State government reform first, then consider tax hikes

Eleven months from a pivotal state election, lawmakers in Lansing are racing to erase a decade of futility. Spending reforms and tax overhauls are competing for attention so that elected officials can claim victory before they face the voters.

        The question, then, becomes: What should they do? And what comes first?

        Many, particularly Democrats like Gov. Jennifer Granholm, are clamoring for tax hikes to make up huge budget gaps. “Do it for the schools!” they exclaim. Or, “Do it for local police and fire departments!”

        Better yet, don’t.               

        Michigan government has not earned the right to dip into taxpayers’ pockets, and this recession is not the right time. First, lawmakers must carry out reforms that show they are serious about saving money.

        That’s not just the sentiment here. That is the message that some 2,000 businesses and groups such as the Michigan Chamber of Commerce delivered last month in a letter to lawmakers. These groups are not anti-tax reactionaries. Several business leaders support the concept of expanding the state sales tax to services that currently don’t charge it (an idea the Legislature approved two years ago and rescinded).

        Still, these leaders want to see that Lansing has done all it can. They do not want to pay into a broken state government that will let more tax revenue go to waste.

        More government reform should have happened years ago, but the latest budget crisis at last has forced many politicians to take the notion seriously. And they have a bounty of good ideas from business leaders and others interested in good government:

        • Consolidate state and local government pension plans and health plans.

        • Tie state government pay to private-sector benchmarks.

        • Merge many of Michigan’s 550 school districts.

        • Bring Michigan’s per-capita prison population in line with surrounding states.

        Progress on these or several other smaller innovations will yield Michigan much of the money that it has lacked in recent years.

        It could put state government on firmer footing to avoid future budget crises.

        Spending reforms also could instill faith in the public if and when elected officials start playing around with the tax code.

        No one likes paying higher, or new, taxes, but there are times when they are warranted. An expanded sales tax, for example, could make sense when coupled with reduced business taxes.

        Those occasions, though, must result from a strategy. One that tightens the belt of state government first. One that finds every last penny first. One that acknowledges that the taxpaying public is not exactly flush with cash, either.

        Michigan government will not solve all of its budget issues in the next year, but it must start moving forward. Above all, we hope that lawmakers and the governor make the right choice and focus on the money they have already before they ask for more.