CRC article warns of challenges in borrowing to stabilize the state budget
The nonprofit, nonpartisan research organization Citizens Research Council of Michigan has some very sound and well thought out research on the risks and challenges of borrowing to stabilize the state budget in their recent article “The Challenges and Precautions of Borrowing to Stabilize the State Budget.”
The state is considering many different options to resolve its loss of tax revenue causing budget deficits for this fiscal year and next. One of those options may be borrowing.
They write that “COVID-related economic challenges have caused an estimated $2.2 billion deficit to the state budget for the current fiscal year, with only four months to bring the budget back into balance.”
Some economists say we should consider state borrowing instead of deep budget reductions. CRC leads us through the various options and limitations.
CRC says “constitutional restrictions limit the use of debt to balance the COVID-depleted budget and some guiding principles should be followed if borrowing is employed, even as a partial solution.”
They give us in the article some useful and practical information on borrowing, use of bonds, borrowing to pay down the pension system, and the federal government role.
This article gives our readers some good objective, data-based and fact-based information to consider as the state begins its discussions on resolving the budget crisis in Michigan.
Rural citizens need to be informed on this important topic so they can communicate their concerns and options to state and federal policy makers.
You can read the full article by the CRC here: https://crcmich.org/the-challenges-and-precautions-of-borrowing-to-stabilize-the-state-budget
Astounding that the article never approaches the easiest and least painful option – tax increases. Astounding oversight. Michigan has lowered taxes several times recently with little economic movement except increased poverty. Raising taxes on my peers who have disposable net income each year would be the best option to balance the budget. Taxes, for instance, on dividend and interest yield.
This article is not a good thought piece. My opinion.
My apology. I had read and was referencing the Citizens Research Council of Michigan article on the calculus of borrowing as a revenue source for Michigan. I was not referencing Dr. Haynes summary, above.
Thanks,
Pat Egan