Did you hear the one about the Governor who had a surplus of money to spend?
It could be the set-up for a joke because it’s just not really how this typically works. Usually, a Michigan state budget is done with erasers rather than pencils. And yet, 2022 comes in bearing gifts.
What do you think when you hear the phrase “government surplus”? I ask because it will likely have a lot to do with what you believe should be done with those overstuffed coffers. Some believe, as I suggested to Governor Whitmer last night, that “government surplus” is code for “overtaxed” and believe those dollars should be returned immediately and fully to those who originally worked to produce them.
Related: Michigan Governor Whitmer pushes tax cuts, education funding in State of the State address
Others, however, see the opposite of the rainy day that seems to keep government entities at all levels from ever making hay while the sun shines. It’s easy to start an argument over the merits of President Biden’s “Build Back Better” spending plan, but it’s hard to find any serious mind that doesn’t believe American infrastructure is in dire need of upkeep and updating. If you don’t fix the hole in the roof when there’s money in the bank, you’re probably not going to fix it when there isn’t. But now that the pile of money sits in front of the Governor and lawmakers, what to do? And must I mention that there’s an election in the fall?
Between higher-than-expected tax revenues and an influx of federal pandemic dollars, Michigan finds itself uncommonly flush. (How nice to find billions of dollars between the cushions of the couch.) There are few right/left divides in American politics as sharp as that over the money that government takes in and spends. But after barely being on speaking terms over pandemic policy, the Governor and her Republican counterparts are at least within shouting distance of each other over some key elements.
There has been strong sentiment toward easing the pension taxes in Michigan, though fights will no doubt break out over which pensions are deserving of the break. (The Governor told me last night she is not interested in giving priority to public pensions over private ones.)
There’s also general agreement over expanding the earned income tax credit, though not necessarily at the Governor’s preferred level which would triple that credit for lower- and middle-income taxpayers. But these are starting points and there’s not much more to ask of spending proposals with her full budget still to be revealed.
After watching bipartisan glee over the announcements from General Motors this week, the Governor told me it seems an opportune time to keep searching for common ground. But the EV landscape is an interesting test track. Having promised rebates to Michigan drivers for overpayments on car insurance, Governor Whitmer is ready to put more money in your glovebox if you’re ready to make the leap to an electric vehicle.
The feds are already enticing you with a $7,500 credit and now Whitmer would like to kick in another $2,500. But she’ll have to convince Michiganders that this is aimed at making those EVs more attractive and more affordable to everyone rather than pouring rebates into the pockets of those already wealthy enough to consider the often lofty purchases in the first place.
Related: GM to spend nearly $7B on EV, battery plants in Michigan
Republicans clapped long and hard for GM’s electric future and went along with the tax breaks to make it happen, but it’s yet another leap from there to subsidizing those vehicles. And if you need proof that any of this is going to be easy, just search out the Michigan GOP Twitter feed which was heckling the Governor in real time last night, even when she touted proposals Lansing Republicans favor.
One other fly keeps hovering over the ointment. The pandemic that got little mention in the address is still the rat in the room. We are all ready to embrace the theories that the omicron surge is the beginning of the end, but as the saying goes, hope is not a strategy. And with the hospitals still buckling under the weight of COVID and 30,000 Michigan lives lost to the virus, if the downward trends collide with another variant or another surge, that surplus may not seem like the extra cushion it does now.
Watch here: Michigan Gov. Whitmer delivers 2022 State of the State address on Jan. 26