LANSING — Despite the objections of the House Democratic Caucus, the state House passed legislation today to paper over a budget deficit in the current fiscal year. Democrats oppose the bills because, among cuts in other areas, they siphon money away from the School Aid Fund to fill a hole created by overly generous tax incentives for big corporations. The legislation now heads to the Senate for consideration.
“Legislative Republicans created this situation in 2011 when they drastically altered Michigan’s tax code to favor corporations at the expense of families, seniors and schools,” House Democratic Leader Tim Greimel (D-Auburn Hills) said. “Instead of re-examining this corporate welfare program to ensure it is effective in creating jobs for Michigan workers, the Legislature is continuing to take funding away from a much better investment: our kids’ education.”
The current budget deficit was announced earlier this year at the biannual Consensus Revenue Estimating Conference. State economic experts, along with the nonpartisan House and Senate fiscal agencies determined that corporations have claimed more in tax credits than originally anticipated, causing a $456 million budget shortfall. Meanwhile, the state School Aid Fund (SAF) registered a surplus, and House Bill 4110 uses that money to backfill the budget hole.
“School funding is still down from four years ago, when Republicans raided the SAF to pay for a $1.7 billon corporate tax cut,” said state Representative Brandon Dillon (D-Grand Rapids), a member of the House Appropriations Committee. “Now, dozens of school districts around the state are facing a deficit. Rather than use the surplus to bring education funding back to where it belongs, legislative Republicans are doubling down on a strategy that failed our schools and failed our economy.”
The effectiveness of the corporate tax incentives is in serious doubt. An auditor general’s report in September 2013 found only 19 percent of jobs that corporations claimed they would generate were actually created. House Democrats offered several amendments to HBs 4110 and 4112, which makes cuts to General Fund programs, to spare those that have proven track records of helping working families and creating jobs. All the amendments were voted down.
“My Democratic colleagues and I are not opposed to helping businesses create jobs. We just want to make sure that we’re getting a good return on our investment,” said state Rep. Sarah Roberts (D-St. Clair Shores), also a member of the Appropriations Committee. “Being good stewards of taxpayer dollars means stopping to look at budget programs to make sure they work. Instead, Republicans are putting wealthy corporations ahead of ensuring our children get a great education, and that’s wrong.”