Tuesday, October 2, 2007

Not a time for celebration, says Gov. Granholm

cross-posted yesterday at Michigan Messenger

This afternoon a subdued Governor Granholm held a press conference on today's budget agreement.

Looking exhausted and speaking soberly, Granholm called the compromise a comprehensive plan to prevent massive cuts to education, public safety and health care. She thanked the legislators who reached agreement on a package of cuts, reforms and revenues.

Granholm called it a historic agreement for Michigan that will "set the state on solid fiscal footing and allow us to move forward and invest and build the next Michigan." She expressed confidence that "this fiscal plan will allow us to do the things that we know are important to rebuilding a state that has been so challenged by the global shift in manufacturing jobs and policies that got us here in the first place."

She said this was not a time for celebration. There are massive cuts -- about $440 million -- that will be made in the next 30 days. "These are going to be tough. And we know whenever somebody is cut, they don't like it. These cuts will be difficult, but they must be done," she said.

She said the combination of cuts, reforms and revenues will be difficult, but that it is a balanced approach to resolving the structural deficit in the long term.

She stressed that the increase to the income tax is temporary and "will start to roll back in 2011." She said her preference would have been for economic indicators rather than a date to trigger future reconsideration of the income tax. The tax returns Michigan's income tax rate to its 1999 level.

The new income tax rate will make Michigan's rate the fourth lowest in the country.

"The combination of the income tax and service tax means about $1 per person per week," she said.

The new revenues, she said, will make it possible to maintain current funding levels for education, public safety, Medicaid, health care, which was a major goal of the budget negotiation.

She was not specific about the nature of the reforms or cuts, except that they will affect corrections and bring public employee benefit plans in line with private sector norms.

"The solution we crafted enables us to put the state on stable, solid financial footing once and for all. We are not going to solve this budget deficit with one-time fixes," she assured her audience.

Speaking about economic development she said, "I am not going to assess blame. I want to move forward in a bipartisan way with my partners in the legislature. But really with citizens and the businesses of Michigan to create a vibrant economy and take advantage of our natural niches." Among those she included "the area of alternative and renewable energy."

Acknowledging the difficulty of the votes that brought forth the compromise, she chided "extremists" taking up recall actions against legislators who voted their conscience. "I am very angry at those on the fringes who would attack legislators who voted their conscience to put Michigan on solid footing." She urged citizens to refuse to sign recall petitions.

Defending legislators who voted for the comprehensive changes she said, "These legislators came to Lansing to fix problems and many of them last night cast what would be the toughest votes in their lives." She said the purpose of the votes was to prevent massive cuts to education, public safety and health care.

"People need to pat them on the back and say 'thank you' for moving us forward."

She also attributed to term limits complications in the negotiation process.