It is Time to Reinvent Michigan Government’s Spending Habits

Have you heard that we need more money for roads?  The Governor estimates that we need $1.2 billion more funding to keep the condition of our roads in Michigan from degrading further.  I agree that we need $1.2 billion more for our roads.  The key question is "How?"

 
The first option pursued by many lobbyists and legislators is almost always "tax and spend."  I'm not a big fan of this approach.  I believe that our taxpayers have been taxed enough already.  Our hardworking families struggle to live within their means on a daily basis.  Our government should honor their sacrifices by working hard to live within its means as well.  
 
In previous editorials and presentations to my fellow Senators, I've outlined three alternatives to raising taxes that I believe merit consideration.  One of these alternatives is to simply prioritize how we spend the money that we already have.  The difference between the revenue generated and our ongoing expenses in any given fiscal year reflects our investment "fund" for that year.  As policymakers, we need to decide if we should return this "fund" balance to our taxpayers in the form of tax cuts, allocate it to roads or identify other priorities.
 
Did you know that Michigan is forecast to generate $472 million more in general fund revenue in FY14 than FY13?  This increase can be thought of as an economic growth dividend.  How should we invest this dividend?  
 
In addition to this dividend, we also have FY13 lapsed funds (money that was appropriated but not spent) totaling $285 million.  We also have converted our structural deficit into a structural surplus resulting in $167 million of additional revenue.  Furthermore, the Governor estimates that our final revenue forecast will yield an additional $65 million in revenue above the $472 million value estimated in January.  
 
So, before we appropriate a single dime for FY14, we are starting off with an additional $989 million of general fund dollars to allocate to our top priorities.  If we were to freeze our general fund spending at the FY13 levels all of this money would be available to spend on roads.without taking any money from our schools.  $989 million is pretty close to $1.2 billion.and we've not even begun to address the other two road funding methods.
 
Are there expenses that need to be addressed before we appropriate money for roads?  Yes.  For example, I believe that we should adjust our budgets for inflation.  That means that we need to subtract $95 million from our tally.  I also believe that we should honor our $358 million commitment for revenue sharing to local units of government.  That leaves us with $536 million to allocate to our roads in FY14.  This is still a sizable amount.
 
Now we can look at the other two methods to fill the $674 million gap.  The other two methods will take time to implement.much like any new tax would.  One of these methods is expense reduction.  It features finding ways to lower the cost of maintaining our road infrastructure such as long-life road design and reductions in axle weights.  The other approach features supplemental revenue through the addition of innovative services such as advertising or concessions.  These methods have been used successfully elsewhere.  Why not in Michigan?
 
It is time for Michigan to break the tax and spend cycle.  There are indeed viable alternatives to this tired policy.  Our push to reinvent Michigan should also extend to how we spend your tax dollars. While I have the support of many of my colleagues, there is still resistance in Lansing to solving the problem without a tax increase.
 
When we look at the numbers, it all comes down to a simple choice.  Do we avoid making tough decisions about priorities by increasing taxes and giving elected officials more money to spend, or do we ask our elected officials to prioritize how we spend the money we already have?  An increase in taxes would come from you.  I would prefer to keep that money in your wallet.
 
Posted in Editorials, Uncategorized.