Michigan’s business community knows that significant cost-saving structural reform is the best way to fix Michigan’s chronic structural deficit. The Legislature has an opportunity to make a significant step toward right-sizing the cost of Michigan’s government.
Last month, the Civil Service Commission revoked its planned 3 percent raise for non-union state employees. As a matter of fairness and sound fiscal policy, the Legislature should take action immediately to revoke the planned raise for all employees regardless of their union membership. Last week, EPIC-MRA released a poll indicating that 68 percent of Michigan voters believe this pay raise for union employees is inappropriate.
The University of Michigan has estimated that personal income in Michigan declined by 3.4 percent in 2009, and adjusted for inflation, personal income will continue to shrink for at least the next two years. The Consensus Revenue Estimating Conference forecasted that Michigan will lose another 300,000 jobs in that same timeframe. That means we have fewer taxpayers, and the remaining taxpayers are making less.
State tax revenues simply cannot support growth in the cost of state government. Now is the time we must seek ways to reduce the cost of government.
Any conversation of increased wages for state employees is inappropriate at this time.
Private sector employers and employees came to this conclusion long ago and started working together to reduce costs. This is most famously demonstrated with the fact that a new UAW employee starts at $14 per hour.
We also believe that the state should treat all of its employees the same. After revoking the 3 percent raise for non-union employees, it is an issue of basic fairness that the pain should be shared by all employees equally.
The looming $1.7 billion budget deficit requires legislators to make decisions about state priorities. For example, the $73 million in savings represents approximately 1/6 of the proposed deficit in the School Aid Fund. The $73 million saved by this basic act of fairness is almost exactly equal to the cut in revenue sharing for local units of government for police and fire services that was included in last year’s budget.
There is no question that difficult choices need to be made to solve our chronic structural budget deficits. We believe revoking the 3 percent pay raise for union employees is a needed and easy fix considering the reality of the private sector economy, the issue of fairness and considering the best possible use for this $73 million. We all offer our support to help pass this sound public policy.
Grand Rapids Area Chamber of Commerce