Cut to the bone

News Hits has to hand it to the Republican-dominated state Legislature. The party that prides itself on being fiscally responsible has managed to create possibly the worst budget crisis in 40 years, according to a report issued by the Citizens Research Council last week.

The CRC, a nonprofit that has been analyzing state budgets for 85 years, doesn’t directly point fingers at the Republican Party. We do. And here’s why: The Grand Old Party can’t resist cutting taxes though the state can’t afford it.

The CRC’s Michigan Fiscal Update says the tax cuts will reduce income to the state’s general fund by about $230 million this fiscal year and about $555 million next fiscal year, according to CRC senior research associate Tom Clay.

Furthermore, the tax cuts have already contributed to the $1.4 billion budget shortfall the state faced this year, which forced major cuts in public services — including the closing of health clinics in low-income neighborhoods. The budget shortfall will be even worse next year, increasing to about $1.5 billion, according to Clay.

The state Legislature is considering suspending the tax cuts, but — if it happens at all — it’s not likely to occur before the current session ends this week, says Senate minority leader John Cherry (D-Clio).

“I also don’t think there is any interest on the part of the Republican Party to consider the legislation,” he says.

And it may be even more difficult next year since it is an election year, according to Clay.

So, who benefits from these tax cuts, which threaten the state’s financial stability for years to come? Well, there’re families earning $50,000 a year; they’ll save a whopping $50 annually, according to the Senate Fiscal Agency. But in five years, those families will be saving as much as $400 per year. But the big winners are businesses, which will see their single-business tax gradually reduced every year for the next 23 years, at which point it will be completely eliminated. For more information about the Michigan Fiscal Update, go to

Ann Mullen contributed to News Hits, which is edited by Curt Guyette. He can be reached at 313-202-8004 or [email protected]
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