Snyder, Bernero lack plans to balance the budget

After cutting billions of dollars out of the state budget over the last several years, and still facing a projected deficit of a billion dollars or more next year, neither Republican Rick Snyder nor Democrat Virg Bernero has offered a serious plan to put Michigan’s budget on a stable revenue footing.

Kathy Barks Hoffman of the Associated Press has it exactly right:

Neither Snyder nor Bernero has offered detailed plans for what services would be cut or eliminated and how big a hit state workers may have to take to balance the budget. About the only guarantee voters have at this point is that both would cut business taxes — but that could just deepen the hole.

Snyder’s proposal to eliminate the Michigan Business Tax and replace it with a corporate income tax could cut revenues by $1.5 billion, doubling the size of the deficit to $3 billion. He also wants to cut the personal property taxes businesses pay on machines and equipment, eliminating up to $1 billion annually that mostly goes to local governments.

He says he’ll find places to lower spending once he gets a closer look at the state budget.

“We need to get to a new budgeting system … that gets to outcome and results instead of the broken model today, which is simply about spending billions of dollars on activities and such,” Snyder said during his and Bernero’s only debate.

Bernero’s proposal to do away with the business tax surcharge could increase the deficit by $500 million, although the Lansing mayor says he’ll try to find a way to make the change revenue neutral. He doesn’t say where he’d increase taxes elsewhere, noting that a tax hike could hurt Michigan’s struggling economy. He wants Congress to require companies to collect state sales taxes on online sales, which could generate more than $300 million. But such a move could be years down the road.

Nonetheless, he said during the debate that “we can and we will balance the budget without gimmicks.”

The notion that budget cuts alone can fix the problem is a pipe dream. As Hoffman notes, corrections and Medicaid use more than half the general fund by themselves and demand for Medicaid is at an all time high with no end in sight as the economy continues to sag.

We’ve already cut a highly popular scholarship program, made deep cuts to education at all levels and slashed revenue sharing to the bone. Cutting taxes even further will only necessitate even deeper cuts.