In response, I joined my colleagues in the House more than a year ago in voting for legislation that would extend unemployment benefits to Michigan workers enrolled in training and education programs, helping to make sure that these workers don’t have to choose between taking care of their families today and getting the skills they’ll need to build a better future.

Importantly in this era of tight budgets, no state money would be used to pay for this extension. Instead, we would be able to use $138 million in federal money to provide our unemployed workers with temporary assistance while they’re getting the new skills they need to reenter the workforce and build a new career.

Unfortunately, more than a year later, the Michigan Senate still hasn’t moved on this important legislation. That’s right: with one of the highest unemployment rates in the nation and 641,000 Michigan residents without work, our State Senate has failed to act while Michigan workers are struggling. Worse, because this is federal funding used to pay for these benefits in states that have taken action, we’re actually sending our tax dollars to train workers in other states.

It’s hard to justify the Senate’s refusal to take advantage of this opportunity on any level, but one thing stands out. We hear a lot of talk about the need to diversify Michigan’s economy. For too long, we as a state have put all our eggs in one basket, and the fact that two of the Big Three went through the bankruptcy process last year should serve as a wake-up call, a blaring reminder that we can’t afford to continue down the same path. Worker retraining represents a golden opportunity to diversify Michigan’s outstanding workforce and give them the skills they need to lead the world in emerging economic sectors like renewable energy, advanced manufacturing, life sciences, and advanced battery technologies. The fact we can use $138 million in federal money to help our working families make this transition is even better.

I’ll continue to stand up for the hard-working families that make Michigan great. It’s time for the Michigan Senate to do the same.

While I’ve been under the impression that the Governor and State House leadership want to invest in Michigan, and Mike Bishop and the Senate Republicans want to cut Michigan down, I now see I’ve been mistaken.

Both parties want investment. We just define it differently:

“‘If we invest this money into education for Michigan’s children, we are investing in Michigan’s economic future,’ said Sen. Alan Sanborn, R-Richmond.”

What’s this investment of which Senator Sanborn speaks, you ask? It’s the $15 million cut to education Republicans approved yesterday.

See, over in bizarro world, cuts = investment. George Orwell would be proud.

(cross posted at MichiganLiberal.com) 

While political disputes are always accompanied by the blame game, it’s important to remember that Standard and Poor’s doesn’t have a dog in this fight. Instead, their job is to offer information as to the ability of borrowers (such as the State of Michigan) to repay their obligations.

That’s why this paragraph is so damning to Mike Bishop and his Senate Republicans:

“The report says Michigan’s credit outlook could be revised to stable if the legislature passes a tax reform package and takes steps such as increasing taxes to balance next year’s budget.”

Instead, Bishop & Co. continue to stick their collective head in the sand, saying that these impartial Wall Street analysts are wrong, and that they can do it with cuts alone. (Still no mention of any details, though.) They offer no plan, no leadership and no solution to plugging the holes in the state budget.

But I know, some of you are thinking this sounds familiar. It should.

Last August, immediately following the irresponsible election year SBT elimination stunt, Standard & Poor’s downgraded Michigan’s credit rating to “Negative.” In explaining their action, S&Ps analysts noted that the repeal of the SBT without identifying a replacement “creates a structural imbalance for fiscal year 2008 that exceeds any one-year imbalance that the state faced during the prior recession.”

That’s right: seven months ago, S&P analysts warned that the profoundly irresponsible SBT repeal would result in a financial situation worse than anything Michigan faced in the last recession. And today these same analysts warned that unless the Senate GOP stops playing games and starts to engage in a serious public discussions, including accepting some form of tax increase, the worst is yet to come.

According to the experts, there is no time to lose: “By failing to place the service tax (or some other measure that creates sustainable balance) in working order by June 1, the state could render substantial parts of the two-year recovery plan insufficient.” June 1 just happens to be the same day that the governor’s plan would take effect.

This is simply no longer a partisan issue. On one side sit Governor Granholm, a bi-partisan commission charged with finding solutions to Michigan’s budget crisis and independent analysts with one of Wall Street’s top firms. (Two if you count this one.) On the other side sit Mike Bishop and his Republican friends in the legislature.

Who do you trust?

(cross-posted at michiganliberal.com)

Essentially it comes down to this: Governor Granholm introduced her budget plan well over a month ago and introduced twenty-three bills to put that plan into action. In response, Mike Bishop, Senate Majority Leader, told the Associated Press that “it’s on us right now,” and added “we’ve got to put our money where our mouth is and get it done.” Just seven days later he had changed his tune, telling the Michigan Information and Research Service (MIRS) that “it’s not my obligation or this legislature’s obligation to come forward with a solution.”

The next day Bishop was back, telling MIRS that he wouldn’t reveal his plans until the governor introduced legislation, as in “a bill.” On March 2, Democrats in the State House and State Senate signed on as co-sponsors of 23 bills to put the Governor’s plan into action. Then, Granholm took her plan on the road, traveling around the state to meet with Michigan citizens and share the details of what she’s put on the table. And from the GOP: nothing.

OK, they claim that they have a “plan” to cut $900 million in state services to balance the budget, but evidently don’t believe the people of Michigan are worthy of hearing exactly where those cuts would take place. Instead, they’re insisting on only revealing their “plan” behind closed doors.

Watch this space as I’ll continue to post updates as they happen, but for day-to-day coverage of the GOP holdout (today marks Day 24 since Bishop declared “it’s on us”), check out MichiganLiberal.com.

The response from Wall Street was immediate. Standard and Poor’s, a top bond ratings service, downgraded Michigan’s economic outlook to “Negative.” The analysts at Standard and Poor’s noted that the repeal of the SBT without a plan “creates a structural imbalance for fiscal year 2008 that exceeds any one-year imbalance that the state faced during the prior recession.”

That’s right: according to the economists as S&P, this arrogant Republican stunt is worse than anything we faced during the last recession.

But Standard and Poor’s is not alone. When the legislature first floated this plan in the spring, another Wall Street ratings service, Fitch Ratings, stated that repealing the Single Business Tax without a plan to replace the revenue would “complicate the state’s ability to manage the (auto industry) downturn.”

It should be noted that these are Wall Street bond ratings services, not political organizations. Their job is to provide investors with non-political, unbiased information as to the ability of corporations and other borrowers to pay back their debt. That’s what makes this so damaging for Michigan: this negative rating reflects Wall Street’s view that our ability to pay back our debt has been impaired.

There is no doubt we needed to replace the SBT. It was an uncertain tax, making it harder for businesses to accurately forecast their tax liabilities. Just as important, it penalized job creation, something we should never do and especially not in the current economic climate. But there was a right way and a wrong way to move forward. By axing the SBT without a plan, Republicans in the state legislature took an uncertain situation and made it worse.

Wall Street has responded forcefully to the special combination of arrogance, irresponsibility, and incompetence displayed by our legislature. The people of Michigan deserve better. We can’t afford a legislature that continues to play partisan games with our state’s economy. It’s time to kick this legislature out and finally get Michigan back on track.

(hat tip to MichiganLiberal.com for some of the above sources)

But don’t just take my word for it. Look at what the Traverse City Record-Eagle has to say. Or the Detroit Free Press. Or the Grand Rapids Press. Or the Muskegon Chronicle. Or the Lansing State Journal. Or the Saginaw News. Or the Port Huron Times Herald. Or the Flint Journal. Or opinion columnists Peter Luke, Ron Dzwonkowski, and Brian Dickerson. When it comes to the GOP’s irresponsible stunt, we all agree: the people of Michigan deserve better than election year gimmicks.

The bottom line is this: at a time when budgets for state programs have already been cut to the bone, cutting another $1.9 billion from the general fund without telling us which programs you’ll cut or whose taxes you’ll raise is deeply irresponsible. And if replacing the SBT is such an emergency, why do we have to wait 21 months to do it? Why not propose a plan this year? And why did the State House fail to even consider the governor’s plan to reform the SBT last year?

So, as the State House heads off for Spring Break, here’s a little homework…

1. If fixing the SBT is such an urgent matter (and I agree that it is), why put it off until next year? Instead, why not sit down, hammer out a solution, and phase it out right away?

2. For that matter, if it’s so urgent that we need to cut nearly $2 billion from the state’s general fund – the same fund needed to pay for schools, prisons and our state’s safety net – why did you not even consider the governor’s proposal to revamp the SBT when she proposed it last year?

3. If this is really about reforming the SBT – and not about partisan posturing – why didn’t you even consider the compromise put forward by Governor Granholm this week?

4. If the primary rationale behind eliminating Michigan’s Single Business Tax was to cut down on the SBT’s uncertainty, why did you add to the uncertainty by not even telling Michigan businesses and consumers what the new tax system would look like?

5. [Multiple choice] What are you going to do to replace the $1.9 billion you are taking away from the general fund? Are you going to:

a. Raise personal income taxes by $800 per family
b. Cut spending on essential programs – like prisons, higher education, the State Police, and community health and human services – by an average of 21.4%
c. A combination of both (but please don’t ask us the details before November’s election)

Right now, the Republican members of the State House fail this test. And until that changes, they are also failing their constituents and a state that needs real reform far more than it needs more political stunts.

While this is good news, a recent report from the Center on Budget and Policy Priorities shows we could – and should – do much more to secure economic security for the working poor in Michigan. Michigan is one of only five states in the country where a family of four making $14,000 per year – or about the equivalent of the new minimum – still has to pay state income tax. For a family of three, the income tax threshold is $10,712. This means that a working family whose income is nearly $6,000 short of the federal poverty line still has to pay taxes to the state, making it even harder for the working poor to ever reach middle-class status.

Perhaps most galling in all of this is that while the Michigan GOP has been eager to blow a $1.9 billion black hole in the budget by irresponsibly repealing the Single Business Tax with no plan to replace the revenue, and even gave away $250 million to the federal government in posturing on the estate tax , it has done precious little to improve the tax structure as it affects Michigan’s working poor. In simple terms, if you are want to pass along your multi-million dollar estate, you can do so tax-free. But if you’re working a full-time minimum wage job to make ends meet for your family, the state wants a cut.

We’re taught that we will be judged by how we treat the least among us. Today’s signing of the minimum wage is a great first step, but we need to do much more. For starters, we should eliminate state income taxes for all working families in Michigan making less than the federal poverty level. If according to federal government standards you’re considered poor, we as a state have no business taking any of that income. Second, we need to enact a state earned income tax credit, rewarding work and giving additional tax relief to working families as they make the transition from poverty to middle class. Such a bill is currently pending in the State Senate, but the GOP leadership has refused to even allow a hearing on the legislation.

Finally, we should always be explicit in explaining how we would pay for our ideas (something the GOP leadership in both houses of the legislature would do well to remember). Much of the cost of the EITC would be offset through increased revenue from the sales tax and the Single Business Tax (or whatever business tax system ends up replacing it) because low-income families tend to spend any additional money on the necessities of life, reinvesting the money back into our communities and creating new jobs. The rest of the revenue could be offset by repealing the GOP’s fool-hardy giveaway of estate tax dollars to the federal government, while creating an exception for family farmers.

Who we’re fighting for says a lot about our priorities, and the irresponsible actions on the Single Business Tax and Michigan’s estate tax by Republicans in the State House and State Senate stand in stark contrast to a positive agenda to reward work, provide opportunity and empowering Michigan’s working families the tools they need to achieve the American dream.

In Michigan, the GOP-controlled State House voted to eliminate the Single Business Tax by the end of 2007. I blogged about this earlier but the bill would create a $1.9 billion shortfall, while offering no plan to pay for it. Many of us – myself included – believe there is a need to reform the SBT. (Last year, Governor Granholm offered a plan that had the backing of businesses across the state. Ultimately, however, the GOP House bowed to pressure from the insurance industry, and the governor’s plan was scrapped.) However, while we should work together to reform business taxes in this state, simply eliminating a revenue stream that makes up over 20% of the state’s general fund shows a disconnect between the GOP State House leadership and the fiscal realities facing our state.

Meanwhile, Republicans in Congress voted to once again raise the debt limit to nearly $9 trillion – the fourth time the debt limit has been raised during the Bush administration. Astonishingly, and in a move that highlights once and for all how far removed today’s GOP is from their heritage of fiscal prudence, Congress also approved over $100 billion dollars in new spending without offering a single dime in new savings.

Bill Clinton once stated “the era of big government is over.”? Republicans in Congress have shown that with their hands on the levers of power, the era of big government has only just begun.

Many of the issues involved in the SBT debate are fiercely debated – opponents say that it’s confusing and makes Michigan a less attractive place for job creation and retention, while supporters argue that Michigan’s business environment is in the top half nationally, especially for small businesses, where we rank in the top five. Despite the disagreement on many issues, however, two things are clear. First, scrapping the SBT in 2007 creates a $1.9 BILLION budgetary black hole. Second, no one pushing the measure has produced any plan – either through additional spending cuts or tax restructuring – to pay for it. And as long as those facts remain unchanged, any attempt to end the SBT in 2007 remains fundamentally irresponsible.

To be clear, there are good reasons for reforming the SBT. One principle complaint is that it is difficult for employers to know exactly what their tax burden will be. For businesses that need to be able to accurately predict their tax burden and other expenses, this is a valid complaint, and it may be worth moving toward a more transparent business tax structure. This may mean going back to a corporate income tax, similar to that used by the federal government and a number of other states.

The key in all of this, however, is that such tax adjustments need to be responsible, and in a budgetary climate as tight as this one, that means that any reform must be revenue neutral. The $1.9 billion dollar shortfall that would result from ending the SBT in 2007 would mean a 21.4% cut in every program funded by general revenue, if such an across-the-board cut was legal (which it isn’t). Schools – cut by 21.4%. Prisons – cut by 21.4%. Funds for environmental cleanup and protection – cut by 21.4%. Community health and human services – cut by 21.4%. Higher education – cut by 21.4%.

The only alternative to these cuts are tax increases elsewhere, from the personal income tax to the sales tax. (Either that, or higher tuition for parents sending their children to Michigan universities and lower quality public services, both of which would hurt our ability to develop the healthy, well-educated, stable workforce needed to compete in the 21st Century.) Remember, the SBT is the only tax on businesses in the state, and the proponents of eliminating the SBT have proposed no other business tax model to compensate for this budgetary shortfall.

As Democrats, we need to oppose the GOP plans to eliminate the SBT without any way of paying for it. Our public services are stretched too thin as it is, and taking an additional $1.9 billion from general revenue hamstrings our ability to make the necessary investments to compete in the years to come. We cannot build a sustainable Michigan without investment in early childhood education, world-class public schools, top-flight research universities, a healthy workforce and a pristine environment.

But as Democrats we also need to do more than simply oppose this irresponsible proposal. As the party of ideas, we need to shape Michigan’s forward looking agenda. We’re a lot more credible in opposing Republican irresponsibility if at the same time we’re putting forward a responsible reform agenda that addresses the problems with the SBT without starving our state of the resources we need to be competitive – now and into the future. That’s what I intend to do, and I welcome your ideas on how best to do it.