HolyCoast: Michigan Finds Itself With a Budget Surplus and the Usual Suspects Immediately Demand to Spend It All

Thursday, February 09, 2012

Michigan Finds Itself With a Budget Surplus and the Usual Suspects Immediately Demand to Spend It All

Some people never learn:
Over most of the past decade, budget deliberations in Michigan have taken on a glum and familiar monotony: What do we cut now?

But the state that experienced an economic downturn earlier, deeper and longer than most of the rest of the country has made an unlikely discovery as its officials closed out its latest financial books: Michigan has a $457 million surplus.

Even more surprising: Revenues, which had sunk or had been mostly flat for all but one year since 2000, have grown. Not a lot, but grown.

Michigan is the most unlikely example of a phenomenon that was unimaginable in most states in recent years. Though nearly all states are required by law to balance their budgets, most have been able to do so only through rounds of painful spending cuts to make up for deep shortfalls in revenue.

Now, however, as a majority of states have begun collecting tax revenues that are on par with or even above expectations, they face some measure of Michigan’s situation — trying to sort out whether the worst is really over, whether it is safe to start spending again, or whether a rainy day fund may be the prudent course.
Of course, everyone is lining up with their hands out:
The attorney general wants 1,000 new police officers after 3,200 were cut around the state over the last decade. Schools leaders say they need to offset cutbacks that have left teachers laid off and schools closed. Child advocates want money for early education for toddlers from poor families; construction workers want money for Michigan’s crumbling roads; and on and on....

The prospect of now building up some savings cushion came as unwelcome news to people like Peter Spadafore, of the Michigan Association of School Boards, who said the schools, drastically cut last year, were in desperate need. “If you’re talking about putting it in a rainy day fund, it’s raining,” he said.
There is at least one voice of reason:
But others seemed reluctant to start thinking about buying things again. Not yet. “Now is not the time to start throwing more money at program areas that haven’t necessarily gone through the real reform that they need to,” said Tricia Kinley, an official from the Michigan Chamber of Commerce. “While our members have a confidence and renewed optimism, we’ve also seen a decade of real turmoil in our state.”

Part of the problem with Michigan and many other states - most especially California - they never learned from the Old Testament story of Pharoah's dream about the fat cows and the lean cows. You can read the Bible story at the link, but bottom line is that Egypt got a heads-up from God that there would be seven years of plenty followed by seven years of famine. The Egyptians followed Joseph's advice and stored up a percentage of the plenty to tide them over during the years of famine. States like California and Michigan though the years of plenty would go on forever, so they spent and spent and created never ending expensive social programs that effectively bankrupted the states when the days of famine came upon them.

Now that states with new GOP governors like Michigan and Wisconsin are starting to see some financial improvement, the last thing they should do is start throwing money around and refunding ideas that were bad in the first place. Building funds for the future is the right way to go, at least until the deadwood programs are eliminated and those which should remain have been adequately reformed.

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