restrict long-term growth.

The controls were introduced during the 2018 budget year to stabilize the budget and long-term controls but since their implementation, the budget surplus total grew to more than $12 billion, which observers said means they are twice as restrictive as they are supposed to be.

Patrick O'Brien, research and policy director at Connecticut Voices for Children, said there is a better way for the budget controls to work.

"We make the case for a more balanced approach," O'Brien explained. "One that maintains fiscal discipline while introducing the flexibility necessary to fund current needs and make public investments essential to supporting families and children, and growing the state's economy."

Reforming the fiscal controls involves changing the state's revenue and spending caps. In practice, the state needs a well-designed volatility cap since personal income and entity taxes are highly volatile. But the current cap's threshold was set too low and is indexed to a variable with no meaningful connection to the taxes, which created up to $755 million per year in restricted revenue, or more than $5 billion between 2018 and 2024.

Making changes to the caps would result in more reasonable restrictions on the collected funds. The report noted Connecticut's spending controls are beneficial. But because personal income growth is slower than the nation, it is limited economic growth.

O'Brien argued the spending cap could have created more revenue.

"If the state's spending cap had continued adjusting since fiscal year 2018 based on the original inflation index rather than a narrower index but excludes food and energy," O'Brien emphasized. "Which has made the spending cap excessively restrictive."

The report also found adjusting the budget reserve fund allows the funds to be used for services beyond debt reduction, like programs to help the state's children and families.

The Internal Revenue Service will be in the crosshairs in the second Trump administration, as the president-elect's recently announced choice to run the agency has called for it to be abolished.

Former Missouri Congressman Billy Long, Trump's choice for IRS Commissioner, cosponsored a bill to get rid of the IRS and implement a national sales tax in its place.

Ryan Polk, assistant professor of accountancy at Clemson University, said if the new administration starts laying off IRS workers, taxpayers and businesses in California and across the U.S. would see big delays.

"When you defund or reduce the funding at the IRS, you run the risk of a less helpful IRS," Polk contended. "The average, everyday taxpayer might be worse off when they have a question."

During the Biden administration, the IRS got an $80 billion boost in funding from the Inflation Reduction Act and used it to overhaul old computer systems and add agents, raising its phone call response rate from an abysmal 15% to over 80%. And the agency added a portal allowing people to upload documents instead of mailing them.

The IRS also debuted Direct File, a system allowing people to file their federal income taxes without paying a tax preparer, available in California and 22 other states. Polk argued the new Congress should understand cutting the IRS budget will limit its ability to pay for the administration's priorities.

"Just last year, they audited taxpayers and collected 100 additional billion dollars that wouldn't otherwise have been collected," Polk pointed out. "That's a pretty significant amount of money. It can go a long way, depending on regardless of the government program or tax cut you're trying to get through."

The IRS said it collects $100 in revenue for every 34 cents it spends on enforcement. Conservative critics of the agency alleged it has been weaponized, with some audits being targeted for political reasons.


get more stories like this via email

The word "fraud" is likely to circulate in the upcoming Minnesota legislative session. One political expert said state agencies are being targeted but the response requires careful thought.

The recent Feeding our Future scandal has spurred demand for more oversight of government spending in Minnesota. There are renewed concerns about organizations claiming to provide various medical services but engage in phony Medicaid billing.

Tim Lindberg, associate professor of political science at the University of Minnesota-Morris, said larger entities are making a more coordinated effort to defraud key agencies. He pointed out it mirrors global crime rings preying on consumers.

"There is some legitimate concern out there but it is also a global phenomenon that is increasing in size and importance," Lindberg observed. "I think government from the top down needs to sort of figure out a new way to deal with this."

Lindberg pointed out the state has investigative resources and internal controls but he thinks the public sector at large likely has some outdated monitoring approaches, especially as technology evolves. He argued it is important to remember agencies in the spotlight are helping people in need who are not part of these scams, and even with the best controls, completely eliminating fraud is impossible.

The cases have garnered headlines and since Democrats have the upper hand in controlling Minnesota government, Lindberg predicted Republicans will use the trend as part of their push for restrictions or cutbacks. He believes Democrats might agree to certain moves to win back public trust but stressed fraud against government is not a partisan issue.

"People doing these frauds, they don't care who's in office," Lindberg asserted. "They don't care who's in power. And Republicans and Democrats themselves have been in various levels, in various states, overseeing governments where this happens."

Taxpayer dollars are at the center of what's happening. Lindberg added the private sector must also mitigate fraud with steps like major retailers locking up essential items in cases. He suggested lawmakers have to avoid veering off-path.

"What are these ways in which government can work better, more efficiently, but also not eliminate the benefits that these programs are designed to do?" Lindberg asked.


get more stories like this via email