Skubick: The bill for tax breaks could be coming due

LANSING, Mich (WLNS) – University tuitions could increase, class sizes for your school children could mushroom and health care for the needy may be jeopardized.

Those are the warnings from researchers who are telling state officials all the tax breaks they are granting could blow a $2 billion hole in state services.

Let’s say you have $1000 in your checkbook but half of that can’t be spent for other services because it is earmarked for your mortgage and other fixed costs.

The same thing is happening to the state’s check book, the General Fund.

State lawmakers have passed a host of tax breaks that must be paid before other state services are covered.

According to the Michigan Citizens Research Council the fixed costs for tax cuts are substantial:

State Tax Cuts

(1) $600M Roads
(2) $600M Cities
(3) $600M Business

And, according to Craig Thiel of the Michigan Citizens Research Council, the number could go higher. “We anticipate that will be closer to two billion dollars in deferred revenue to the General Fund so it won’t be there for state services.”

With fewer dollars in the state checkbook, universities may get less support, resulting in higher tuition.

There could be fewer medicaid health care dollars for the needy and if lawmakers take money from the school aid fund to indirectly pay for all the tax breaks, what does that mean for local schools?

“It will be smaller funding increases or flat funding for the foundation grant or grants to school districts,” explains Thiel.

Instead of talking about paring back the tax breaks, Sen. Jack Brandenburg wants to eliminate the state income tax with a $6 billion loss to the state check book.
Thiel responds has this to say about that. “The general fund at this point can’t support a major income tax reduction.”

Sen. Brandenburg disagrees and he says he’ll cut state services to pay for the income tax cut.

All this won’t come to a head for three to five years, long after the current batch of legislators are gone and a new governor will have to deal with this.

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