HOWELL — When Mitch Bean served as the Director of the nonpartisan Michigan House Fiscal Agency for the past 12 years and one of three voting members of the Michigan Consensus Revenue Estimating Conference he had to be careful of what he said, but since he retired in 2011 he has been very free in criticizing the last two state budgets passed by Michigan Republicans.
“This is an unprecedented tax shift from business to individuals; it’s really significant,” he said. “As I look back through history, I have never seen such a shift of the tax burden from one group to another.”
Bean spoke at a town hall meeting at the Howell Carnegie District Library Wednesday night sponsored by Shawn Lowe Desai, the Democratic nominee for the Michigan House for the 47th District.
The last two year budget cycle has seen the pensions of senior citizens taxed, and numerous tax credits eliminated that will increase the income taxes of the working poor and middle class. The changes to the individual income tax will result in a tax increase of $1.7 billion, and it will give business a $1.8 billion tax cut. The changes eliminated home heating credits, homestead tax credits, tax credits for charitable giving and reduced the Earned Income Tax Credit (EITC).
“I had a lot of disagreements, privately, with the governor when all this went through,” Bean said. “It was an entertaining time.”
The gift to business also came with cuts to education, higher education and revenue sharing for local governments that balances the budget on the backs of children, working men and women and seniors. Bean said funding for public schools, when adjusted for inflation, is lower than it was 10 years ago.
“We have also done a terrible job of funding higher education,” he said.
Revenue sharing is used by local governments to fund public safety, roads, water and sewer and other services, but Bean said in the last 10 years the state has only funded revenue sharing fully for one year. That has led to layoffs of police, firefighters and teachers and cuts to services. The housing meltdown really hit locals and schools hard because 75 percent of their tax revenue comes from property taxes. The cap on property taxes that limits increases in taxes to 5 percent or the rate of inflation ensures that it will take years for revenue to recover to levels of pre-2008.
Bean said he is also concerned about the proposal to eliminate the Personal Property Tax (PPT). Slashing another $1.2 billon with the elimination of the PPT, coupled with falling property values, could send many municipalities and school districts to the brink of insolvency. The Senate approved the four bill package in May, and it is in the House. It has been delayed because locals have lobbied for some kind of revenue replacement.
“I’m a little concerned about how this will move forward,” he said. “We will see how this shakes out.”
Bean said he is really concerned about the Republicans belief that tax cuts will fix everything, and he said it almost reaches the level of religious fervor. Bean said business is already sitting on record profits of more than $2 trillion, but they still want more tax cuts and are not hiring.
“That they think that this will free up things is a bit absurd,” he said. “What creates jobs is demand; I don’t care if they reduce taxes to zero. If there is no demand they are not going to hire anyone.”
Bean said there is good news on the horizon after Michigan lost thousands of auto and auto-related jobs. He said the level of auto employment will never come completely back, but the job loss could have been much worse without the auto government loans and help. Bean also said politicians in Lansing are trying to take credit for the turnaround, but they had nothing to do with it.
“I had very credible on my desk that said if GM and Chrysler did not come back, it would affect 3 million jobs nationwide,” he said.