The Budget Deficit

Harvey Santana understands the enormous financial challenges we face in Michigan. Our state has suffered through economic downturns due to job losses in our major industries, the cyclical effects of our national economy and our structural deficit. Michigan must make serious changes to or tax system and budget priorities.

Over the years, in response to the ongoing structural deficit, the Michigan Legislature has cut the budget, raised the income tax temporarily and used other one-time measures to balance the budget. None of these is an acceptable long-term solution. Spending cuts to public safety, health care, human services and education are being felt all across the state. Not only do spending cuts cripple services, but they are also bad for the economy, as they lead to a further loss of jobs. Given the size of the current deficit and the implications of reduced services, it is virtually impossible to address the deficit solely through cuts.

Fiscal year 2009 marks the ninth consecutive year that state revenues have not been adequate to fund state services and programs. Since 2001, Michigan has undertaken a combination of one-time measures, spending reductions and modest revenue enhancements to balance each year’s budget. These have not addressed the structural deficit, which is a serious and growing problem. It is time for state policymakers to look at revenue options that will provide long-term solutions.

The 2009 Fiscal deficit of $2.1 billion was addressed with $1.7 billion in stimulus dollars and $400 million in cuts, Michigan’s projected deficit for FY 2010 is $3.0 billion and $2.5 billion in FY 2011

Since the first decline in revenues in fiscal year 2001, Michigan has experienced cumulative deficits well in excess of $10 billion, has exhausted over $6 billion in fiscal reserves and has instituted over $4 billion in spending cuts.

As a State Representative, Harvey Santana will review a variety of solutions and judge each on its own merit. Harvey Santana understands that Michigan’s budget only has two sides – INCOME AND EXPENSES. The INCOME side of the budget is largely based on a mid 20th century economic structure which no longer exists. As a State Representative, Harvey Santana will work with other legislators to find innovative solutions to address the economic reality that Michigan now faces. Michigan must consider serious changes to our tax structure and have honest conversations about replacing the flat tax we now have which punishes lower income earners and rewards the higher income earners with alternatives such as the graduated state income tax. Conversely, Michigan must also address the tax structure for businesses in Michigan which is NOT competitive. In a rapidly changing economy Michigan needs to make serious changes to our tax system so businesses can be competitive with other states and a global economy. Our business tax structure needs to be in line with those of our competing states by lowering the cost of doing business in Michigan. The Michigan Business Tax is a unique tax in the United States. While most states have a straight forward corporate income tax, the Michigan Business Tax has both a corporate income tax and a gross receipts tax followed by a 22% surcharge. Michigan needs to change the tax system to foster business growth. Ultimately, Michigan needs to change the tax structure so it is simple and understandable.

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One Response to “The Budget Deficit”

  1. Andrea Says:

    I agree you need to make it eaiser for business to start up, grow and STAY in Michigan, moreover, the Detroit area. If you tax the businesses to death it will be the death of us all.
    I DO NOT support the tax on services!!!
    People spending the tax dollers need to be responisble for how and what it is spent on. CUT OUT THE FAT.
    Best of luck – you have my support

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