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Old December 23rd, 2006, 03:14 AM   #1
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Default What the people wanted

Nothing helps a hurting economy more than raising taxes.
It's coming.
Dumb voters elect a dumb bitch.
Heaven forbid she really cut back on services.

Granholm: State must raise taxes or cut back
Looming deficit challenges officials to devise remedies

December 22, 2006

Gov. Jennifer Granholm tells reporters in her ceremonial offices in the Capitol that government must weigh taxation against state services. (MANDI WRIGHT/Detroit Free Press)
LANSING -- Gov. Jennifer Granholm used a yearend news conference Thursday to warn that Michigan's economic doldrums would continue into 2007, forcing state policy makers to choose between increasing taxes and significant cuts in services.

Granholm declined to outline her preference but repeatedly emphasized the value of investing in education, health care and other government services in creating a better future. She also said she believes voters rejected an economic policy based on tax cuts and smaller government when they returned her to office by an overwhelming margin.

At the same time, she avoided answering questions about whether she is prepared to call for a tax increase to address the state's budget deficit, which she said could be in the range of $3 billion.

"I'm not giving you a headline to write," she said. "I'm preparing people for the fact that this is going to be significantly challenging."

Her reticence was understandable, given the volatility of the tax debate. An online summary of the governor's remarks on the Free Press' Web site,, generated more than 170 comments, most of them critical of tax increases.

And legislative Republicans seemed to interpret Granholm's comments as a prelude to a tax increase proposal.

Incoming Senate Majority Leader Mike Bishop, R-Rochester, issued a statement a few hours after the governor's remarks, saying higher taxes would not be on his agenda in 2007. But Bishop didn't entirely foreclose the option.

"The Senate Republicans will not look to tax increases as our first answer to any budget problem," he said. We need to live within our means, and, if we can't, it is not up to the hardworking citizens of Michigan to bail us out."

Granholm and Republicans in the Legislature have been at odds all year about taxation, especially the lawmakers' decision to back elimination of the state's main business tax two years ahead of its scheduled expiration. The tax cut, to take effect in 2008, is projected to leave a $1.9-billion hole in state revenues. Granholm has called for new business taxes to replace all the revenue, and Republicans have argued that the replacements should result in a net tax cut.

Speaking next to a Christmas tree in her ceremonial Capitol office Thursday, Granholm called for "a balance" between levels of taxation and the delivery of key services. She avoided answering inquiries about how to best raise taxes if taxes need to be raised.

There are lots of choices, none of them particularly attractive to elected officials.

The state's two primary general taxes, sales and income, could be changed in many ways, expanding the sales taxes to such services as hair cuts and car repairs, for instance. Raising the income tax rate could quickly increase revenues by hundreds of millions of dollars.

But the governor made it clear Thursday she is in no hurry to make any suggestions of that sort.
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