Small Movement on State Budget as October 1 Nears

by Doug Paterson, MPA, Director of State Policy, Michigan Primary Care Association

With October 1 getting ever closer, there was finally a small bit of movement on the State budget this week. Under pressure from the public and media, Governor Granholm finally revealed a plan that would raise some revenue. Her plans calls for instituting a 1 cent per bottle tax on bottled water, extending the sales tax to tickets for live entertainment, and raising the cigarette tax by 25 cents per pack, and would generate $684 million in new revenues ($546.3 million of which would affect general fund expenditures).

The Governor’s plan also proposes $862 million in cuts, but does not indicate specific programs facing the knife, only the amount sliced from each department. Her target cut amount for the Michigan Department of Community Health (MDCH) is $150 million beyond the cuts already assumed in the executive order she released in February. For Community Health Centers, this means that her budget continues elimination of the Medicaid adult dental benefit and the State Loan Repayment program. In order to garner some support for her plan, Governor Granholm called for phasing out the 22% surcharge on the Michigan Business Tax over three years beginning in 2011.

Upon release of the Governor’s plan, Speaker of the House Andy Dillon responded that he was quite certain he could not garner support in the House for her proposal. This drew criticism because he has still not put any specific budget proposal forward. With the Senate and now Governor making their plans public, Dillon is feeling pressure to release something soon.

At Thursday morning’s House Appropriations Committee meeting, Chairman George Cushingberry stated that he had been up most of the previous night developing a proposal that he had run by Speaker Dillon just that morning. Cushingberry said he was just trying to get some action started. His plan calls for nearly $1 billion in new revenues; would reduce tax expenditures (exemptions/loopholes) by $53 million; would tax cell phones, bottled water, fast food, dog racing, small cigars, and satellite TV; and impose a 3% physician QAAP assessment and a surcharge on private insurance claims. His plan specifically does not annualize the executive order cuts to MDCH.

The Governor, Senate Majority Leader Bishop, and Speaker Dillon are supposed to continue discussions today (September 11). The House is scheduled to meet early every day next week (save Monday) to begin to move bills if any are ready.

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