How To Balance a Budget

I have refrained from talking about the Michigan state budget on this forum for two reasons:

1) I am by no means an economic expert.

2) The whole issue is like an angry, angry bear and I fear that all I would be doing is poking it with a stick and pulling back a stump.

Of course, when you see articles like this one, it becomes difficult not to have an opinion. The budget and the economy are so bad, Michigan's credit rating dropped. What does that mean? Well, if you want to borrow money, it's going to cost you a lot more.

But let's add into that the stories we've been reporting on over the last few days. The legislature is cutting over $90 million out of the higher education budget. That alone is bad enough, but then there's the news from the Michigan Radio Network that next year's deficit is going to be worse, due in large part to the way that the legislature has been trying to "solve" the problem. Oops.

The issue, as I see it, is this. The Republicans and the Democrats - and do not for a moment believe that either party is blameless! - have turned this into a grandstanding political issue. The Republicans have outright refused to support any sort of tax increase, and the Democrats aren't real fond of cutting programs either. Now, a rational legislature would try to compromise, and to be fair both sides did compromise to come up with a solution for this year.

Granted, it was an awful solution, but let's give credit where credit is due.

It is the steadfast, bullheaded commitment to "core beliefs" on both sides that has made finding an actual solution difficult. The short answer is this: there will need to be a tax increase, or new taxes, to fill the gap - and not just a new tax to replace the defunct Single Business Tax. However, it's going to be necessary to cut some programs as well, and make the government leaner overall.

Unfortunately, all the areas that should not be cut seem to be the ones that are being cut. The legislature may have dodged the looming spectre of Granholm's promised "$125-per-kid-cut", but in doing so they've hamstrung higher education as well. Part of the problem with the current economic situation in Michigan is that we just aren't turning out (or keeping) enough of the best and brightest. One would assume that if we continued to support higher education, that would help at least contribute to keeping said "best and brightest" in the state. It's simple logic: if other states offer educational opportunities that we don't, the kids that would be the future of the Michigan economy are going to leave. Moreover, advanced and well-funded universities attract businesses looking to expand and hire new, capable employees.

But all of this is hypothetical. The title of this post is not "Why Certain Things Should Not Be Cut", but rather "How To Balance a Budget". Understanding that a replacement for the SBT is an inevitability, there are still lots of ways to not only bring more money into the state, but also keep vital programs (like higher ed) from getting cut and also keep we the tax payers from having to pay more out of our incomes.

A couple ideas off the top of my head.

1) Beer and liquor tax. It is true that liquor and beer are already quite heavily taxed. But I'm not talking about anything ridiculous. How about a tax of two or three cents per glass at the bar? Or maybe ten cents added on to the cost of a six pack? These are not bank-breaking taxes, and most people who will drink are going to do so anyway. Moreover, even if a few people decide not to buy alcohol, that makes the roads that much safer. It's a win-win for the Greater Good.
2) Cigarette tax. See above. Cigarettes are even more ridiculously taxed, but honestly? I don't care. It's not good for people to smoke, and it costs the state and the general public a lot of money to pay out for health care. Add a few more cents onto a pack and put it in the general fund. Again, a win-win.
3) Sweets tax. Why not fight obesity and make a little money for the state while we're at it? Tack a one-cent tax onto candy bars, ice cream, fast food, etc. and that will contribute some cash too.
4) Advertising. I'm not for a minute suggesting that Granholm should pose for a Nike ad, though that's just hilarious enough to make me consider a Photoshop. But small logos from businesses (and respectable ones, mind you) on things like state brochures and pamphlets for parks and the like might not be a bad idea. Or maybe little banners at highway rest stops.

Now, it's not that I particularly like these ideas. But they are just a few ideas I've had. If you've got some others, I'd love to hear them!