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Issue Alert - 04-06-01

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Date:

Jun 01, 2004

Issue Summary:

STATE SERVICES FACE DEEEP CUTS IF GOVERNOR GRANHOLM’S PROPOSED REVENUE INCREASES ARE NOT APPROVED

Persons Affected:

Anyone depending on state programs and services


Background

Medicaid

What's Happening?

In order to address a projected budget deficit of $1.3 billion in
Fiscal Year 2005, Governor Granholm’s Executive Budget recommended a
combination of spending reductions, fund shifts, and revenue increases.
Revenue increases totaling $391 million were proposed and include: A
75 cent increase in the cigarette tax, bringing the total tax on a pack
of cigarettes from $1.25 to $2.00. The proposal would generate $295
million in new revenues. Under the Governor’s proposal, the first $30
million in revenue would be dedicated to the Health Michigan Fund for
smoking cessation and chronic disease programs. The remaining $265
million in revenues would be deposited in the Medicaid Benefits Trust
Fund, to avoid deep cuts in the Medicaid program. Decoupling from the
federal estate tax would generate $94 million in Fiscal Year 2005 and
$130 million on a full-year basis by retaining Michigan’s share of the
federal estate tax. Seventeen other states and the District of Columbia
have taken similar action to keep their state’s share of the tax. The
proposal applies to deaths after July 1, 2004, and includes a filing
threshold of $1 million, with exclusions for family-owned farms and
businesses. The estate tax would apply to approximately 1 percent of
filers in Michigan—roughly 1,000 estates per year—and would also be
deposited in the Medicaid Benefits Trust Fund. An increase in the
mark-up applied to liquor sales. The Liquor Control Commission
establishes uniform prices for the sale of alcoholic liquor and then
applies a mark-up, or gross profit margin. Under the Governor’s
proposal the mark-up would increase from 65 percent to 74 percent. The
increase, which would apply only to liquor—not to beer and wine—is
expected to fully fund local fire protection grants. The liquor mark-up
would generate $32 million in addition General Fund dollars. Last month
the House of Representatives quickly defeated legislation to decouple
from the federal estate tax and to increase the liquor mark-up. It is
uncertain whether there is sufficient support in the House to pass the
cigarette tax and Senate support is also uncertain. It is absolutely
critical that members of the House and Senate hear from constituents
and organizations across the state as soon as possible that there is
support in their districts for these revenue increases and that
essential state services should not be reduced. In addition, House and
Senate leadership should be contacted as well.Senate leadership
includes Sen. Ken Sikkema, Senate Majority Leader and Senator Robert
Emerson, House Minority Leader. House Leadership includes
Representative Rick Johnson, Speaker of the House and Representative
Dianne Byrum, House Minority Leader.

What Should Advocates Do?

Everyone should: Contact your Senators at P.O. Box 30036, Lansing, MI 48909. Contact your State Representatives at P.O. Box 30014,Lansing, MI 48909.

Finding Help

Most legal aid and legal services offices handle cases involving denials of public benefits, and they do not charge a fee. You can locate the "free" legal services or legal aid office that serves your county on the Michigan LawHelp web site (<a href="http://mi.lawhelp.org">http://MI.LawHelp.org</a>) or look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.