June 1, 2007
Underscores government reforms, budget cuts
LANSING - Governor Jennifer M. Granholm today said a final, comprehensive solution to Michigan's budget crisis, which includes spending cuts and cost-saving government reforms paired with new revenues and a new business tax structure, is critical for Michigan's economic future. Praising the "One D" regional priorities, Granholm said that economic revitalization requires investments in Michigan's future. The governor made her comments during the annual Detroit Regional Chamber Policy Conference on Mackinac Island.
"Making Michigan competitive and revitalizing the state's economy depends on resolving this budget crisis," said Granholm. "The solution must be a four-part equation: a mix of cuts, reforms, revenues, and a new business tax that is simple, fair and competitive."
Granholm emphasized that spending cuts and reforms are critical parts of a long-term budget solution. She highlighted hundreds of millions of dollars in cuts that have already been made this year as well as a series of reforms that are underway, including elimination of a state department and consolidation of the state's human resources, purchasing, and accounting services.
Granholm also cited a number of areas where reforms can offer significant savings in the years ahead, including prisons, teacher pensions and health care costs, and public employee pensions. In particular, the governor advocated requiring school districts to competitively bid their health insurance and to pool with other districts and units of government in order to get the best possible price. She also endorsed common sense reforms in pension costs, such as eliminating the practice of "double dipping," which allows employees to receive a salary and a pension simultaneously, and tightening vesting requirements so that school districts do not provide lifetime health benefits to short-term employees.
"These and other pension and health care reforms will have little or no impact on our immediate problem, the 2008 budget deficit," Granholm said. "But they are critical to controlling our costs over time, and they must be part of a budget agreement this year."
The bipartisan Emergency Financial Advisory Panel, which released a report on Michigan's budget crisis earlier this year, concluded that reforms must be combined with further spending cuts, new revenues, and a new business tax structure. Granholm urged lawmakers to take the report into consideration and underscored that further cuts for the 2008 budget must come from education, health care, and public safety, which Michigan citizens depend on and that are key to Michigan's economic future.
"We will not balance our budget by destroying the things that will make Michigan competitive," Granholm said. "Our schools, colleges and universities, our health care system, and our 21st Century Jobs Fund are critical to our state's future, and our 2008 budget must reflect that fact."
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A copy of the Emergency Financial Advisory Panel report is attached below.
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