Gov. Snyder's budget would cut school, city spending

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• Tax credits aimed at promoting things such as battery manufacturing, the movie business, brownfield redevelopment and other state-encouraged industry would end. About $25 million for film credits would be paid for from the 21st Century Jobs Fund. Last year, the state spent about $100 million for movie credits.

• State aid to local government not mandated by the constitution would be cut from $300 million to $200 million. Governments would have to compete for the money by showing they can consolidate services, reduce employee costs and be open to citizens about spending.

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The budget would cut state aid to public schools by another $300 per student, in addition to the $170 per-pupil cut that was enacted this year and will continue next year. That will make school officials howl.Universities would receive 15% less from the state, but they would get some back if they held tuition increases to 7% or less. And, Snyder will propose ending income-tax credits for those who donate to universities.

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http://www.freep.com/article/20110217/NEWS15/110217023/Snyder-proposes-huge-business-tax-spending-cuts-cites-need-tough-decisions-?odyssey=mod|breaking|text|FRONTPAGE

Goal of Gov. Rick Snyder's revenue-sharing plan: Get cities to cut costs


Gov. Rick Snyder’s plan to scale back revenue sharing and make local governments earn it is a way to nudge them to reduce costs, said Bill Rustem, Snyder’s director of strategy. That includes Detroit, which will receive $176 million from the state this year, making it, by far, the largest revenue-sharing recipient.

“Detroit will have to get tough about legacy costs, about ending some of the current practices related to pensions and health costs,” Rustem said.

Snyder will call today for creating a $200-million state fund that will be distributed to cities, villages and townships that demonstrate their intent to curb employee benefit costs such as health care and retirements, and to consolidate services, or even merge.

That will replace about $300 million now distributed among 510 communities. Rustem said many get very small amounts that won’t be missed, while others that receive more substantial amounts could be left out in the new formula.

He said Snyder will announce details in March about how the $200 million in revenue sharing will be distributed competitively among communities.

The news was received glumly by the Michigan Municipal League, which has called for more, not less, revenue sharing to help local governments strained by falling revenues because of lower property values that shrink taxes.

'“We’ve gone from a program of revenue sharing to revenue stealing,” spokeswoman Summer Minnick said.
She said that if the state requires more cost savings, it should change the binding arbitration law for police and fire union negotiations, and laws that make it harder to merge services.

The arbitration law, called P.A. 312, has long been a sore point with local governments that blame it for costlier contracts.

Minnick warned that many communities are on the brink of insolvency. Snyder told the Municipal League last month that state revenue sharing should be linked to cities’ efforts to scale back costs and to make their finances more accountable to the public. Mo< Rochester City Manager Jaymes Vettraino said he hopes the governor’s plan takes into account savings communities have already imposed.

“Rochester, Rochester Hills and Oakland Township have jointly managed recreational services, senior services and library services,” Vettraino said. “Whatever revenue-sharing programs come out, I hope they take notice.”



Source: http://www.freep.com/article/20110216/NEWS03/110216069

Snyder's proposed budget calls for:

"An elimination of statutory revenue sharing payments for cities, villages and townships in fiscal year 2012 to be replaced with a new incentive-based revenue sharing program available to cities, villages and townships that meet state standards and adopt best practices. A 4-percent increase for total of $659 million for constitutional revenue sharing payments to local units of government."

It sounds almost like he wants to turn revenue sharing into a carrot to force cities to undertake economic austerity policies, like a mini-IMF. How does this square with his vow to bring cities back?

The cities that need the most help may receive the least revenue sharing? [[depending on how the formula is worked out). Watch for a fight on developing the formula, because Detroit could lose even more from its share from previous years.

Brownfield credits ending.

It is a good thing Detroit and Michigan does not have any old or contaminated properties.

Among the tax credits Gov. Rick Snyder has proposed eliminating are those for brownfield redevelopment and historic preservation — a move that could slow or stop the flow of redevelopment projects in Detroit.

“Devastating,” said Art Papapanos, vice president of board administration at the Detroit Economic Growth Corp. “Devastating for the city of Detroit.”

Brownfield and historic preservation tax credits have played a role in the high-profile redevelopment of historic Detroit buildings such as the Westin Book-Cadillac, the Doubletree Guest Suites Fort Shelby and the A. Alfred Taubman Center for Design Education, formerly the Argonaut building.


a move that could slow or stop the flow of redevelopment projects in Detroit.

Ummmm more like putting a screeching halt on future projects.

http://www.crainsdetroit.com/article...on-tax-credits.

The elimination of the statutory revenue sharing is going to be compounded by the effect of population loss on the constitutional revenue sharing. Urban areas, like Detroit, that have lost population, are going to see that share of revenue sharing fall when the new Census numbers come out. The dollars that previously went to Detroit will go to those areas that grew or at least saw less of their population leave. A double-whammy to Detroit's bottom line.

How does he propose to create jobs when he eliminates all of the above?

Have you seen the mayhem going on in Wisconsin's state capital of Madison?? ... where their republican controlled state government is threatening severe changes....
http://www.cbsnews.com/8301-503544_1...92-503544.html

I assume eliminating the Brownfield credits will hurt the chances of the Whitney Building's new owners putting together financing for the redevelopment. Shouldn't the DDA have been more certain of the financing before loaning a million dollars toward the purchase?

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Originally Posted by Buy American

How does he propose to create jobs when he eliminates all of the above?

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Exactly , Just to give a quick view on the impact just by what was printed today and how it concerns my project and Detroit. I was $800,000 short of it becoming a reality the incentives tax breaks,brown-field etc, would have covered that bridge . Simple math is $800,000 divided 2500 new jobs created would equal the state and taxpayers basically paying out $320 per job.

Knowing that the city needs the revenue I was not even thinking of the 12 year property tax break,so that would have been a one time charge on the taxpayer,not even one days pay for a mid range employee.

What he is proposing is not finial yet but until it is everything is in limbo,and with funding hard as it is to get decisions have to be made whether to wait it out and risk loosing the funding or seek other states to do business in.

It is understandable why he is doing what he is doing because in the past some funds made available to potential employers were not a good return on taxpayer investment,but there is talk of doing a case by case study but considering how long it even gets to receive a email back from the state this could move many projects back a couple of years which in turn will hurt in Detroits case the momentum of what is happening here and now.

It is hard enough to get outside funders to help with MI projects and many point blank will not do it ,how todays news will affect it remains to be seen but I am thinking more along of the lines of a sub zero freezer. This needs to get worked out fast.

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Originally Posted by 401don

I assume eliminating the Brownfield credits will hurt the chances of the Whitney Building's new owners putting together financing for the redevelopment. Shouldn't the DDA have been more certain of the financing before loaning a million dollars toward the purchase?

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Everything that is already in the pipeline or has been approved will stay,this is his proposal for anything that happens after the finial approval.It is not cut in stone yet.

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Originally Posted by Buy American

How does he propose to create jobs when he eliminates all of the above?

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He wants to let capitalism create jobs, not the government.

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Originally Posted by 48091

He wants to let capitalism create jobs, not the government.

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Fine, just what we need to move the discussion forward another cliche with no basis in fact

Nolan Finely of the News is purporting that it's good to balance the budget of Michigan while bearing the burden on seniors, kids, & working families. He thinks it's much better that businesses be given a tax break in order to have extra funds to "create more jobs". What an a$$. I've been listening to this myth for nearly 30 yrs. since Reagan started his "trickle down economics", which for the average joe out there is really "boohoo economics". I have yet to see or hear about any business who receives a tax cut reinvest that money into expanding their business & hire more workers. All they do is sit on the extra profits. The rest of us continue to take hit after hit. Snyder's proposals will hit us hard if they go through.

The one thing that he is wishing to eliminate is the use of Enterprise zones.
Detroit is unique in that aspect I am not sure how the rest of the state works,but other states use these zones to encourage growth in a specific area.

Kinda like saying Woodward is now an Enterprise zone tax breaks are given to encourage business growth it works pretty good and depressed values do go up.

Where Detroit is unique is she takes a specific address and not the area as a targeted zone,so one building may have it while the one next door did not,I can see how if one has connections it could be used to an advantage.

I am thinking that the reason for that was because of the plants and factories are set about the city and not in one central location. But this is to me anyways a good idea because those large buildings can be used as employment hubs for the surrounding neighborhoods and act like a nucleus for that particular neighborhood.

As far as using capitalism to fund growth,you would be hard pressed to do that in currant Detroit she needs for outside investment to come in and it would also take every other state in the US to be on the same page.

John or Mary wants to start manufacturing buggy whips so they put an ad on ebay but the only bidders are the states nobody else can bid,so then it becomes a bidding war between states some are more hungrier then others so they bid high because they need those jobs and they do come at a high cost to the taxpayer and sometimes what happens is the parent corporate owner decides 3 years down the road that it is not going to work .The taxpayer is still paying for that.

I looked at a brand new fully equipped factory in a southern city that the state taxpayers built from ground up $53,000,000 , they went to hand the factory over to the foreign company that was bringing the jobs,it had declared bankruptcy for whatever reason and an already broke state city and taxpayer is still having to pay for that plant for many years to come.

So what the gov is saying or from the way I am reading it is instead of offering the tax break and the taxpayer is paying for it for many years to come,instead offer it as a grant,which long term is smart in one way, you are only spending what you have in the bank as an incentive.

When those funds are gone thats it until next year but on the other hand you can get into a stifling growth situation,because funds are gone and another factory wants to locate and you have to turn them away it is hard to look at your starving constituents and turn the jobs away.

Funds are or should be based on how many jobs are being brought to the table and how much do those proposed jobs pay, it is a formula that works well ,if they stick to that without the bidding wars you get a steady solid building of jobs without incurring so much long term debt , which in turn frees up capital to work on the quality of life issues.It is smart growth,or common sense.Who is going to pay $1000 for a $500 car ?

Brown-field incentives provide for rehabilitation of former industrial and large buildings to give incentive to reuse these instead of tearing them down mostly dealing with the contamination issues,asbestos ,lead paint etc. They kinda work hand in hand with the fed EPA in the clean up and a little relaxing on the currant laws so the property becomes a bit more attractive when it comes to funding and helping to absorb the added clean up costs.But it is a very important tool when it comes to preserving a communities historical buildings verses tear them down and build new.

If they drop the Brown field incentives without the EPA picking up the slack,that will become a huge problem for Detroit considering her stock of commercial buildings.That right there will tip the scale in deciding that it is cheaper to tear down and build new.

IMHO

Why couldn't a business be given a tax break if they can show that they have hired people with the money they saved in taxes, that they are not sitting on the money. No hiring, no tax break.

That nerd has gone too far. Cutting the school spending will not help ease the deficit. It will cause more schools to close, classes size to be increase and extra-cirricular activities to dissapear. Don't vote for Synder in 2013. Get a governor who will NOT cut our education.

there are no more sacred cows anymore when it comes to cuts....unions, goverment workers, public workers...its all on the table now, for years it was ignored and just pushed down the road because no one wanted to be the bad guy....the voters spoke in november and elected a "bad guy" for change..the day of reckoning is here....

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Originally Posted by ja!mz

there are no more sacred cows anymore when it comes to cuts....unions, goverment workers, public workers...its all on the table now, for years it was ignored and just pushed down the road because no one wanted to be the bad guy....the voters spoke in november and elected a "bad guy" for change..the day of reckoning is here....

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Don't just stop at the usual suspects. You can add to the list children, college students, the elderly and families. The cuts to education, tax on pensions and elimination of the personal exemptions from taxes [[surprised people aren't focusing on that one more) will hit these former "sacred cows" the hardest.

Detroit has stayed afloat with monies from Washington and Lansing since the '70s. As a native born Detroiter and retired Detroit firefighter, I often wondered when Detroit would bust a move on "economic self-empowerment," something that is heralded by the Nation of Islam and others in the city.

I understand the legacy of economic racism and disinvestment in Detroit that has put a major historic hurt on the city. But by now, concerns about fiscal support from Lansing becomes rather absurd as the State of Michigan has broader concerns than Detroit.

Sell off the vacant land in Detroit to all comers with appropriate oversights for development to thwart speculators. Privatize most of city operations. Throw off emotional BS about charging nominal entrance fees to Belle Isle. Make Detroit an organic functioning city rather than dependent of the state.