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Bridge Michigan
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So, what will happen with your taxes over the long term?

That’s Michigan’s defining question.

Populist and conservative pressure for small government and tax cuts isn’t going away. Counter pressure to invest and reform education and infrastructure to assure Michigan is competitive and our students can get well-paying jobs isn’t going to go away.

Pressure on financially strapped local governments isn’t going to go away. Local governments endure a five-fold whammy: Lower property values, lower tax revenues, less financial support from the state, rising retiree health care and pension obligations, all as residents continue to expect dependable delivery of basic public services. Yet combined state and local tax revenues in Michigan are $5 billion lower than they were a decade ago.


MICHIGAN STATE & LOCAL TAX REVENUE BEFORE AND AFTER THE GREAT RECESSION

Total State Government Tax Revenues

  • 2004: $28.6 billion
  • 2014: $25.1 billion
  • Change: -12%

Total Local Government Tax Revenues

  • 2004: $13.8 billion
  • 2014: $12.3 billion
  • Change: -11%

Source: Census Bureau State & Local Govt Finance Data

Tax figures presented in inflation-adjusted 2014 dollars.


Oh, and one more thing: Michigan’s economic recovery started in June 2009. It’s been a historically tepid recovery, and one that is 96 months old. The average economic expansion in Michigan lasts 58 months.

“It’s likely less than four years to the next downturn,” notes state budget and tax expert Jeff Guilfoyle, vice president at Lansing-based Public Sector Consultants and former president of the Citizens Research Council of Michigan (Disclosure: Bridge’s parent organization, The Center for Michigan, is a PSC client).

So add the prospect of future recession to the combined pressures on taxpayers’ wallets, education, infrastructure, and other public needs and services.

The next statewide election is 18 months away. Michigan will elect a new governor. All 148 legislative seats are up for grabs.

At some point, something’s gotta give.

If the tax-cutters win, they must decide what areas of an already trimmed-down government to cut to pay for more tax breaks. They must figure out how to cut taxes without crushing Michigan’s future economy with poor schools, crumbling infrastructure and unattractive local communities with poor public services.

If the public-investors win, they must figure out how to pay for all the education and infrastructure improvements they envision. They must convince a public that has little faith in government that the investments are worthy and will pay off – for them, and for Michigan.   

It’s a pretty epic collision course. Put on your seatbelts.

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