Feb 3, 2003
Why is Michigan claiming severe state budget problems? It certainly had money not so long ago when it gave a lot of it away to some of wealthiest corporations in the world. For example, General Motors has received huge tax breaks, such as 107 million dollars for its Flint engine plant, 93 million dollars for the Warren Tech Center, and 169 million dollars for its new Lansing plant. In addition to this, the state took the outdated GM Building off GM's hands, and gave it tax breaks for its new headquarters in the Renaissance Center. And GM is even now working on a deal to get still more.
Chrysler, meanwhile, just received millions in tax breaks to retool its Warren Truck Plant.
But it's not just the auto companies that benefitted from Lansing's deep pockets. In 2001, the drug giant Pfizer received a 25 million dollar state tax break to build a facility near Ann Arbor. In addition, the state agreed to invest one billion dollars over 20 years to fund research that Pfizer will have free access to and can profit from. In addition, the city of Ann Arbor also gave Pfizer 47.7 million dollars in tax breaks.
These are far from the only examples. It seems as if every week there is a new corporation announcing it is receiving tax breaks.
Besides giving tax breaks to wealthy corporations, the state also changed its entire tax system during the 1990s. Michigan cut the Single Business Tax, and changed the way schools were funded by drastically cutting property taxes and shifting a bigger burden on sales taxes – a tax that hits the poorest the hardest. They raised the sales tax from 4% to 6%.
So if there is a budget crisis today, it's because these billions of dollars were handed out as great big gifts to some of the richest companies in the country. It's obvious that if there's now a crisis, these same corporations should be the first to pay.
So what has Michigan's newly elected governor, Democrat Jennifer Granholm, proposed? She has said not one word about undoing the damage done by her Republican predecessor and forcing the wealthy and big businesses to start paying their fair share or rescinding tax breaks to wealthy corporations. Instead, she now says that the state needs to redefine what Michigan does for its people and some programs and entire departments must go.
Granholm announced she is cutting 127 million from the schools in the middle of the school year. Layoffs of non-union personnel have already started in several schools.
Granholm says don't be surprised to see higher fees for state parks and services.
And she's continuing cuts proposed by her predecessor in the social programs that mainly benefit poor and working class families. The state is also cutting money to education and to local revenue sharing programs that cities and townships (especially the poorer ones) rely on to fund many of their city services. Libraries, after-school programs, parks and recreation, fire protection, are all to be cut.
Of course, Michigan is not the only state in this situation. Forty other states are in the midst of what has been call the worst "budget crisis" in 50 years.
They are all there for the same reason. Whether run by Democrats or Republicans, they spent the 1990s stripping the cupboard bare for the sake of the big corporations.