With Michigan Speaker of the House Andy Dillon (D-Redford Township) formally in the race for the Democratic nomination for governor, his rivals are questioning his recent statements about the creation of a cuts-only budget for the 2010-2011 budget.

Two weeks ago, Dillon was quoted by the Detroit News saying that he was creating a cuts-only budget, but in an interview with Michigan Messenger he said that budget was designed to motivate the public to bring more pressure on the legislature to find new revenues to fund the programs that would have to be cut.

almawheelerdankildee“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.”

But state Rep. Alma Wheeler Smith said that is just a repeat of the 2009-2010 budget process which resulted in a cuts-only budget being passed after a temporary shut down of state government.

“It’s exactly what he did with the budget year last year. We did an all cut budget to get people to understand what the significant cuts were and where we were losing real value,” she said in a phone interview with Michigan Messenger. “Well we see how well that worked. We ended up with an all cuts budget that did a lot of harm to education, to families, to seniors, to our ability to have transportation dollars for federal match and if that’s the path he proposes to take us down again, I don’t know where the strategy is besides failed.”

Meanwhile, former Genesee County Treasurer Dan Kildee said the cuts-only budget discussion points towards a fundamental problem in the state legislature.

“I can’t really dispute or even find fault with the speaker’s tactical determination… but it speaks to a much bigger problem. That is, it’s just not working in Lansing. It is a system failure,” Kildee said. “It’s really important that as we move forward we have people in positions of authority in both parties that are willing to have a conversation and not essentially be satisfied to blame one another.”

The system failure, Kildee said, is a failure of “leadership.”

“There is such a strong sense of partisanship, of one-upsmanship, that it’s beyond repair with the current cast of characters,” he said. “It just seems sitting out here in Genesee county and listening to the debate, it seems to me that what you have is a bunch of people arguing over the deck chairs while the Titanic sinks.”

Lansing Mayor Virgil Bernero, the 4th Democrat in the campaign for the gubernatorial nomination, did not respond to repeated requests for an interview with Michigan Messenger.

Smith proposed a tax reform package in November which would raise an estimated $6.5 billion more for state coffers. That plan would replace the state’s flat income tax with a graduated income tax, eliminate the business surcharge tax, provide some business tax breaks and lower the state sales tax while expanding it to some services.

“I’ve been in the legislature for 14 years and we have been cutting for 12 of those 14 years. The concept of an all cuts budget or reform simply means we’re going to continue to cut. We have that. We are at the bottom of the 50 states in many areas where we used to be in the top 20,” Smith said. “We need to have revenue in order to help this state function correctly. If we want reform, the reform has to be in an antiquated tax structure.”

Dillon for his part is not rejecting tax reform out of hand, but he is not jumping for joy at the prospect either. He says he wants to see the state’s budget pared down with cuts and reforms, and only then will he consider revenue increases. And of the possible ways to raise new revenues, he seems to think that adding the sales tax to some services is the most realistic.

“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.

And this is just the disagreement among Democrats. Republicans are completely opposed to anything that would raise new revenues under any circumstances, which sets up a budget battle this year that makes last year’s fight look amiable.

Gov. Jennifer Granholm threw down the gauntlet last week in a meeting with Grand Rapids Press editorial team. During that interview she said she would veto any budget that comes to her desk with cuts to education. Smith dismissed the governor’s statement.

“I would have supported that threat from the governor in 2007, and I wanted her to shut government down in 2007. We had the dollars in our budget we could have operated a few more weeks on if we had gotten an extension,” Smith said. “But to shut government down now, when we have no reserves and we have people who are totally dependent on state support, in the Family Independence Program, in health care — just keeping food on the table — is the wrong thing to do.”

“When the governor fights for revenues first, and can’t get them and can prove to the citizens that she has made revenues for education a priority, then I will support whatever she wants to do,” Smith continued. “But threatening the legislature without putting forth the effort and the fight to generate the revenue we need to meet the needs of our citizens is just hollow.”