By By ANDY HAMILTON / Niles Daily Star
NILES – Michigan is currently facing a $3 billion budget deficit.
As a way to help alleviate that shortfall, Gov. Jennifer Granholm has proposed in her 2007-2008 budget a 2 percent tax on nearly 100 services. Some lawmakers have said budget cuts and not more taxes is a better way to generate more revenue for the state.
The governor's two-penny plan would place a tax on a number of service areas, including transportation; storage; finance, insurance and real estate; personal services like barber shops, laundry and dry cleaning; business services; automotive; amusements; professional services including accounting and legal; construction; and repair and fabrication.
Officials in Niles and Niles Township said not knowing how the deficit will be mended, and more importantly how much funding to municipalities and schools will be cut, has local governments facing a large amount of uncertainty.
"We're halfway through this fiscal year and now they're talking major cuts and we're dying on the vine out here. We cant' do anything right now under the present conditions," said Terry Eull, Niles city administrator. "We start our budget process for [20]07-08 in April and right now I don't have a clue on revenue."
Niles annually gets $1.5 million in state money for its general fund, Eull said. Cutting that funding in half could mean The City of Niles would have to eliminate 12 employment positions, he added.
"This is the fact. In the last 10 years taxes have been cut over 40 times in the State of Michigan. The present governor has cut $2 billion out of the state fund in the last four years. The state has 9,000 less employees than four years ago. So there's been a tremendous amount of cuts and layoffs and it has not helped one bit," Eull said. "You can't cut your way out of this problem."
He added 80 to 90 percent of the Niles Police budget is for personnel.
"Who's going to want to move to a state with bad schools and no police force?" Eull noted.
Eull also said there's not enough information to determine if Granholm's proposed two-penny plan would benefit the state.
Government services are not included in the plan, but Eull added everyone would be affected as consumers.
"There's not enough information out now for people to even express an opinion. So you're literally all over the place trying to figure out which would be best," he said.
The hold up is the battle in Lansing between a Democratic governor and House and a Republican Senate, Eull said. Plus, he added, it doesn't help lawmakers have not agreed on a replacement plan for the Single Business Tax, which accounted for $1.9 billion of the state's general fund.
"They just gotta get going on it," Eull said.
Jim Ringler, treasurer for Niles Township, said the governor's proposal would only continue turning businesses away from Michigan.
"That is just devastating for the business climate of Michigan. And to implement that as a plan to reinvigorate the business climate in Michigan, I don't understand their thinking," Ringler said. "It's like you want to tax your way out of a tax problem."
Ringler said state has made five cuts in revenue sharing since 2002, what he called a substantial part of taxes that were generated by residents of Niles Township to pay for services such as a fire department, police and elections. Revenue sharing accounts for more than half of the Niles Township general fund, Ringler said.
"As they take away revenue sharing we have limited avenues to generate money and so you do constantly have to evaluate the services you provide," Ringler said. "The question becomes where are you going to cut from that doesn't provide a critical service?"