LANSING – With a special mid-August revenue estimating conference expected to identify an increase in estimated tax collections for 2005-06, the debate is already on regarding how to use that money at a time when discussions are unresolved on the budget and how to approach restructuring the Michigan business tax.
The Michigan Chamber of Commerce is suggesting the new revenue be used either all for tax cuts as part of the SBT restructuring or at a minimum limiting the amount used to resolve budget problems to half of the new money.
Rich Studley, vice president of the Chamber, said he looks forward to seeing what any updated revenue projections will show, but added, “It seems like we’re looking at $50 million to $150 million in additional revenue. We would like to see most or all of that go to tax relief. Our preference is that it be used to help finish negotiations on business tax restructuring.”
Gov. Jennifer Granholm had proposed a revenue neutral restructuring plan that included hefty increases on some insurance and financial services sectors to provide relief to 74 percent of those companies that pay the SBT, with much of the relief going to manufacturers.
A plan by House Republicans to offer relief to all businesses relied on eliminating some $100 million in current tax exemptions.
House Speaker Craig DeRoche (R-Novi) is waiting to see what the revenue conference produces, said spokesperson Matt Resch, but said he has talked about keeping the Newberry prison open if new revenues were to become available. That prison, along with the privately run youth prison in Baldwin, is at the center of debate on how to write a Corrections budget for 2005-06.
Other than that, Resch said DeRoche wants to keep the budget close to what the House proposed as a way to balance spending and taxes next year and would agree with the Chamber for the need to invest in the state’s economic recovery.
Ari Adler, spokesperson for Senate Majority Leader Ken Sikkema (R-Wyoming) said revenue increases will help the budget situation, but emphasized that spending cuts can yet be made as part of the equation.
“First we need to see if revenues will increase,” he said. “But then we need to answer the question of whether we are doing the budget separately or dealing with it along with tax restructuring.”
State budget spokesperson Greg Bird said it is premature for the Chamber or anyone else “to tell us how we’re going to be spending taxpayer money before we know how much if any at all extra we have.”
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