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DEAL! State Teeters on Brink of Shutdown, But Budget Talks Extended 30 Days

Higher Income, Sales Taxes May Close $1.75 Billion Gap

September 30, 2007       Leave a Comment
By: Dave Rogers

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Sunday night, the Michigan Senate approved a delay in budget deliberations by extending talks 30 days

After long wrangling, the Michigan Senate just before 10 p.m. Sunday night approved a delay in budget deliberations by extending talks for 30-days.

A continuation budget will be in effect for a month starting today.

The Senate voted 34-3 approving the continuation budget for state government operations, and 35-3 on a continuation school aid bill.

A House bill that ties the continuation budget to the income tax increase from 3.9 percent to 4.35 percent also was accepted by the Republican-dominated Senate. The rest of the revenue package would be achieved by new sales taxes on services or by closing several business tax loopholes.

Sen. Buzz Thomas, D-Detroit, minority floor leader, issued this statement at 5:51 a.m.:

"The Senate just passed the final piece to the budget agreement for fiscal year 2008. We started session at noon on Saturday and adjourned at 4:30 am Monday. It has taken months for the Legislature to get to this point. Republicans and Democrats have both compromised a great deal to craft a fair solution that will start investing in Michigan immediately. "Because of the lateness of the agreement reached, citizens should go to to confirm any business disruptions throughout today. I sincerely apologize for the inconvenience the Legislature has caused you." Michigan legislators have tentatively decided to increase sales and income taxes to meet a $1.75 billion budget deficit.

  • The income tax would go from 3.9 percent to 4.35 percent;

    The bill extending the sales tax to 23 categories of services passed the House about 6:30 p.m. Sunday on a 56-53 vote, with all but two Democrats voting "yes." The bill raises about $613 million toward cutting the projected $1.75 billion budget deficit.

    The 6 percent sales tax is proposed to be extended to services such as landscaping, raising $25.8 million; dry cleaning ($31.2 million), golf and country club fees ($30.2 million) and sports tickets ($2.2 million).

    The legislative action negated Gov. Jennifer Granholm's pink slips to about 35,000 of the state's more than 53,000 workers. Her office had notified them not to report to work on Monday in case of a shutdown. About 18,000 public health and safety workers were expected stay on the job whether or not a budget deal was forged.

    Granholm had refused to sign a temporary budget without higher taxes to fund education, public health and other programs.

    A proposal okayed on a 21-17 vote by the Republican controlled Senate is designed to save money by introducing competition for health insurance to the Michigan Education Association MESSA plan that now dominates school districts' insurance coverage.

    That provision reportedly is a key to the entire budget negotiation process and a resolution to the issue was not clear at deadline.###

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    Dave Rogers

    Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
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