As we face down a fiscal year fraught with possible deficits and revenue shortages, state lawmakers need to take a careful look at the way they manage the budget.
At Tuesday’s financial conference, economists predicted an overall deficit of about $1 billion in 2001, but they expect the state’s economy to recover in 2002. In the meantime, they have set themselves the task of finding ways to keep Michigan as close as possible in the black until then.
Revenue from personal income growth and industry taxes is drooping. Gov. John Engler’s administration is expecting a $500 million gap in the budget.
Many economists involved predict the School Aid Fund to increase during the 2001-02 and the 2002-03 school years, albeit at a lower rate than usual. As the fund relies mostly on state sales taxes, it is expected not to be hurt as badly.
One solution that has been bandied about for the general fund has been to delay some special tax cuts on state income and single businesses. This decision tends to make some policymakers nervous, as it gives the impression of increased taxes, even though such is not the case.
Although some solutions may momentarily appear to hurt more than help, most people will understand this is a period when we need to tighten our belts and cut back where we can.
Holding some of the more generous initiatives back until times are better is only in the state’s best interest. By doing so, we can help to assure that many important programs - such as K-12 education, expected to take the biggest hit - remain at or near the level of funding they need and deserve.
Another solution that would hold in voters’ minds would be to enact better pay regulations for legislators. Under a measure approved Wednesday by a legislative panel, lawmakers and state officials will be required to obtain affirmative votes from each chamber to approve any pay raise recommended by the State Officers Compensation Commission.
This year, lawmakers received a 35.8 percent raise, and will get a 2.9 percent increase next year - but never actually voted to approve the measure because a loophole in the state Constitution allows any recommendation by the commission to take effect if the Legislature does not act.
Along with legislators raises, Engler received a 13.7 percent raise, Lt. Gov. Dick Posthumus got a 19.6 percent raise and state Supreme Court justices received a 13.6 percent raise.
Although it wasn’t until after the pay raises took effect, the Senate approved a constitutional amendment requiring any future pay or expense increases to be approved by state lawmakers. The House has yet to approve the measure.
By mid-November, the Engler administration expects to have a new spending plan in place to address the budget concerns - taking into account a requested cut in the state budget by at least 5 percent and in each state department by 5 to 10 percent.
Lawmakers need to take it upon themselves to make the hard choices that will reduce unnecessary spending throughout the state for the time being. The situation is not as bad as it could be, but without some careful consideration, it could easily become much worse.
Besides, if that 5 percent can’t be found by cutting programs and initiatives, they could always take that money out of their salaries.
