MICHIGAN BUDGET CRISIS: Senate Vote Targeting Low-Income Families Hit
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Michigan is not alone among state governments coping with the economic downturn, but one private human service agency sees recent legislative action as particularly damaging to low income families.
Michigan League for Human Services (MLHS) has issued a statement opposing cuts approved by the Michigan Senate on Friday:
"These cuts threaten to seriously harm low-income children, their families and frail seniors. Balancing the budget on the backs of the most vulnerable in our state is wrongheaded and unfair."
Meanwhile, Michigan school boards have surveyed member districts facing a $110 per pupil cut in state aid funding and have scheduled an Aug. 27 seminar entitled "Districts in Distress: Preparing for the Worst."
School districts responding to the Michigan Association of School Boards (MASB) survey said as a result of lower funding they would: spend fund balance, 27 percent; reduce staff, 18 percent; negotiate reductions in health insurance and other benefits, 12 percent; seek grants, 12 percent; freeze staff/board professional development, 9 percent; negotiate reductions in employee salaries, 9 percent; privatize services, 3 percent; all of the above, 9 percent.
The Senate reduced Vocational Education and Adult Education by 10 percent, reduced ISD (Intermediate School District) operations by 5 percent and the Early Childhood Investment Corporation by $750,000.
The education bill requires the Department of Education to create an Adult Learning Planning Group to evaluate this program to address the increased demand for adult education and the need to align adult ed with postsecondary education, training and employment.
The cut of $10 per month per person in the Family Independence Program (FIP) grant in the Department of Human Services budget would further shred an already damaged safety net, said League officials. That would drop the maximum grant of $492 per month for a family of three to $462 per month.
"Such a change will mean a family has to be 46 percent below the poverty line to be eligible for the FIP grant, which has eroded over the years." In 1993, a family living at 20 percent below the poverty line could qualify.
"Cuts to the children's clothing allowance, child day care for low-income working parents and state SSI supplementation to vulnerable seniors would hurt those least able to cope with our ongoing recession. Moreover, because so many workers need to build their skills to keep up in the new economy, it is penny-wise and pound-foolish to cut funds for employment and training.
"With DHS so short-staffed, cutting 100 more workers would likely make it even more difficult for families in need to get help.
"Our policymakers have other options to modernize Michigan's revenue structure and fund needed services."
The Citizens Research Council (CRC) of Michigan has analyzed Michigan's budget situation and has issued the following statement:
"Although federal stimulus funds can help balance the Michigan budget in Fiscal Years 2009 and 2010, they also create a real possibility of aggravating the ongoing structural deficit by permitting policy makers to postpone actions to bring long-term revenues and expenditures into balance.
"The State has been operating with a structural deficit, a deficit that will not be eliminated by a more buoyant economy, during the past decade.
"It has met the constitutional balanced budget requirement principally by using nonrecurring sources of income totaling over $8 billion over that period and has not solved the basic structural problem. Federal stimulus dollars, available from the American Recovery and Reinvestment Act (ARRA) will provide the State with $7 billion, which will help in the short run, but which may make more difficult the resolution of the structural deficit."
The Center on Budget and Policy Priorities comments that although the recovery package is mitigating states' fiscal problems, states are continuing to identify reductions as budgets are developed for the fiscal year that begins July 1.
To date at least 36 states have addressed their shortfalls by reducing services to their residents, including some of their most vulnerable families and individuals. Cuts to state services not only harm vulnerable residents but also worsen the recession by reducing overall economic activity.
Sixteen states have enacted tax increases in 2009 in response to budget shortfalls caused by the recession, and another 17 are considering them. Like budget cuts, tax increases remove demand from the economy, by reducing the amount of money people have to spend. But tax increases can be better for state economies than budget cuts because some of the tax increases result in reduced saving rather than reduced consumption.
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