Ferndale's State Officials Say Gov. Snyder's Proposed Budget Creates Tough Road for Cities, Schools, Poor

When talking with Ferndale resident Michael Thatcher about newly elected Gov. Rick Snyder's proposed budget cuts, you might want to cup your ears. To save you the colorful language, Thatcher isn't very happy. He isn't happy about taxing pensions, about repealing the Michigan Business Tax in one shot, or in the other various cuts proposed by Snyder.

"(Taking away the MBT) is such an abrupt change (for Michigan). It will hurt us immediately," he said. "It should be gradual. Doing it this way, the rich will get richer and the poor will get poorer."

Thatcher and about 20 other people gathered around Ferndale's State Rep. Ellen Cogen Lipton March 14 at to talk about , which was released last month. Lipton, the Democrat who represents Ferndale and surrounding cities, was the first of Ferndale's Lansing reps to visit Ferndale last week. State Sen. Vincent Gregory (D-Southfield)  held a forum at the  Thursday.

The goal of both events was to shed some light on Snyder's budget proposal and to listen to the concerns of Ferndale residents and answer their questions.

Each talk, although held separately, fielded much of the same questions surrounding Snyder's proposed $1.8 billion cut in taxes for businesses as well as cuts to public schools, city funding and tax incentives;  credits on the chopping block ; and taxing of pensions.

Lipton said Snyder's $1.8 billion in tax cuts to businesses come from proposing the removal of the Michigan Business Tax. Currently, Michigan is facing a $1.4 billion shortfall for the next budgeting year. Lipton said by removing the MBT, it would create a cumulative $3 billion shortfall. To fill that gap, she said, Snyder is proposing cuts to everything else.

"(Snyder) is taking away all the tax incentives that we've used successfully," Lipton said. "If we don't offer them, other states will."

Cutting out the MBT, Snyder has said, will create jobs and attract businesses to Michigan. Lipton said the governor has yet to provide data on how that will work. "He noted metrics and data, but said he wasn't going to provide them to us," she said. "And he's not obliged to provide the data."

Cutting the tax, however, would make Michigan the most business-friendly state in the country, Lipton said. "How many jobs created from this?" Lipton asked. "We ask them, and we still don’t know."

Phil Elam of Ferndale, who came to talk with Lipton, had concerns over the film incentives and where they might end up.

"I wanted an update on the Michigan film incentives, where it stands," he said. Elam also attended the .

"I heard what I expected to hear. It's going to be an uphill fight," he said.

Snyder has proposed a $25 million cap on filming projects, which is considered a significantly lower incentive than the up to 42 percent tax incentives projects get now. This reduction, Lipton said, would be the "death knell" to the film industry in Michigan. She said the film The Avengers has already pulled out of Michigan and is now filming in Ohio.

"The film industry gives young people an option to stay in the state," Elam said. "It's a new enthusiasm in Michigan. This enthusiasm brings a sense of pride, builds up self-esteem. Then the state becomes healthier. It's all related."

Ferndale resident Mike Poterala attended both Lipton's and Gregory's community events. A day earlier, he rode a bus, along with 45 other people from the Detroit Federation of Teachers, to attend a rally at Lansing to protest Snyder's proposed cuts to public schools. He said an estimated 3,000 to 4,000 people gathered at the Capitol.

Snyder has proposed cutting public schools an additional $300 per student, on top of the $170 per student cut that was passed in the summer.

"I came out to learn more about what's happening in Michigan," he said. "I'm always learning something, some new budget detail, a new cut from Snyder."

Ferndale Mayor Dave Coulter, who also attended both Gregory and Lipton's event, gave Gregory an "I (heart) Ferndale" sticker, then asked the state senator how Snyder might reward cities utilizing shared services and best practices. Snyder has proposed cutting statutory revenue sharing to cities completely but then rewarding cities that are sharing services and collaborating. Ferndale is expected to lose about $1.2 million in this cut.

Gregory said he wasn't sure how Snyder proposes to reward cities but said he would "keep an eye on it."

Currently, Ferndale shares fire services with Pleasant Ridge and Royal Oak Township and is .

Other cuts that were brought up during Gregory's forum were removing the brownfield tax incentive. Ferndale Councilwoman Melania Piana said removing the incentive would mean taking one of the most powerful tools out of the economic development toolbox. Gregory said that he had spoken to the Michigan Economic Development Corp. and officials told him the brownfield incentive wasn't going away but would be morphed into a new program that does the same things. 

The brownfield incentive is intended to spur development of contaminated or blighted property by providing businesses tax credits, on a case by case basis, for projects on such "brownfield" properties.

Libraries could also face severe cuts, according to Vice President of the Library Board of Trustees Jim O'Donnell. State aid to libraries has dwindled since the early 2000s, according to the Michigan Library Association, peaking in 2003 at just over $14 million. Aid for 2012 is expected to be between $3 million and $4 million.

O'Donnell specifically brought up funding for electronic databases offered at public libraries. These include online resources for certification testing and training for ACT, GED, nursing, civil service, and police and fire certifications. The Michigan eLibrary also provides resources for small businesses and market research.

"These databases cost us $5 million but if libraries have to replace these databases locally it will cost $72 million," O'Donnell said.

"It's important goal to continue funding that," Gregory said. "But the governor made a pledge to balance and these are to be cut. Unless we convince him otherwise, it'll be cut. ... They're cutting things but for a state to be viable, we have to have a viable library."

Other cuts Snyder has proposed include removing energy and preservation credits, along with tax credits to companies that produce advanced batteries (for example battery packs for hybrid or electric cars), according to Lipton.

"Governor said he's not picking winners or losers but there clearly are winners and losers," Lipton said. "Snyder says he won't raise taxes, but when you change what someone pays in taxes, when you eliminate tax credits for low-income, eliminate charitable donation credits, personal exemption, eliminating credits is a tax increase, people will pay more."