Republicans Push Economic Stimulus
LANSING — In an effort to spark consumer spending and create jobs in a soft Michigan economy, a group of state lawmakers recently introduced an economic stimulus package.
The plan, which cuts state spending and pushes up dates for scheduled tax cuts, drew strong support from business associations, including the Michigan Chamber of Commerce.
The state treasurer, however, warns that now is not the time to cut revenue, as Michigan may be facing a $500 million budget deficit this fiscal year. And at least one state senator isn’t certain the package will clear his chamber. But the Michigan chamber has vowed to get the package passed.
“We’re serious about moving forward with this package and we are equally determined to defeat any legislation that would delay or cancel scheduled tax cuts for working families and Michigan’s job providers,” said Michigan Chamber President and CEO Jim Barrett.
Joining the state chamber in backing the plan were the Detroit Regional Chamber, the Michigan Association of Home Builders, the Michigan Association of Realtors and the Mackinac Center for Public Policy. All were present at the Lansing press conference where eight state senators and three state representatives, all Republicans, unwrapped the package.
State Sen. Glenn Steil, R-Grand Rapids, was one of the lawmakers on hand and he feels the city needs the incentives the plan offers due to all the recent job cuts made by the office furniture makers.
“We’re in a recession and I want to get more money into the hands of consumers to buy more. And also the businesses, such as office furniture, are in a recession — one as bad as I’ve seen in a long time,” said Steil, also CEO of Compatico, which markets office furniture components.
Steil told the Business Journal that many state Republicans are trying to hold off efforts by Democrats and some “liberal” Republicans who want to erase the tax cuts that have been in place for the last nine years.
“We’re combating that. We feel strongly that if you accelerate the tax breaks to business and individuals, it will help the economy in Michigan similar to what the federal government is about to do,” said Steil.
“The people that I’ve come in contact with are generally very supportive of it. People in the office furniture industry, which I’m in, definitely feel that we need something, because the industry is really hurting,” he added. “And let’s face it, the people of Michigan are not under-taxed.”
Here is the core of the plan:
•Cut state spending by 5 percent for the current fiscal year, which would slice monetary needs for the General Fund by $487 million.
•Move up the planned income and Single Business tax rate cuts from Jan.1 to Oct.1. Cutting the income tax rate earlier would put an additional $46 million into the pockets of Michigan consumers, while cutting the SBT earlier would put another $25 million into the coffers of Michigan companies.
•Drop the state real estate transfer tax from $3.75 to $2.50 per $500.
•Lower payroll taxes by putting the state’s levy on par with the federal tax. Change the state’s unemployment insurance taxable base from the first $9,500 to the first $7,000 of a worker’s annual wage. Employers would save over $260,000.
•Tax telecommunications property like other personal property, on its depreciated value instead of intangible assets. These firms would save up to $15 million.
Steil said all the savings estimates were made without including any additional job growth, and that the school fund would not be financially affected by the package. He added that he hopes the stimulus plan would be out of committee before the Thanksgiving break.
The Mackinac Center projected that nearly 76,000 new jobs would be created in Michigan over the next five years if the package gets approved in Lansing.
Rep. Joanne Voorhees, R-Wyoming, also supports the package.
State Treasurer Doug Roberts expects the General Fund to be from $450 million to $550 million short of meeting its revised $9.3 billion target, and he doesn’t think tax rollbacks are a good idea now. State Sen. Robert Emerson, D-Flint, said he wasn’t sure there were enough votes in the Senate to lower tax revenues.
The U.S. House of Representatives passed its own stimulus package last week. Known as the “Economic Security and Recovery Act of 2001,” the measure now goes to the Senate. The U.S. Chamber of Commerce backs the package.
The federal income tax rebate plan, fostered by Bush and quickly passed by Congress as an incentive for the nation’s consumers to spend, apparently did little to arouse the economy last month.
The Index of Leading Economic Indicators fell by half a percent in September to 109.2, the largest one-month drop for the index since January 1996. In August, the index dipped by one-tenth of a percent.