Two hours into a government shutdown last night, the Michigan legislature caved on passing a set of budget bills and instead approved a temporary measure that keeps the government running for another 30 days. The midnight hold-up: approval of a K-12 budget that cuts school aid fund spending by less than 3% ($218 per pupil). The demand: higher taxes on Michigan residents.

 The Senate had already passed a balanced budget earlier this summer when Gov. Jennifer Granholm (D) and House leadership began discussing higher taxes. In the crosshairs: a new tax on hospitals and doctors, bottled water, cigarettes, entertainment and sports tickets, as well as reductions in tax credits for low-income Michiganders and the elimination of business deductions.
Then a few weeks ago, House Speaker Andy Dillon (D) joined Senate Leader Mike Bishop (R) in agreeing to $1.2 billion in spending cuts and no tax increases. But, with the collapse of budget negotiations over school funding, all these tax hikes are back on the table.
Most of the state’s tax-hike-free budget bills have been approved by both chambers, after spending cuts were carefully crafted by a conference committee. However, proponents of higher taxes had a simple plan. If they could stall attempts to pass at least one of the tax hike-free-budget bills, it would force either a shutdown or a temporary budget that buys another month for special interest groups to campaign for tax hikes. It also provides lawmakers an excuse to vote for higher taxes, claiming the initial budget plan just didn’t have the votes.
So, early in the day Gov. Granholm attempted to stall the budget by threatening to notify state employees of a government shutdown unless a temporary budget was sent to her immediately. Once the legislature balked at that plan, the Michigan Education Association stepped in to finish her job.
Before the education budget vote at the end of the night, the MEA’s taxpayer funded lobbyists targeted several lawmakers to effectively kill the bill, thus sending it back to conference and burying hopes to finish a long awaited budget. The MEA then released a statement claiming they were “very disappointed that we’re still without a budget agreement.” Well, so are Michigan residents, taxpayers, and lawmakers who worked to provide a tax-hike-free budget agreement, until the MEA killed it at the eleventh hour.
Having bought one month, Gov. Granholm now has an opportunity to veto the tax-hike-free budget bills she disapproves of without causing a government shutdown – knowing her tax hikes can still be pursued. Further, House Speaker Dillon, the shepherd of the 2007 multi-billion dollar tax increase package, has an excuse to accept tax increases in the budget and backtrack on the spending cut agreement. In fact, the House plans to vote on some of the tax hikes as soon as today.
Nevertheless, tax hikes will be a difficult sell in the State Senate. After some legislators complained about spending cuts, the republican caucus called their bluff and put brought a democrat income tax hike to a vote. It failed a bipartisan and resounding 33-2.
CLICK HERE to contact your Michigan lawmakers and tell them to oppose taxes in the Michigan budget. Also, check out and for more budget updates.
(photo by matthileo)