Dillon: Cuts-only budget talk inaccurate

LANSING — Michigan Speaker of the House Andy Dillon says he is gearing up for a battle over the budget, and that his reported cuts-only budgets are not intended to be voted on but are designed to show the public how damaging such a budget would be in order to boost support for major reforms and new revenues.

The Redford Township Democrat has been coming under fire from members of his own party for statements published in the Detroit News last week in which he indicated he was preparing a cuts-only budget in response to an anticipated $1.8 billion deficit. In reality, he told the Michigan Messenger in an exclusive interview, those budgets are being prepared so he can better prepare Michigan residents for what the GOP is pushing.

“What I told my folks to do is — I said ‘Look it, prepare these budgets.’ I said ‘we’re not gonna vote on ‘em’ but I said ‘prepare ‘em assuming no revenues, so that we can be showing the affected groups what it means without revenues,” Dillon said. “The objective here is to prepare budgets with no revenues and see what they look like…so that we can start a coalition for what I think should be responsible budgets. And my assumption is, is that without some sort of great reforms that identify immediate savings, without revenues, these budgets would not be responsible.”

This is the first time since Gov. Jennifer Granholm introduced her budget plans Feb. 11 that Dillon has said he supports possible tax increases. His squabble, he said, was in doing tax policy reform in the midst of budgeting.

“I separate tax policy from these budgets. So, conceptually, can I get there?” he asked. “Yeah.”

And what does ‘there’ look like for Dillon, who is likely to announce his candidacy for the Democratic nomination for Governor by the end of the month?

“It’s either you look at a graduated income tax, which I don’t see any support for, or you look at spreading out the base on the sales tax. I guess a third one would be increasing the income tax, but that one seems to have less support than looking at the sales tax,” Dillon said.

During the budget crisis this past fall, the Republican-led Senate allowed only one vote on revenues — a proposal by Sen. John Gleason (D-Flushing) to raise the state’s income tax rate. It failed, garnering only two yes votes. This after Dillon cut a deal with Senate Majority Leader Mike Bishop that the House would attempt to achieve a cuts-only budget to erase the current fiscal year’s deficit if the Senate would consider revenue increases if that plan failed.

But Bishop broke that deal, Dillon said, only giving revenue increases a cursory look without any serious consideration.

“Bishop was saying if they send (revenue plans) over, we’ll consider it,” Dillon said. “Well we did it last year and the consideration wasn’t very thoughtful. So we got a problem. Bishop, last year, was very direct. He said ‘There’s not one vote in my caucus for taxes.’ And then I said, ‘If I sent (revenue proposals) over, would you put them up for a vote?’” Dillon said. “He wouldn’t even promise that.”

Dillon says that tactic from Bishop and the GOP majority in the Senate has the House Democratic caucus nervous and has them reluctant to support legislation for new revenues as well.

“You know we did a couple of retreats with the caucus and I put the question before them and said if there is not a deal with the Senate, how many of you wanna make a statement and vote for revenues?” Dillon said. “It was a very small number.”

“Now if there was an agreement with the Senate, then I think, we’ll struggle, but I think we could find the votes for it. But my caucus doesn’t want to just walk the plank,” he said. “The Senate obviously just had no appetite for (revenue increases in the 2009-2010 budget) and they’re not having any appetite for it this year.”

Dillon says he understands that balancing next year’s budget will be difficult considering the massive shortfalls in revenues the state is facing. The state is facing a $1.3 billion shortfall in the general fund, and just under $500 million in the school aid fund.

The only way to change the political calculus on new revenues, he argues, is for the people most impacted by the cuts to be more vocal than they were last year. He said that it was not until after the budgets passed that the K-12 community came to Lansing to address the budget crisis. And that, he says, is why preparing the cuts-only budgets to prepare the groups that would be most affected by such a budget — the K-12 community as well as local governments, hospitals and others — is so important.

Another area where Dillon believes it is crucial to find revenue, either through reforms or tax increases, is the Medicaid budget, where the House passed a bill last year that would have used a fee on doctors to set up a quality assurance program that would have brought more than $500 million in federal money into the state.

Calling more Medicaid funding “a high priority,” he noted that it was wrong to cut programs like Medicaid at a time when people most need it.

“That’s the case I’ve been making and it’s starting to resonate with the business community,” Dillon said. “There’s no free ride here. All we’re doing is walking away from the federal subsidy on Medicaid. For every dollar we spend, we get $2.70 from the feds. So to me, that is one of the most important budgets that we need to make certain we’re funding.”

He said Medicaid and transportation funding are key issues. Although he said we was uncertain transportation was leaving as much on the table as Medicaid was, he noted that the legislature will have to deal with shortfalls in both programs.

While Dillon did not confirm he was going to definitely seek the Democratic nomination for governor in the interview, he said his decision would be “very soon. We’re close.”

The 48-year-old is an unlikely hero for a Michigan Democratic Party struggling with an economy stuck in neutral, a foreclosure crisis and record high unemployment. He is eyed warily by unions following his announced plan to merge healthcare plans for the states government workers. That plan, he argues, would save the state nearly $1 billion dollars. He is also anti-abortion in a party which values its pro-choice platform.

Asked how he expects to compete in a Democratic primary battle with Lansing Mayor Virgil Bernero and State Rep. Alma Wheeler Smith (D-Salem Township), both of whom share considerable support from both the pro-choice community and the labor community, Dillon was direct.

“What I believe is that the voters out there want someone that will demonstrate they will reach across the aisle and get a deal done and that will even stand up against the special interests within their own party if that’s the right thing to do,” he said. “They’re thinking, ‘Andy, we want the state to work, we want to turn it around.’ And I think I present that alternative to them. We’ll see what they do in August.”