Monday, October 1, 2007

Queen Jenny Gets her Massive Tax Increases

Senate approves tax on services, averting a state shutdown today
Deal is 'right solution for Michigan,' Granholm says

October 1, 2007


UPDATED AT 5:20 A.M.: LANSING – The shutdown of state government was halted early this morning when the Senate voted to expand the 6% sales tax to various services, the final major piece of a plan to erase a $1.75-billion deficit and balance a 2007-08 budget.

Democrat Lt. Gov. John Cherry cast the deciding vote for a 20-19 tally, the minimum needed for passage of an historic budget agreement that stopped what would have been a chaotic and embarrassing interruption of state services.

Three of 21 Republicans voted for the sales tax change, and only one of 17 Democrats opposed it.

“This budget agreement is the right solution for Michigan,” Gov. Jennifer Granholm said in a news release after the vote. “We prevented massive cuts to public education, health care and public safety while also making extensive government reforms and passing new revenue. With the state back on solid financial footing, we can turn our focus to the critical task of jumpstarting our economy and creating new jobs.”

The vote came about 4 a.m., about three hours after the House and Senate voted to raise the 3.9% income tax rate to 4.35%, and approved controversial changes in school employee health insurance and pensions benefits aimed at reducing state costs.

The Senate vote to raise the income tax was also 20-19, with Cherry as the tie-breaker.

The two votes triggered a 30-day interim state budget which Gov. Jennifer Granholm said she would sign – if coupled with a tax increase – to avert a shutdown.

Granholm said 35,000 state workers threatened with temporary layoffs would be told to report to work this morning at their regular work times.

The votes concluded an epic, 17-day struggle over taxes and the size and importance of state government, as the Legislature met in numerous late-night sessions with no results.

Democratic leaders hailed the approved plan as a responsible compromise, while
Republicans decried it as a massive tax on Michigan’s struggling taxpayers.

Senate Majority Leader Mike Bishop, R-Rochester, had held out for a smaller tax hike and bigger spending cuts. He said he was disappointed at the final outcome, but said some spending reforms were enacted that would reduce the cost to taxpayers over the long haul.

In the end, Bishop said, Granholm and Democrats who control the House were able to flex their political will for the tax increases.

He said work would begin now to cut $435 million from state spending and produce a permanent 2007-08 budget.

“Our members are going to work hard to make this the best state to work, live and raise a family,” Bishop said.

The tax increases will generate $1.35 billion in additional revenue for the state, with the promise of $435 million in spending cuts.

Those cuts will be decided in the next month, as the Legislature determines spending for public schools and the state’s 19 departments.

The flurry of final votes late Sunday night and early this morning capped yet another marathon session in a tumultuous two-and-a-half weeks.

Late Sunday, the Democrat-controlled House passed a bill to raise the state income tax from 3.9% to 4.35% by a 57-52 vote with just two Republicans — Chris Ward of Brighton and Ed Gaffney of Grosse Pointe Farms — voting for it. Only three Democrats — Lisa Wojno of Warren, Martin Griffin of Jackson and Mike Simpson of Liberty Township near Jackson — voted against it.

Gaffney said he is “not happy with what I did,” but it needed to be done to “break the logjam and put us on a course to keep government open.”

House Minority Leader Craig DeRoche, R-Novi, criticized the votes to raise the income tax and extend the sales tax on services.

"This was vote for bureaucracy and special interests,"DeRoche said."This is one of the largest spending sprees in Michigan history, it is a 10% increase in the size of the bureaucracy.

He added, "We stood on principle to cut and reform and have the state live within its means, like working families have to live within their means."

Granholm and her fellow Democrats argued more revenue is needed to head off deep cuts to schools and state services for health and public safety.

House Speaker Andy Dillon said the House had done its part to solve the $1.75-billion deficit, putting the issue in the Republican-controlled Senate’s hands.

Asked why the House couldn’t have approved a $1.35-billion tax increase — the size of the income and sales tax increases the House approved Sunday night — weeks ago, Dillon replied: “It’s a nature of the legislative body to wait till the last second the make tough decision.”

Will the last one out of Michigan please turn out the lights?

Republicans who controlled the Senate de-cried it but in the end helped to pass it

Republicans who voted for Queen Jenny's Tax Increases

Income Tax Increase - Was 3.9%; Now will be 4.35%

State Senate:
* Patricia Birkholz - Saugatuck * Tom George - Portage * Ron Jelinek - Three Oaks * Gerald VanWoerkom - Norton Shores

State House:
* Chris Ward - Brighton * Ed Gafney - Grosse Pointe

Sales Tax Extension to Several ServicesState Senate:
* Wayne Kuipers - Holland * Ron Jelinek - Three Oaks * Valde Garcia - Howell

State House:
* None

1 comment: said...

Was one heck of a tough weekend for Michigan families.

The news here in Grand Rapids is hilarious, too. They keep broadcasting reports saying "people are really really upset."

Really? You don't say. And here I thought everyone would just curl up in the fetal position and take it when the big-government tax-and-spenders came to yank $1.35 BILLION out of our pockets.