LANSING – With the prospect of less money for the coming Michigan government fiscal year than originally projected, groups urged the Legislature on Thursday to reconsider some of the tax exemptions allowed as a way to boost revenue.

Officials with the 20 organizations representing human services, local government and education argued that tax loopholes are passing back or not collecting 55 percent of the state’s tax revenues.

Though the groups offered a list of 22 loopholes they argued could be closed, raising as much as $425 million, the key issue was to have the various credits and exemptions reviewed as part of the budget process.

“Tax expenditures are almost never reviewed,” said Doug Drake, senior policy consultant for Public Policy Associates. He noted that the Price of Government review the Legislature used for the budget last session called for a review of those credits as well as spending, but in most cases only spending was considered and ranked.

“Our basis is there should be a revenue system that provides adequate revenue in a stable and fair manner,” said Lynn Jondahl, executive director of Michigan Prospect. “A fair tax system is one that includes taxes on all spectrum of economic activity.”

Don Gilmer, retired Kalamazoo County administrator, argued that the harsh partisanship that led to the battle over the current budget seems to have cooled. “There is a willingness for legislators to be what they need to be and that’s problem solvers,” he said. “What we’re proposing is a solution that’s already been agreed to in part.”

Among the loopholes the groups propose to close are bad-debt exemptions for retailers and tobacco wholesalers and sales tax exemptions for air and water pollution equipment, periodicals and vending machine sales. The groups noted that each of the changes they proposed have at least been included in an executive budget and most had passed the House in 2007.

In addition to the list provided, Gilmer argued there could also be value to another look at the proposed movie production credits. He said the credit has already cost $40 million in the few months it has been in place and could cost $110 million for the current fiscal year. “Maybe there should be a cap on it,” he said.

Gilmer, former Republican chair of the House Appropriations Committee, said the proposal also allows all sides to maintain their vows not to raise taxes this year. “Political reality is in an election year no one’s going to say, ‘Vote for me. I’m going to raise your taxes,'” he said. “This is not raising taxes.”

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