By Kevin Prokop and Jim Curran
The State is about to begin its annual budgeting rite when the Governor presents her proposed budget. While the specifics are far from clear, we all expect more gloomy news.
As Co-Chairmen of the Legislative Commission on Governmental Efficiency, which has spent the past 18 months examining the State’s structural issues, we can confirm what the Governor’s budget is likely to highlight: the State has a massive structural budget issue, driven by cost pressures, a revenue system that is out-of-step with the economy, and spending priorities reflecting a different era.
Our Commission’s recommendations chart a path through these difficult issues and towards real fiscal reform. And, they demonstrate that both Democrats and Republicans can come together to craft common sense solutions to the State’s budget problems.
We achieved consensus in most areas by taking a holistic approach, looking broadly at the root causes of the issues and looking for opportunities to take costs out “throughout the system.” We asked hard questions about which units of government should be doing what work and looking for opportunities to achieve savings within – and among – the 1800 local units of government.
Our work focused on ten areas. Some ideas, including recommendations around higher education and corrections, have already been implemented in whole or in part. Other recommendations include:
• Restructuring local government revenue sharing to provide local governments with visibility and certainty while also helping local governments achieve consolidation
• Helping school districts achieve savings by providing “early out” incentives and additional latitude for district consolidation
• Evaluating opportunities to reduce benefits costs for all governmental units by pooling health care plans across levels and units of government
• Conducting a five-year workforce supply and demand forecast to better align the number of state personnel with the expected demand for services.
We also recommended a “pay as you go” budget process to ensure that any new spending commitments can be paid for and long-term fiscal forecasts to illuminate the trajectory of the State’s budget.
Finally, we recommended that the legislature examine the structure of the State’s tax system, which reflects an era when the State’s economy looked very different. As an example, reducing even a portion of the $35 billion of annual tax credits and loopholes could simultaneously reduce the size of the structural budget deficit and reduce overall corporate, personal income, and or sales tax rates, similar to what Republicans and Democrats at the federal level were able to achieve with the Tax Reform Act of 1986.
Our Commission demonstrated that representatives from both sides of the aisle can find common ground on most of the issues and craft a common sense approach to reform. In short, the path forward exists. It’s up to the leaders of the State to find similar common ground and make the tough decisions that will allow our State to once again begin investing in areas that create jobs and bolster the well-being of its residents. It is up to us, as citizens, to reward those leaders who provide such leadership.
Editor’s Note: Jim Curran and Kevin Prokop were Co-Chairmen of the Legislative Commission on Governmental Efficiency, a Commission established as part of the 2007 budget process. The Commissioners included representatives appointed by Majority Leader Bishop and Speaker Dillon and the Directors of the House and Senate Fiscal Agencies, among others. The Commission’s full report can be found at http://council.legislature.mi.gov/lcge.html.
