On February 17, 2011, Michigan's Governor Rick Snyder laid out his budget proposal for fiscal year 2012. FY 2012 begins October 1, 2011.
There is some good news in the proposal for people with developmental disabilities. This is from an AnnArbor.com report on the highlights of the governor's budget:
- Medicaid eligibility is maintained and provider reimbursement rates are supported without reductions to preserve health care and access for those most vulnerable.
- A Medicaid budget that is funded at $11.2 billion, reflecting the institution of a new 1 percent health care insurance assessment on all paid health care and dental insurance claims.
- The preservation of over $1.4 billion in funding for programs that assist nearly 55,000 special education students, as well as $1.2 billion for core education programs such as services for academically at-risk students and adult education.
Schools and Universities, however, will be taking a big hit in the proposed plan. K-12 funding will be reduced by 5 % or $500 million. The state will encourage schools to adopt "best practices" that generate savings on medical benefits for employees and reduce spending on "non-instructional" services. It remains to be seen whether there are additional savings to be squeezed out of already stressed school district budgets.
Another problem is the "elimination of statutory revenue sharing payments for cities, villages and townships in fiscal year 2012 to be replaced with a new incentive-based revenue sharing program available to cities, villages and townships that meet state standards and adopt best practices." This amounts to a reduction of nearly one-third of revenue sharing funding available to local governments. Local governments will have less to spend on safety, fire protection, and other local services and the mental health system will have more difficulty serving people who are not eligible for Medicaid. They will not be able to shore up the mental health system to provide services that are needed but not necessarily mandated or covered by Medicaid. This exacerbates the problem of declining revenues from property taxes for local governments. A more detailed analysis of the impact on Washtenaw County is covered in an article from AnnArbor.com.
There will also be less money available for poor people with the elimination of Michigan's contribution to the Earned Income Tax Credit (EITC). Snyder says that the money saved will go into maintaining Medicaid and other services for the poor, but Stephen Henderson, a columnist for the Detroit Free Press has a good point: while the budget calls for eliminating tax breaks for wealthier people, "poor people will take a bigger hit, relatively speaking than everyone else". This will also effect small businesses, especially in Detroit where the EITC reduction will take $330 million out of the local economy.
In an interview with the Detroit Free Press, the Governor explains the thinking behind the balancing act that his administration did to justify the changes he is proposing. Last Sunday's Detroit Free Press editorial page, not known for its support of Republican budget initiatives, is surprisingly mild in its criticism of the governor's proposals. Michigan's budget problems have been long in the making and there is a tendency to hope, perhaps beyond reason, that these proposals will help.
The Governor's non-ideological approach to Michigan's problems and his eclectic method of problem-solving are mulled over by Free Press columnist Brian Dickerson in his assessment of the governor as "A mild-mannered radical". Dickerson foresees the possibility of attacks from both ends of the political spectrum, but says that "Snyder's ace in the hole is the voters' widely shared conviction that Michigan's fiscal disease cries out for nothing less than radical surgery."
So far, the governor appears to have avoided a full-frontal Wisconsin-style assault on public employee unions, but one can expect that local adjustments will inevitably lead to losses in wages and benefits for public agency employees, if the governor's budget is adopted.
Oregon voters, who have rejected tax increases since 1990, passed a ballot measure on Tuesday to raise income taxes for households earning more than $250,000 and individuals earning more than $125,000 a year. A second ballot measure raised the income tax on corporations.
According to an article in the Los Angeles Times, the tax increases will raise $700 million to help close the state's budget gap and prevent early school closings, teacher lay-offs, and cuts to healthcare benefits.
Joel Connelly, a columnist for SeattlePI.com, says "The tax increases aren't that onerous despite wailing and gnashing of teeth on the editorial page of the Wall Street Journal. Oregon did not really soak the rich, just asked that they shower regularly."
On January 13, 2010, the CMH Boards under the Community Mental Health Partnership of Southeastern Michigan met to hear very bad news about Michigan's funding of mental health agencies. Because of the state's deflationary spiral downward and drastically reduced revenues, all local Community Mental Health agencies can expect unprecedented cuts in funds from the state.
The four CMH boards from Washtenaw, Lenawee, Livingston, and Monroe Counties braced themselves for the beginning of the 2011 budget negotiations which start in February when the Governor delivers her budget proposals to the state legislature. The meeting began with a sobering state budget overview and a presentation on finance basics and the impact of the crisis on the state's General Fund and Medicaid funding.
I am no expert on state finances, but this sure sounded bad to me:
- The current recession at 22 months ("peak to trough") is the longest since the Great Depression.
- Leading indicators point to an imminent national recovery, but Michigan has been in a longer and deeper decline than other states.
- Auto sales are going up again, but the Big Three market share has dropped from around 70% of the market in the early 1990's to 35% of the market now. (Nationally, fewer people today work in manufacturing jobs than did in 1941.) Michigan Vehicle employment dropped 78% from 2000 to 2010. Overall, 1 million jobs have been lost since 2000. The forecast for 2010 is a Michigan unemployment rate of 15.3%.
- In good times, Michigan's personal income relative to the U.S. was 122%. We have fallen to 87% of the national average.
- States revenues in the General Fund for 2010 are equal to the General Fund level of 1965, when adjusted for inflation. All the rumors about how our taxes keep going up are not exactly true: Michigan taxes as a percent of personal income have declined since 2000.
After significant cuts in spending for the 2010 fiscal year, the state has told all agencies that they must submit program reduction proposals for fiscal year 2011 equal to 20% of their General Fund appropriation and the Department of Community Health also wants agencies to submit proposals for 20% reductions in Medicaid spending. (This is especially troublesome, because Medicaid pays for most of the specialty services for people with developmental disabilities.)
If the threatened cuts were to be fully implemented, Washtenaw County would have to cut $1.9 million from its General Fund authorization. Even though Medicaid-enrolled consumers are entitled to needed services, Medicaid funds would be cut by $8.8 million.
The four-county affilliation that includes Washtenaw County is developing a strategy to make sure that the CMH Partnership of Southeastern Michigan takes a leadership role in influencing how the state will respond to this crisis. They have been disappointed in the past by the lack of leadership from their state association (the MACMHB) and plan to take more direct action.
From the discussion this week, it appears likely that the short-term strategy to get us through the next 18 months will be to push for an expansion of Medicaid and tap into other sources of federal funding while developing a long-term strategy for remaking the community mental health system. If the healthcare reform legislation makes it through Congress, it will open possibilities for funding through numerous demonstration projects. The affiliation, rather than focusing solely on the money, will focus on changing the system and serving consumers.
According to an article in the Detroit Free Press, 4/26/09, Macomb County Commissioners plan to vote to increase property taxes by 0.356 mills. The increase would cost the average homeowner only $27 a year more in taxes and turn the county government's $10.3 million deficit into a $1.2 million surplus.
County governments contribute to the cost of mental health services and a wide array of other social services and health programs. Revenues raised through tax increases do not erase all problems with the mental health system, but is does help. An informed and active citizenry is necessary to make sure the money is spent well and for the right purposes.
