Reality has been set aside for the 2011 budget for the state of Michigan.Our Governor has heeded the call by Obama that to pull the country out of recession,we need to start spending more money again.So she has proposed a budget that increases spending by $2.1 billion over 2010.This is partially offset by a tax hike of $554 million due to including the service sector in sales tax collections.
She is leaving office with a sloppy,wet kiss for her union buddies.The state unionized employees will see a 3% pay raise under her plan.This follows the 1% raise in 2010 after a freeze in 2009.In comparison,California is facing a budget shortfall of nearly $20 billion in 2011.They also have a lame duck Governor,the terminator.He proposes a spending cut of $8.5 billion and is asking for a federal bailout of $6.9 billion.While hardly the model approach to fiscal sanity,at least California is addressing the need to reduce spending.This after already chopping $60 billion from the 2010 budget.State employees there just took a 14% hit in 2010 and face another 10% hit in 2011 as well as increased retirement contributions,which Granholm also proposes.
The two states have similar financial situations,albeit California's is on a much larger scale.High unemployment and state budgets way out of whack.Yet,our Governor takes the approach of protecting her union buddies and shielding state employees from the reality of just how bad our finances are while California is making theirs join in the pain with the rest of it's citizens.Arnold is hardly a real Republican,yet he plays one on tv when compared to Granholm's political payoffs to her financial backers.
They both make the same mistakes when it comes to budget projections,however.Granholm projects her new sales tax tinkering will be revenue neutral by 2013.The terminator fudges the numbers by shifting money from the general fund and counting on federal bailout money not yet approved in his budget.Any of our nations illustrious accounting teachers would cringe at the methods used to balance the books in either state.The tax credits Granholm likes to hand out are just appalling.The movie industry is getting upped from $116 to $155 million.brought any jobs to your neighborhood?The Brownfield credits for cleaning up industrial sites are simply criminal.A company in Benton Harbor that is responsible for creating an environmental hazard is the same one getting the taxpayer funded handouts to clean up their own mess!
With the nations highest unemployment rate for years,revenue projections are shaky at best.Yet,our state tax revenues haven't been as dismal as advertised due to the distortions of the Headlee Amendment.It's just that a much greater percentage of tax revenue has gone to entitlement programs,a.k.a. wealth redistribution.From 11.2% when the Headlee Amendment to 18.8% today.Here is the link to that story from the Mackinac Center.
Despite having a family leaving our state at the rate of one every 12 minutes,tax revenues as a whole have been just fine,thank you.Our per capita personal income reflects this as Michigan is over 13% below the national average.So,we are left with several constants from the Granholm administration.The citizens are still paying more than their share of taxes.State employees continue to prosper at the expense of their private sector counterparts.Our government continues to spend more than they take in.Our state continues to keep shedding jobs both to other states and other countries.Our population keeps decreasing putting added pressure on those who stay to continue supporting our governments fiscal irresponsibility.
Obviously,Granholm is a devoted follower of the Obama school for economic dummies.They work well together and both have one in common.Zero chance for their economic policies to work.More to come...