Capitol Chaos, October 12 edition

News of the day
K-12 Budget received with mixed reactions

Reactions by school officials were happy to have a final 2009-10 budget but angry that the cut was larger than they had been led to expect when schools developed their budget in June.

The House presented the Governor with the K-12 budget (HB 4447) Friday afternoon and she signed the bill today.

Due to the $165 per pupil cut, as many as 100 school districts are expected to be in deficit spending for the current fiscal year. However, once the governor signs the bill, schools will be ensured no interruptions in their state and federal aid payments. School aid payments will be smaller and schools will have to make adjustments.

There is concern that this budget isn’t really balanced, since the revenues proposed by the Senate to reduce the per-pupil cut from $218 to $165 haven’t been passed. It has been pointed out that $20 million in the General Government budget from license plate fees likely won’t be there.

The Senate package is designed to provide an additional $71 million in revenue and phase out the Michigan business Tax (MBT) surcharge. The Senate voted to freeze the Earned Income Tax Credit (EITC) at 10 percent, cut film credits, cap Brownfield credits and put an 18-month residency requirement on anyone claiming the EITC.

Meanwhile the House revenue plan is to generate an additional $400 million to cover its budget priorities – libraries, Medicaid, revenue sharing, the Michigan Promise and K-12 schools. So far three of the six proposed revenue bills have passed the house – a 3 percent physician’s tax or Quality Assurance Assessment Program (QAAP), a measure freezing the personal exemption allowed in the state’s income tax to last year’s levels and a shell bill that allowed doctors to write off their new QAAP tax as an MBT write-off.

This leaves an interesting end game for a compromise on enough revenue to cover the shortfall in K-12.

It’s time to stop corporate greed!
Business tax breaks cost Detroit about $15 million last year

The Detroit news reported Saturday that city-issued breaks cost Detroit about $15 million last year. The tax abatements were aimed to keep or add 25,000 workers, but about 7,500 were laid off.

This city cut taxes on $2.7 billion in investments over the past decade to businesses that failed to follow through on job promises. The question remains, do tax credits/abatements improve the economy of the cities and state or only the economy of the corporations?

Dillon Health Care Plan – Prescription for Disaster
Public Hearings on HB 5345 scheduled through November

A hearing on HB 5345 is scheduled for Thursday, October 15, 2008, at 2 p.m. or after session, whichever is later.

Hearings are also scheduled for October 22, 29, and November 5th.

State Employee Health Premiums Increasing

According to a 2009 survey completed by the National Council of State Legislatures (NCSL), state employee health premiums are on the increase.

There is a wide variation on cost-sharing among the 50 states. Most states are opting for lower-cost widely-available policy options. The national average for state employee health plans is envisioned as the benchmark for public employee benefits under the Dillon plan.

The national average that the Dillon Plan puts forth is a full family premium of $870 and a single premium of $437. If the Dillon plan is enacted Michigan employees would take a big loss in benefits. The average employee premium share is 8% for single coverage and 18% for full family.