Echoes of Community Conversations in Snyder’s 1st Budget

The best two wisecracks we heard in the state budget mosh pit Thursday:

“Ok, so the strategy here with this pensions thing is to tax ‘em before they’re dead?”

“This budget has nothing for everybody.”

Of course, Gov. Rick Snyder’s groundbreaking budget proposal was no joke. An accountant speaks loudest with numbers, and the Nerd in Charge put it all on the line Thursday.

If you were among the 10,500 participants in the 580 Community Conversations held by the Center for Michigan in the past three-plus years, there are things to like in the new budget and things that run counter to the “common-ground” thinking we heard across the state.

POSITIVES

1. A MORE COMPETITIVE BUSINESS ENVIRONMENT: Community Conversations participants said they wanted a focused state strategy for economic transformation and intensified leadership focus and public debate on the details. Well, you got it. “Today, is a day that should’ve taken place in the 1980s,” Snyder declared, positioning his budget as a blunt and original assessment of Michigan’s troubled future debt, pension, and health care liabilities. At every turn, through the outline of every cut, Snyder harkened back to the main purpose of his strategy – create a competitive environment for business.

2. OVERHAUL OF THE MICHIGAN TAX SYSTEM FOR THE 21ST CENTURY: Community Conversation participants said they wanted a simplified and stable tax code, wholesale review of the state’s $30 billion patchwork of tax breaks and incentives, and business tax cuts to spur growth. Well, you got it. Snyder’s budget clearly accomplishes all three of those goals. In terms of revenues, Community Conversation participants were most supportive of broadened sales and consumption taxes, such as sales tax on services. Pension taxes were not on your radar in any significant way.

3. TRANSPARENT AND STRATEGIC BUDGETS: You said you wanted a state budget passed on time that explains clear, strategic priorities and clear intended outcomes. Like no budget we’ve ever seen, Snyder’s budget does just that. Every program area comes with a clear mission statement and easy-to-follow metrics of intended outcomes. In every budget area, citizens can know exactly why he’s doing what he’s doing and whether the state is making progress on the defined strategy.

4. MORE ACCOUNTABILITY: You said you wanted more accountability in the spending of state tax dollars. Snyder’s budget includes three creative tools meant to manage costs that have proven difficult for previous governors and legislatures to handle. First, a new $300 million pot of discretionary school funding is meant to reward school districts where educators’ share of health care costs mirror those in state government and the private sector. Second, a $200 million pot for discretionary revenue sharing would reward local government best practices – a kind of benchmarking that has saved significant money in other regions, including North Carolina. And third, a competitive university funding formula designed to encourage campuses to keep tuition increases to a minimum.

5. PROTECTION OF SOME OF MICHIGAN’S COMPETITIVE ASSETS: You’ve said you want protection of, and investment in, Michigan’s competitive assets, such as the environment and creative communities where people and businesses want to locate. Overall environmental quality and natural resources spending is up slightly in Snyder’s plan. A paltry $2 million in arts and culture grants to local communities at least stays at this year’s levels after years of heavy cuts. And early childhood education programs were largely kept intact, as a new Children’s Leadership Council of business leaders had strongly recommended. Still many kids who qualify for publicly funded preschool can’t get in because of funding shortages. Status quo isn’t exactly full protection of competitive assets, but status quo is likely the best that could be hoped for in this budget.

NEGATIVES

1. PRISON SPENDING STILL RISES: The prison budget actually gets an increase in Snyder’s budget, despite widespread bipartisan calls for both sentencing and operations reforms. The corrections department makes up 24 percent of the general fund in this budget proposal. We’re now to the point where Michigan taxpayers will spend 48 percent more on housing prison inmates than on educating college students.

2. EROSION OF SOME OF MICHIGAN’S COMPETITIVE ASSETS: Community Conversation participants said they wanted more and stable funding for education. They also wanted greater accountability. Snyder’s approach seems to be to force accountability by cutting funding. Overall, education spending is down more than $900 million in Snyder’s budget. A $216 million cut to universities is especially hard to take given that the prison budget is essentially held harmless. Likewise, the governor has spoken eloquently about the need to grow Detroit and Michigan’s other cities into the kinds of attractive places where businesses and prosperous people want to live. Yet a nearly $100 million cut to local revenue sharing will hurt – and we’re eager to see further details in upcoming Snyder speeches on how budget formulas can encourage consolidation and service sharing in schools and local government. From a Community Conversations perspective, citizens see consolidation and service sharing as the most hopeful and constructive ways of saving money in local schools and government – more details and strategy are needed from Snyder on this.