Thursday, September 20, 2007

Tax increase or government shutdown?

The budget crisis is coming to a head. The deadline for a balanced budget, while officially still 10 days away, is essentially passed. Tonight may be the night that the budget gets settled with a combination of reforms and tax increases. Read on...

Back in February, Governor Granholm submitted a budget that had a dozen or more new programs and $1.5 billion in new spending.  Her proposal called for a 10% increase in government spending.  All throughout the Spring and into the Summer, the House Appropriations Committee passed budgets that were as big or bigger than the Granholm proposal.  As the apples were ripening on the trees and the leaves were just beginning to turn, it became apparent that we were headed for a possible train wreck. All indications were that we had a huge hole in the budget; a spending framework that was $2 billion bigger than anticipated revenue for the 2007-08 budget year.
We are now ten days away from the beginning of the new budget year without a budget.  Everything is in limbo because Republicans have refused to vote to raise taxes on the people of Michigan and Democrats have refused (along with the governor) to cut government.
Tonight, there is talk of a potential settlement.  Apparently, three Republicans in the House have agreed to vote for a tax increase, if 54 Democrats do the same, and if they agree to substantial reforms and cuts to government.  It remains to be seen if the agreement will hold.
The threat looming over the heads of the legislature is that if we do not get the budget balanced and on the Governor's desk in time, there will be a "government shutdown".  What does that mean?  Nobody knows for sure.  My belief is that we can get through a temporary shutdown situation and that essential services will continue.
Incidentally, the Senate did pass a "continuation" budget to keep us going for another month.  But to do that, the House has to vote on it as well, and then the Governor has to sign it.  She has threatened to veto such legislation.
Here is my question to you?  Would you rather see your taxes go up to as much as 4.6% of your annual income, for years to come, or would you rather risk a "shutdown"?  Please feel free to hit the "reply" button at the bottom of this letter and let me know your thoughts.  I will be keeping track of the results and let you know what I learned.

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