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Big Ten Budgets



March 17, 2011

There is some big news coming out of the Big Ten, but it has nothing to do with sports and everything to do with budgets. The news is that the governors of the states of Michigan, Ohio, and Pennsylvania have released their first budgets, all of which do not use tax increases to balance their books.

In Michigan, Governor Rick “One Tough Nerd” Snyder kicked things off by releasing a budget that aims to close a $1.5 billion deficit without tax hikes. The bulk of his budget is reductions in spending to keep the budget manageable, as businesses and families in Michigan have done to weather this recession. Additionally, Snyder, a former executive with Gateway computers, aims to reform the state’s tax code to lower rates for Michiganders and attract businesses. Snyder proposes to lower the personal income tax, saving taxpayers $122 million over the next two years. He also wants to eliminate the burdensome Michigan Business Tax and replace it with a corporate tax set at a rate of six percent. 

Meanwhile, Ohio Governor John Kasich, who like any good Buckeye is not going to be outdone by a Wolverine, released a two year budget earlier this week to close an $8 billion deficit by reducing aid to cities, reforming Medicaid, requiring merit pay for teachers, and selling state prisons to private operators. To reduce the costs for cities that lose aid, Kasich would make it easier for local governments to share services and reform wage and bargaining laws for public workers. Additionally, Kasich wants to convert Ohio’s state-run liquor distribution business into a public-private partnership. Kasich, a former Member of Congress who once served as chair of the House Budget Committee, knows a thing or two about how budgets work and what it takes to get them adopted.

Rounding out Big Budget News from the Big Ten is Pennsylvania, where Governor Tom Corbett released a budget that did not spare any government function from reform to close a $5 billion budget deficit. Perhaps the biggest change in the budget – and in Pennsylvania – is a reduction in basic education to the 2008-2009 spending level, a government function that has not seen a reduction in 20 years. Further, Corbett, a former prosecutor who hails from the Western part of the Commonwealth, proposes to give more control over school budgets and the property tax rates that pay for schools to, respectively, local school boards and voters.

Budgets are all about priorities for the state governors. According to their budgets, the priorities for the governors of these three very important and large states are getting their fiscal houses in order. All of these governors are telling us that they believe, correctly, the path to fiscal sustainability is through lower taxes and more manageable budgets, not higher taxes to finance more spending on big government. But while governors are important people, they are only one player on the field we know as government. The legislatures will have the final say on these budgets. If history is any guide, the legislatures will have some “suggestions” (aka higher taxes, more spending, etc.). Let’s hope that these governors do not yield to their opponents because this budget game is one

But for starters, these three governors and their budgets can’t be beat. If the state budget season were a basketball tournament, all of these states would deserve to get number one seeds.


 

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