The Ugly Truth Behind Michigan's Budget Surplus

Patricia J. Williams
February 15, 2012 | This article appeared in the March 5-12, 2012 edition of The Nation.

Michigan is a model of fiscal recuperation. At least that’s what the headlines said as I stepped off a plane in Detroit recently: its spending was slashed so ruthlessly in the past few years that the New York Times quoted a former state budget director as moaning, “We were so far down that the floor looked like up to us.” But now there is a budget surplus projected for 2013, of anywhere from half a billion to a billion dollars, with yet sunnier fiscal predictions ahead. This apotheosis is generally credited to the enactment of Republican Governor Rick Snyder’s stern austerity policies, which include replacing “a business tax with a corporate income tax that is expected to save businesses $1.5 billion a year,” according to the same Times article. “To make up lost dollars, lawmakers agreed to tax public workers’ pensions, reduce the state’s Earned-Income Tax Credit for the working poor, and remove or reduce other tax exemptions and deductions.”

On the ride from the airport, my friend Dee gave me an earful about what he described as “Snyder’s for-profit governance, while for us ordinary non-corporate humans, things just get bleaker.” The schools are decimated, he told me. Infrastructure is crumbling, zoos and parks are being eliminated, libraries closed and daycare all but nonexistent. Snyder has slashed funding for the state’s colleges and universities by 15 percent in the past year alone.

Moreover, Detroit is on the verge of financial ruin, in no small part because since 1998 it has been hobbled by a law requiring all cities to cut personal income taxes every year, for residents as well as nonresidents. Exemptions are given only if a city is in financial distress—a status virtually guaranteed by such cuts. “Financial distress” in turn triggers Public Act 4, an insidious law—detailed by Chris Savage on page 6 of this issue—that permits the governor to appoint an “emergency manager” (EM) whose job is, no joke, to displace elected officials and run local governments as though they were private, profit-driven corporations. Yet for all their considerable power, EMs lack the one thing that cities like Detroit need most (Republican dictum notwithstanding): the power to raise taxes. (Not that one would want a trickle-down executive branch boss like an EM tackling taxes, in addition to disappearing local legislative structures like city councils and school boards.)

EMs are balancing budgets by gutting government itself: selling off water and sewer lines (Flint), “redeveloping” public parks into private golf courses (Benton Harbor) and threatening to dissolve school districts (Highland Park). Detroit public schools, 80 percent of which fail to graduate any students with a college-qualifying ACT test score, have been taken over by GM’s former vice president for North American vehicle sales.

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http://www.thenation.com/article/166293/ugly-truth-behind-michigans-budget-surplus