-May 17th, 2010
Bean: Tax Loopholes Busting Budget
Tax expenditures are the "primary cause" of the structural budget deficit, Mitch BEAN of the House Fiscal Agency (HFA) told a Business Leaders for Michigan (BLM) summit today in Lansing.
Bean was speaking on a panel on Michigan's Fiscal Future at the all-day summit put on by the 75-member BLM.
Tax expenditures have increased "dramatically" in recent years, he said. Tax expenditures hit about $33 billion in Fiscal Year (FY) 2008. That's $6.3 billion more than revenues clocked in at. In FY 1998, revenues were $6.8 billion higher than tax expenditures. They've increased about $13 billion since then.
Bean said tax breaks are supposed to stimulate the economy, but he said, "Those are claims that I tend to be very skeptical of."
"Both caucuses are equal opportunity offenders," he added.
The state's structural budget deficit will face an additional $525 million hole in Fiscal Year (FY) 2014, thanks to phased-in tax exemptions.
Refundable tax credits include the homestead property tax credit ($987.5 million in FY '10), the Earned Income Tax Credit ($333 million) and the alternative energy tax credit ($46 million).
Seniors also are fully exempted from paying taxes on Social Security, military and government pension and retirement income. Michigan's population is getting older, so this will cost more, Bean said. In 2010, 12.8 percent of the population is 65 and over. By 2030, that number will rise to 19.5 percent.
Former Gov. John ENGLER adviser Richard MCLELLAN stood up during the question and answer period.
"I've been to a lot of these things and you walk away depressed, with the conclusion that you have to raise revenue," McLellan said. "But the political reality is that no one wants to touch tax expenditures here."
Bean agreed that there's "no appetite to raise taxes" but he added the same goes for budget cuts.
General Fund revenue has plummeted 43.4 percent since FY 2000, adjusted for inflation and the School Aid Fund (SAF) has slid 15.7 percent. He said the downturn in the economy doesn't account for all of it.
"Something else is going on," Bean said.
Other causes of the structural deficit are the decline of the domestic auto industry, the state's tax policy and increasing costs for Medicaid and Corrections.
Bean said General Fund revenue is at 1965 levels and state spending is at 1969 level.
"The state tax base isn't stable and can't support any level of services for very long," Bean said.
Bean recommends trimming tax expenditures and having them peer reviewed by economists at the University of Michigan, Michigan State University or the nonprofit Upjohn Institute. He also supports dropping the marginal taxation rate and expanding the base, but he stressed that he's not making a judgment call on raising more revenue, less or keeping it flat.
He expressed concern about cuts to public safety, an educated workforce and safety net. The budget cuts could have "indeterminate long-term economic consequences, Bean warned.
"They say that taxes are the price of a civilized society," Bean said. "They're also the price of a productive society."
Jeff GUILFOYLE, president of the Citizens Research Council, said there would be job losses in 2010, as there have been since 2001, but that would probably end next year. Michigan has lost population, as well -- 120,000 people since 2005, the equivalent of the population of Ann Arbor.
That means that Michigan is on track to dropping from the eighth-largest state to the ninth and will lose one to two congressional seats. The state also will lose federal aid.
Per-capita income for Michigan has slid this decade, dropping in the state rankings from 20th in 2001 to 37th in 2009.
Gary OLSON of the Senate Fiscal Agency (SFA) said that the American Recovery and Reinvestment Act (ARRA) has been the "savior of the Michigan budget over the last three fiscal years." But he said the good times are over, as there's no indication that Congress will be writing the states any more checks.
Without the ARRA money starting in FY 2012, Michigan has a "very serious problem" in the General Fund, he said.
"The huge dose of federal money has allowed us to push off critical decisions," Olson said. "Yes, [the feds] gave states a favor, but everyone pushed off decisions."
Olson said Michigan can do a number of reforms to reduce costs, like having state employees pay 20 percent of their health care costs, reducing government salaries to the national average and consolidating K-12 districts. He said that it's very hard to get rid of programs, noting the fight over the Michigan Promise.
"In 32 years I can only remember hardly any programs being eliminated," Olson said.
McLellan said that there was no mention of cuts to Medicaid or effort to put other "draconian cuts on the table."
Olson said there's a potential problem in chopping Medicaid, since it could run afoul of the new national health care reform law.
Republican activist John RAKOLTA, owner of Walbridge, said that Michigan could be following in the footsteps of the Big Three and City of Detroit, which were "unable to deal with reality." He suggested Michigan was heading toward becoming the first state in the country to become bankrupt.
Bean said he didn't envision Michigan going belly-up, but he admitted that he didn't think GM would.
"All of our problems have a solution if there's the political will to do it," he said.
Term limits inevitably came up in the discussion and was fingered for Lansing's dysfunction. Olson said it would be a mistake to blame term limits for everything, noting there's no compromise in Washington, either. Bean argued that term limits have made the situation worse.
"You could argue people like me are more important to the process because we actually understand something," the economist said. '"But I haven't been elected to anything."
He predicted 50 new House members in 2011, with 90 to 100 having two years of experience or less. Olson said there would probably be 29 or 30 new senators.
Gubernatorial candidate Rick SNYDER attended the forum and issued this statement:
"Michigan's budget woes aren't going to be solved by the current broken budget system in Lansing. Our state must adapt to the changing times and be forward looking. That's why I proposed Value for Money budgeting so that our budget can be right-sized to provide results for tax dollars with the stability that results from a multi-year approach. The state of Washington successfully implemented a similar outcome-based budget reform and was able to close a $2.4 billion deficit without raising taxes.”
-May 14th, 2010
NASW’s New Study Provides Better Information on Social Work Salaries
Data Released by Payscale Too Limited
WASHINGTON – The National Association of Social Workers is concerned with social work salary information from Payscale that is being quoted by Huffington Post and other news organizations. NASW has a new Social Workers Compensation Study that offers a fuller and fairer depiction of what social workers earn.
“Payscale limited its reporting to social workers with bachelor’s degrees,” said Tracy Whitaker, DSW, ACSW, director of NASW’s Center for Workforce Studies and Social Work Practice. “And, while a bachelor’s is a professional degree, social workers often get additional certifications, master’s degrees and doctorates. In fact, social workers are some of the best educated professionals in the nation.”
The NASW study included data from social workers with master’s degrees. According to the NASW study, the median annual salary for social workers with less than five years experience is $43,700; those with 10-19 years experience earn a median salary of $52,000; and those with 20-29 years experience earn a median annual salary of $60,000.
Payscale, which only included social workers with bachelor’s degrees, listed the starting median salary for a social worker at $33,400 and $41,600 for a mid-career social worker.
You can find social workers in all areas of society. For instance, they help veterans secure benefits, counsel families in crisis, and help protect children. Many social workers say the good they bring to the lives of others is more important than getting rich.
However, NASW is pushing for higher salaries for social workers to compensate them for the wide range of services they provide and the education they must earn to do their jobs. NASW supports Congressional passage of the Dorothy I. Height and Whitney M. Young Social Worker Reinvestment Act, which would secure federal and state investment in the social work profession.
Social work is one of the fast growing fields in the United States, according to Labor Department data. And a May U.S. News and World Report article said medical and public health social work will be one of the 50 best careers in 2010 and beyond.
“Judgments on the monetary value of certain careers are always subjective,” Whitaker said. “Thank goodness many people continue to choose life-affirming careers such as social work despite the naysayers.”
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