5 hints to how Rick Snyder may handle Michigan's very own economic stimulus
The heavens have opened, and, after a period of extended financial destruction, Michigan finally got some good budget news Friday.
The Michigan Senate and House fiscal agencies separately predicted that the state will collect somewhere in the range of $400 million to $700 million more in revenue than it had previously expected for both 2010-11 and 2011-12, according to multiple reports.
Michigan Gov. Rick Snyder
All of a sudden, everyone's got a suggestion as to how to handle the new money — which, to be sure, is equivalent to about one-third of what the state will lose due to the $1.7 billion business tax cut Gov. Rick Snyder is expected to sign into law.
Nonetheless, half a billion dollars could be the difference between reasonably sized K-12 classes and overcrowded classes, huge tuition increases and modest tuition increases, healthy public safety budgets and anemic spending for police and fire services.
But if we've learned anything from Snyder's first 4.5 months in office, it's that he's bound to take a nontraditional approach to handling the sudden influx of cash.
Here are 5 bits of insight on how Snyder may handle the good news — and why he won't just start doling out cash to anyone who asks:
1. During his gubernatorial campaign, the Republican decried former Gov. Jennifer Granholm's handling of the billions in federal economic stimulus funding distributed to the state. Instead of using the funding to push for structural changes, she worked with the state Legislature to use the funding to simply plug the deficit and put off the tough, structural budget choices.
Now Michigan's got a fresh chance at handling an economic stimulus package, so to speak. Snyder won't do what Granholm did.
2. Snyder likes to wield money to push for more changes at cities and schools. Using the extra cash as incentives to nudge municipalities and school districts would fit with Snyder's style. It's exactly what he's doing with his municipal revenue sharing proposals and what he wants to do with his education reform initiatives. Now, he's got a bigger pot of cash and he'll surely be tempted to ramp up incentives.
3. The former Ann Arbor venture capitalist has been itching to set up a rainy day fund for the state. Saving cash for later is not the popular political choice. But Snyder has been trying to spotlight the state's lack of savings for months. He may view the new cash as the perfect opportunity to start saving.
4. Pressure is mounting for Snyder to reduce the funding cuts he's proposed. Although he would likely prefer to stick to his previous proposals for spending cuts, it'll probably be politically impossible to keep legislators — Democrats and Republicans — from demanding lower cuts. We can probably expect schools, in particular, to get a bit of a reprieve.
5. Anyone's guess. Snyder has already proved that he can be unpredictable. Anyone who suggests raising taxes on senior citizens — which he has officially accomplished — is clearly willing to take politically risky steps. So, Snyder may dismiss the first four things on this list in favor of something else.
One area that comes to mind is health care. He hasn't yet said much about how he plans to shape Michigan's health care spending. But we know that he favors an increased emphasis on healthy living.
Regardless, this much is for sure: The influx of new dollars marks the start of another period of political wrangling in Lansing. Money is the root of all political fights.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
alternativeview99
Tue, May 17, 2011 : 3:07 a.m.
I am so totally confused. All of a sudden, we have a surplus to argue about how to spend? Yet, we are asking members of the middle class who remain in Michigan to sacrifice even more? Please explain. Why would any skilled tradesperson wish to remain in Michigan? Why would they choose to work for people like Snyder and his friends when they could move elsewhere and get a better deal? We ought to be asking why Snyder and his friends don't want to attract business by having a a government that trains a talented work force. Instead, Snyder says the middle class must pay subsidies to attract business. In essence, we must pay to have a job. For what it's worth, I vote to support Warren Buffet and Bill Gates in what they have to say about taxation and running this country. These are two men who have earned my respect and admiration....despite the fact I curse the oil industry and Microsoft on a daily basis. Take a look at what they have to say. <a href="http://front.moveon.org/warren-buffet-and-bill-gates-on-why-the-wealthy-need-to-pay-more-taxes/" rel='nofollow'>http://front.moveon.org/warren-buffet-and-bill-gates-on-why-the-wealthy-need-to-pay-more-taxes/</a> Check them out.
Tru2Blu76
Tue, May 17, 2011 : 1:19 a.m.
Betting: the gullible will credit $nyder for fixing Michigan's debt problems even though he's going to have it much easier before too long. The economy is finally looking like it will sustain recovery so that alone will increase revenue without any "look what we found" money. In addition, U.S. manufacturers are already committing to bringing factories back home. (Having "discovered" that foreign workers are about 1/3rd as productive as Evil Unionized American Labor.) Funny how they were all convinced a decade ago that they "couldn't possibly" stay in business without offshoring billions of dollars worth of production. Just BAD MATH and BAD IDEOLOGY was at the root of that myth. It made our recession problems worse, in fact. Back and forth: the two ideological camps known as Democrats and Republicans go. It was "Roosevelt saved the economy" back when the Dems held sway. It was actually the massive reindustrialization of America as part of the war effort that turned the Depression on its head. So now we'll be hearing that "Reagan-Bush-Bush-Corporate Welfare" saved us from the Great Recession of 08 which the Republicans created in the first place. Let it be remembered: any recovery isn't to be assigned to $nyder or any politician. Obama's program produced little if any effect (partly because he stuck with Republicans to run his show). It's always a matter of people's fears being quelled so they start making purchases which stimulates the economy AND due to the increased revenues which come with every recovery. Trading a one-trick pony for another (replacing Granholm with $nyder) has nothing to do with actual economics. Thomas Carlyle said: Teach a parrot the terms 'supply and demand' and you've got an economist.
your-kidding
Mon, May 16, 2011 : 7:57 p.m.
Wow, Nathan, great writing. Did you formerly work for The Onion -- <a href="http://www.theonion.com?" rel='nofollow'>www.theonion.com?</a>
Mike
Mon, May 16, 2011 : 7:55 p.m.
He'll incentivise municipalities and school districts to spend wisely; and that's a bad thing because.......? I'm sure there are all kinds of people lined up live Pavlov's dogs waiting to get their hands on the money. He might spend some on schools but the rest he should use to create jobs or save for a rainy day (what a novel, cruel concept). Granholm did waste the stimulus money; no jobs were created unless you were in the union or your government job was saved. We borrowed from the Chinese amongst others and mortgaged our kids futures so Granholm could avoid making the tough choices and taking heat like Snyder did. We need more politicians willing to do what is necessary regardless of what the tax and spend crowd would like.
tmo
Mon, May 16, 2011 : 4:36 p.m.
I thought this was a rainy day.
Mick52
Mon, May 16, 2011 : 4:05 p.m.
How money is spent is generally decided in the legislature, yet most folks focus on the governor. I suggest Michigan avoids spending this ASAP, but there are some critical places that need help. I hope Detroit public schools get some fiscal assistance. Those children have suffered enough.
tom swift jr.
Mon, May 16, 2011 : 3:54 p.m.
How about we use the money to fund a recall campaign...?
Mike
Mon, May 16, 2011 : 7:57 p.m.
Why? Are you a government official doing a poor job?
Wolf's Bane
Mon, May 16, 2011 : 3:31 p.m.
Nathan, "Snyder has already proved that he can be unpredictable." Really? How about this, Snyder will do whatever he has to do to give big business tax breaks at the cost of K-12 education, cutting benefits for seniors, and the deregulation of the EPA and other oversight agencies. C'mon, Snyder is a predictable as a fox.
GoBlue1984
Mon, May 16, 2011 : 3:21 p.m.
5 hints!? I'll do you one better... 5 facts: 1. CUT 2. RUN 3. CUT 4. RUN 5. KICK A PUPPY Recall this sad, sad excuse for a governor!
Mike
Mon, May 16, 2011 : 7:59 p.m.
You forgot to label him as racist and that he hates old people and kids
EyeHeartA2
Mon, May 16, 2011 : 3:36 p.m.
One of the best and most coherent post of all times. Too bad you need to sully the block M with it.
a2susan
Mon, May 16, 2011 : 2:16 p.m.
When I think of structural changes I think of fixing our roads and bridges. Driving around Ann Arbor is a hazardous experience, and walking is downright dangerous. I am embarrassed when visitors come to our state and see the poor condition of its roads and highways.
leaguebus
Mon, May 16, 2011 : 1:57 p.m.
I guess I am a little fuzzy, non-traditional? This is typical Republican supply side economics which only makes the rich richer and the poor poorer. Plus, in Snyders case, when the poor get real poor, he appoints an emergency manager who fires all the elected officials and union members. Great way to cut budgets. Lower pay is a great way to get the best people into a job. Oh, sorry, except at the other end of the scale, the ultra visionary Captains of Industry deserve huge salaries because how many people could do their jobs? To establish a rainy day fund, we need to lay off more teachers and public safety people because there is still no money to pay them. Great Idea! Oh by the way, the influx of new dollars has nothing to do with the current regime in Lansing and more to do with the old regime and the successes of the Obama administration to damp the effects of the recession. Those pesky Democrats messing up the triumphant Republican return to power.
Mick52
Mon, May 16, 2011 : 4:02 p.m.
You do not seem to understand how important the emergency managers are for communities. I suggest you pick up the most recent AARP newsletter and read the story on Vallejo, Ca. Or read about Vallejo online, there are tons of stories. Trying to prevent what happened there is a critical measure. Its not when the poor get poorer, its when the debt becomes more and more unmanageable.
Dave
Mon, May 16, 2011 : 3:17 p.m.
It's these kinda posts that are not very constructive towards the political climate. Over-dramatized stereotypical categorization, and re-iterating catchy mantras is not going to bring people to the table to discuss & solve the issues at hand. [That goes for both the left & right.]
eagleman
Mon, May 16, 2011 : 3:01 p.m.
Well, the poor got poorer under Democrats so your point fails. The ultra visionary unions and professors get well paid to stir up the masses until they are a frenzied mob, purposefully ignoring that it is the Captains of Industry who pay the wages of all involved in the Populist Movement. For much of the past two decades we have had some of the highest paid teachers in the nation. What did that do to our economy? Nothing. The high salaries of Union workers were great until the Big Three collapse and left the workers with nothing. What good was the UAW then? What good were you and the rest of the Populist Movement at saving the common man from destitution? You don't create the jobs that generates the tax revenue that funds all that you want. Bahsing those who do create the jobs seems a bit ridiculous to me. When you and your cohorts actually CREATE tens of thousands of jobs, I'll listen to your arguments. Until the, all that you say and write means less then a hill of beans.
alan
Mon, May 16, 2011 : 1:53 p.m.
State revenues have been increasing already. This 'windfall' is only 1/3 of the revenues lost by the plan passed last week. How is this good news?
Paul
Mon, May 16, 2011 : 1:41 p.m.
Isn't the talk of spending the money, the same problem that got us into this mess. Don't we owe more than $4 billion to the federal government for unemployment benefits. Why don't we pay down debt before we talk about spending more right after we balanced the budget for the first time in almost a decade?
johnnya2
Tue, May 17, 2011 : 12:38 a.m.
So not true Mike. Some years I spend more than I make, In fact the year I bought a home I spent WAY more than I make. I took out a loan. Some years I make far more than I spend, and I invest it in things like improving my house (education) or maybe landscaping (roads), or even a security system (police). The problem has been all governors have decided to do everything the cheapest way possible. With term limits they do not care what happens after their time in office is done. LONG TERM thinking is the problem. Snyder is a typical businessman. He only cares what the current quarter does for shareholders and screw long term viability (Gateway)
Mike
Mon, May 16, 2011 : 8:15 p.m.
@waterdipper - It is spending more! You would make a good politician. We are overspending, so we cut to spending to save money. If you don't cut spending then you are spend more than you take in, therefore by definition you are spending more. If your personal budget is spending more than you take in, and you inherit some money and then return to your old spending ways you will soon be back in debt and waiting for another rich uncle Obama to save you. The real change we all want is painful
Waterdipper
Mon, May 16, 2011 : 1:56 p.m.
This isn't really talking about spending more...it's about cutting less. I suspect paying down whatever debt the State has would have been be factored into the Snyder balanced budget plan, which, one would have to assume, was prepared without factoring-in the apparent increase in revenue. Given the cuts to education, the reductions to our police and fire departments, and the poor condition of our roads, I think reducing some of those cuts should be a higher priority than increasing our debt payment. But all this "assumes" Snyder's budget plan does fix the structural deficit(s), already includes paying down the debt, and in fact, will bolster employment by boosting businesses, thus increasing revenue.
grye
Mon, May 16, 2011 : 1:29 p.m.
I surprised most here didn't think that he would just pocket the money himself since you think is so dishonest.
tom swift jr.
Mon, May 16, 2011 : 3:56 p.m.
Actually, he puts it in the pockets of his corporate cronies... and you can trust it will eventually float back into his in some manner.
A2anon
Mon, May 16, 2011 : 1:24 p.m.
That money needs to go to reducing the extraordinarily drastic cuts to K-12 education. Then, our legislature needs to FIX the structure by which we fund our schools, and at the very least, allow communities to choose to prioritize and invest in their schools.
Monica R-W
Mon, May 16, 2011 : 1:09 p.m.
So, if Snyder has been in office a good.....five or so months, and Michigan now has a "Economic Stimulus".....wouldn't former Governor Granholm be to THANK for this? I am extremely confused how Rick Snyder gets to claim fiscal victory on this nature, when he has been in office less than six months. Also, is this "business news" or really just opinion? Oh well....
johnnya2
Tue, May 17, 2011 : 12:33 a.m.
Mike, I knwo this is hard to understand, so I will speak at your level. His changes have NOT happened yet. This report is based on the laws in place BEFORE Rick Snyder. But I am sure republicans will try to take credit for it somehow.
Mike
Mon, May 16, 2011 : 8:17 p.m.
Real simple his changes are generating more revenue
Mick52
Mon, May 16, 2011 : 3:57 p.m.
I had the same thought Monica. But then I started searching for the why and am frustrated I cannot find it. I think an explanation, other than "recovering economy" would be an important part of this story. This is big news, glad to see it reported, but I would like to see what created this surplus. Maybe not giving money to movie studios?
Dave
Mon, May 16, 2011 : 3:08 p.m.
Not entirely. Surely, Granholm's administration may have had some effect/responsibility, but it is a "prediction" for the 2012-2013 period (from what it sounds like). It hasn't happened yet. To me, that signals the current administration is much more directly accountable for those fiscal outcomes, be it good or bad.
eagleman
Mon, May 16, 2011 : 2:53 p.m.
Snyder is not "claiming" anything. Where in the article is he claiming victory?
Paul
Mon, May 16, 2011 : 12:38 p.m.
Cash, I hardly every agree with you, but on this, your spot on. Thumbs up!
Cash
Mon, May 16, 2011 : 1:45 p.m.
Paul, Whether pro or con....the subjects of: Snyder Ann Arbor Fire Dept AAPS teachers have been overdone. Yesterday AAFD got TWO posts! Just blogging for the sake of high count hits isn't going to work long term. I have noticed a lot of thoughtful posters have left this site. That concerns me. Hit and run posts are boring. And jon, I highly doubt Paul and I are brothers. My only brother passed away four years ago at a young age.
jondhall
Mon, May 16, 2011 : 1:12 p.m.
Are you and Cash brothers ?
Cash
Mon, May 16, 2011 : 12:28 p.m.
Oh Nathan, Nathan, Nathan. Please stop giving us this day our daily Snyder. There must be someone or something else to blog about daily. I log in daily hoping for new topics here. I give up.
steve banicki
Mon, May 16, 2011 : 12:13 p.m.
Spending to stimulate the economy is a good thing; however, it needs to be targeted towards investments in the future such as education, finding alternative energies, high speed rail where it makes sense, yes domestic oil production and high speed internet. If government used the same accounting rules as private industries, these items would not be considered expenses. They would be assets to be used to enhance our future productivity, The time to do these things is now when money is cheap and we better do them if we want to compete in the future. The PBS program Need to Know has a segment describing how the country who invented the Internet is falling behind other nations who are investing heavily and leaving us in the dust. <a href="http://www.pbs.org/wnet/need-to-know/culture/video-high-fiber/9263/" rel='nofollow'>http://www.pbs.org/wnet/need-to-know/culture/video-high-fiber/9263/</a> What we don't want to happen is for Americans to consume the way they did prior to 2008. We cannot afford it. <a href="http://www.freeourfreemarkets.org/2011/05/stimulate-plan.html#more" rel='nofollow'>http://www.freeourfreemarkets.org/2011/05/stimulate-plan.html#more</a>
Waterdipper
Mon, May 16, 2011 : 12:06 p.m.
If my taxes have just gone up to pay for business growth and to close a budget deficit (structural or otherwise) that, lo and behold, will be less than advertised, I'd strongly favor using the additional funds towards a reduction in the cuts to education, police and fire departments, and road maintenance. A well educated electorate is essential for a strong and functional democracy and is the best defense against political chicanery. And a well-educated workforce is essential for business operations. I have to admit, I DO find it interesting that the news was officially released the day AFTER the legislature voted for the tax overhaul.
Mick52
Mon, May 16, 2011 : 3:53 p.m.
Waterdipper, I had the exact same thought. But then I start thinking just because we have a pot of extra cash, maybe that does not mean we should spend it as soon as possible. It is very important to have a rainy day fund and I am sort of shocked to read Michigan has none.
eagleman
Mon, May 16, 2011 : 2:52 p.m.
All our well-educated people are leaving because of a lack of suitable jobs. We won't benefit from spending on education if we continue to ignore job creation. These things go hand-in-hand. We need both. It is up to the governor and legistature to find a way to achieve a balance that addresses both jobs and education.
runbum03
Mon, May 16, 2011 : noon
Errr. . . any "windfall" belongs to the taxpayers - not the State. The Stimulus failed big time. Throwing money at problems feels good but never makes the problem go away.
Mick52
Mon, May 16, 2011 : 3:51 p.m.
It depends. The Center for Automotive Research reports cash for clunkers was a success (though I think it was grossly unfair to folks who did not buy clunkers but needed a new fuel efficient auto). And around here in particular, a lot of roads were repaired. At least temporarily. So some good came from it, but overall, it did little to create jobs. It extended some.
alan
Mon, May 16, 2011 : 1:51 p.m.
Every study suggests that without the stimulus things would have been much worse. So if failed means the lack of complete recovery then you are correct. If failed means it didn't help then you are incorrect.
Enso
Mon, May 16, 2011 : 1:30 p.m.
"The Stimulus failed big time." No, it didn't. Say the people that study the question anyway. I don't know what the talking heads on Fox say though.
Veracity
Mon, May 16, 2011 : 11:57 a.m.
Oh, let us not be coy or naive. Of course Governor Snyder's use of the "unexpected" new revenue of $400 million to $700 million is very predictable. First, he will propose additional business tax reductions, perhaps a percentage point off the recently proposed 6% flat rate. He will also provide another $100 million to SPARK so that it can hopefully double the number of jobs added yearly to 2800. What is left can be offered for low interest loans or grants to favored businesses. Does anyone expect that the Governor would rescind his taxation of pensions or replace lost funding for education or increase the interval for which the unemployed are supported?
John Q
Mon, May 16, 2011 : 4:39 p.m.
"Who creates the jobs that generate the tax revenue that pays for unemployment, teachers, education, and other government services? Business. " Here I thought it was me being a consumer buying goods and services that generated all of that business activity. But no! It's businesses by themselves that power the economy. If that's true, why isn't business generating more business? Stop waiting for all the people you just socked with a tax increase to spend. Go forth and be profitable!
eagleman
Mon, May 16, 2011 : 2:49 p.m.
Who creates the jobs that generate the tax revenue that pays for unemployment, teachers, education, and other government services? Business. WHy is it that you don't understand that everything starts with business?
EyeHeartA2
Mon, May 16, 2011 : 1:07 p.m.
We can check back in a few weeks and see how accurate your prediction is. If you are off base, perhaps you can post about that as well. ....but thanks for hysterics so early in the morning.
stunhsif
Mon, May 16, 2011 : 11:52 a.m.
I say put all of it toward repairing roads and bridges in this state. I for one am sick of having to pay for front end alignments, broken wheels and blowouts.