State budget & taxes

Mon, 6 Feb 2012 — Steven Norton

A surplus for schools? Don't hold your breath

The latest projections show that revenue to the state School Aid Fund, which supports K-12 education in Michigan, will increase 2.7% next year, compared to a 4.3% drop this year. But will local public schools get a funding increase? There will be a lot of politics at work between now and the start of school next fall, and little can be taken for granted. While Governor Snyder is likely to use any school aid surplus to make one-time “pay for performance” payments, there is significantly less money available to do that this year.

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Thu, 4 Aug 2011 — Steven Norton

Historical Amnesia: Schools don't need that money, do they?

Talk of an ever-growing flow of money to schools is, like many such things, wildly exaggerated. But it does serve to frame the debate about school funding in such a way that cutting schools seems only “fair.”

We started to hear it during the debate over next year’s state budget. Lawmakers backing the governor’s budget responded to constituents worried about cuts to K-12 schools with two, oddly contradictory, palliatives: that money for schools continued to “pour in” even though there were fewer students; and that “getting spending in line with reality means understanding our lack of revenue.” Sometimes these earnest-sounding claims were in the same paragraph.

The most recent example of this effort to depict schools as awash in cash comes in an interview of State Budget Director John Nixon by the AP’s Kathy Barks Hoffman.

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Tue, 24 May 2011 — Steven Norton

Budget update: Let's make a deal [with update]

Updated Wed. 5/25/11
The school aid budget was reported out of conference committee today, and sailed rapidly through the Senate. The “compromise” bill reduces the cut to K-12, but does not plow the funds into the foundation allowance.

Last week, the Governor and majority leaders of the Legislature announced a budget agreement that reduced cuts to public schools. They were able to do this because of the projected $430 million increase in State revenues for the current year. These are considered “one-time” funds, however, because a potential surplus for next year will be eaten up by the business tax cut recently passed by the Legislature.

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Tue, 17 May 2011 — Steven Norton

Money, Money, Money: K-12 budget bills move to conference

House and Senate conferees will be able to negotiate virtually the entire K-12 budget from scratch, while passage of the Governor’s tax package narrows options and the revenue conference offers limited hope.

Over the next days, the members of the House and Senate conference committee on their respective versions of the School Aid budget will be hammering out a compromise, with virtually everything on the table – at least in theory. At the same time, passage last week of the Governor’s tax package – which eliminated the Michigan Business Tax and replaced it with the much smaller Corporate income tax and also increased personal income taxes on many filers – has effectively closed, for now, any options of increasing the revenue stream to school aid.

Finally, the May revenue estimation conference offered a glimmer of hope, indicating that revenues for the current fiscal year (2011) would be $132.4 million higher in the school aid fund and nearly $429 million higher in the SAF and General Fund combined. However, a potential $500 million overall surplus for next fiscal year largely evaporates with the tax package just passed, hitting the school aid fund especially hard.

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Fri, 13 May 2011 — Steven Norton

State School Aid budget action alert

Update: 13 May 2011

Tax changes lock-in reduced revenues for schools and other public services

In a dramatic series of votes yesterday, the package of tax changes proposed by the Governor emerged from committee in the Senate, passed on the floor of the Senate (with a 19-19 tie broken by the Lt. Governor), was sent over to the House where it passed there as well. The Governor is expected to sign the bills shortly.

With this rapid-fire move, the legislature has essentially closed off any option of looking at new revenue to support schools, at least for the foreseeable future. Because of a spending item inserted in the bill, it will be exempt even from a statewide referendum. The bills eliminate the Michigan Business Tax and replace it with a Corporate Income Tax that brings in $1.1 billion less in revenue for next year – an effective tax cut of $1.1 billion in FY12 and $1.7 billion in FY13.

Some of this revenue loss will be made up with taxation of all pension income of new retirees, a 70% cut in the Earned Income Tax Credit, and the elimination or limitation of many other personal tax credits.

What this means is that any moderation of the cuts to schools will have to come from cuts in other areas or luck in tax collections.

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Thu, 7 Apr 2011 — Steven Norton

State Budget action alert

Everyone who values public education in Michigan needs to speak out NOW

Dear Friends and Supporters of Education,

This is an extraordinary moment for public education in the state of Michigan. The full impact of the Great Recession, and of years of trying to ignore funding problems in education, are hitting our communities all at once. Dramatic changes are proposed, because "dire times require drastic measures." Over $1 billion would be cut from education under the Governor's proposed budget, most of that from K-12 education. These cuts would dramatically affect our schools, and limit the education we can offer to our children for years to come.

Do the changes make sense? Do they reflect the real needs and values of the people of Michigan? We're not so sure.

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Mon, 21 Mar 2011 — Steven Norton

Budget Brief: Snyder's education budget proposal

Michigan Governor Rick Snyder presented his first budget proposals to the state legislature on 17 February. While it wasn't quite the "atomic bomb" Lt. Governor Brian Calley had promised, it produced shock waves nonetheless. By scrapping the Michigan Business Tax and replacing it with a much narrower corporate income tax, the proposed budget cuts business taxes by over $1 billion in 2011-12 and by $1.7 billion in the year after. To pay for this and still balance the budget, the governor wants to cut overall education spending by nearly $1.1 billion next year; his proposal also makes changes to the income tax that will increase revenues in large part by requiring retirees and low-income families to pay more in taxes. School districts may face overall reductions of $715 per pupil. Evidently, this is Gov. Snyder's vision for "reinventing Michigan."

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Thu, 24 Jun 2010 — Steven Norton

Brief: Budget hangups

*Negotiations on a school aid budget for FY2011 ground to a halt as House and Senate conferees split on what to do with the projected School Aid Fund surplus.* After months of uncertainty, closure appeared near on the school aid budget for the 2010-11 fiscal year. A deal in principle was reached among House and Senate members on the conference committee reconciling the differences in "the two chambers' versions of the budget bill, SB 1163":http://legislature.mi.gov/doc.aspx?2010-SB-1163. The Senate version, passed before the "optimistic news from the May revenue estimation conference":http://www.miparentsforschools.org/node/127, had included further cuts of $118 per pupil plus larger transfers from the cash-strapped general fund. The revenue conference projections, however, allowed lawmakers to consider making no cuts at all for fiscal 2011. The news was good enough, in fact, that the School Aid Fund might emerge with a surplus when all was said and done. And that is where the trouble began.
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Fri, 21 May 2010 — Steven Norton

A sliver of good news from the revenue conference

The State's key financial agencies released their consensus revenue estimate today, updating their predictions for state tax revenue for both this fiscal year and next. The consensus estimate for School Aid revenue for this year (2009-10) is now $10.75 billion, up $292 million (2.8%) from the estimates made in January. The estimate for next year (2010-11) is now $10.83 billion, up $352 million (3.4%) from the January estimates. These new projections may limit school aid cuts for next year to the $118 per pupil passed by the Senate earlier this spring, or possibly reduce it even more.

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Sat, 27 Mar 2010 — Steven Norton

Status report: Where do we stand today? (Race to the Top)

For much of December, the Legislature was consumed with bills that lawmakers hoped would increase Michigan's chances to get a share of Federal "Race to the Top" funds. Money from this stimulus program would be awarded to states which came out on top in a competition which evaluated reform efforts, and Michigan might have qualified for as much as $400 million. In the end, Michigan was not chosen as one of the finalists for the first round of funding, but the changes to Michigan law enacted in late December are not voided as a result.
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