News Story
GOP Politicians Love the Spending, Reserve Right to Criticize the Revenue
Michigan Republican Senators Tonya Schuitmaker, Tory Rocca and Mike Nofs.
Last week, three Republican state Senators — Tory Rocca from
Sterling Heights, Tonya
Schuitmaker from Lawton and Mike Nofs from
Battle Creek — joined all Democrats in voting for two defeated amendments to
spend $37.7 million more on two programs that had been trimmed in the
recently passed 2012 budget. However, the same senators then voted “no” on the bill to keep the revenue
flowing that would have paid for their extra spending.
In other words, these Republicans appear to want it both
ways: Being able take credit for increasing certain spending programs, while
reserving the right make fiscal conservative-sounding boasts about opposing the
revenue source that pays for them.
The pattern is not new. In 2007, all three of these
legislators opposed a $1.4 billion tax hike, but literally within hours of its
passage voted
to increase spending by almost that entire amount. Specifically,
Rocca voted for every dollar of a $1.47 billion spending hike, Schuitmaker
$1.09 billion of it, and Nofs $1.10 billion.
On the latest spending votes, Nofs told Capitol Confidential that he thought the proposed tax raises more
than is needed for its purpose. However, he said that the “Healthy Michigan
Fund” — one of the programs the amendments would have increased — “helps a lot of constituents in my district,” and that he wanted to
“indicate my support” for both of the affected programs.
Two other Republicans, Sen. Geoff Hansen of
Hart and Dave
Hildebrand of Lowell, also voted “yes” for the “Healthy Michigan
Fund” spending, but unlike Nofs, Rocca and Schuitmaker, also
supported the underlying revenue source that would have paid for the
spending. Back in 2007, after opposing the big tax hike then, Hansen had voted
for $1.33 billion of the spending increases that it enabled, and Hildebrand for $121 million of it.
The votes this time all came on a
bill lowering the rate of an existing health care services tax but
broadening its base to a larger number of taxpayers. Importantly, it is
supposed to be a tax shift, not a net tax hike, although some firms not now
paying the tax would have to in the future.
This medical services or claims tax itself is a “gimmick”
used to extract more federal Medicaid dollars, taking advantage of a quirk in
the federal/state cost-sharing formulas to “game” the system in favor of
Michigan taxpayers and medical welfare recipients. Proponents say that without
this extra revenue, the net cost paid by Michigan residents for health care in
general would go up.
One of the two programs these Republicans tried to spend more on provides subsidies
for medical education graduate students. The other, the so-called “Healthy
Michigan Fund,” pays for a variety of government prevention programs, with much
of the money targeted at low-income populations in Detroit and elsewhere. It
has been a target of GOP budget-cutters for a number of years.
In addition to backsliding on already adopted spending cuts,
this extra spending potentially could have turned a revenue-neutral tax shift
into modest tax hike. The details are complicated, and involve which spending
can or cannot be used to “game” more federal dollars. Essentially, the
amendments would have meant that a net tax increase
might be needed to get the same federal money “bang for the buck” from the
gimmicky medical services tax.
Besides the three senators who supported both of the
spending amendments described above, four other Republicans opposed this tax
shift bill: Jack Brandenburg
of Harrison Township, Joe
Hune of Hamburg Township, Rick Jones of Grand
Ledge and Pat Colbeck
of Canton Township. Colbeck wasn’t in office in 2007, but the other three all voted for
spending increases following that year’s big tax hike: Brandenburg
supported $349 million of that extra spending, Hune just $7.5 million, and
Jones $410 million.
In addition to the GOP politician behavior revealed by the
most recent votes described here, the episode also reveals some of the negative
fiscal effects of Medicaid, the joint state/federal health care welfare program
for the poor. Among other things, the program has been called the monster that
ate state budgets for the way it has expanded year after year, crowding out
other state spending priorities. The gimmicky tax described here is one of the
methods state legislators have used to mitigate the drain on state budgets.
The fact that Michigan gets nearly $2 from the feds for
every $1 that state government spends also makes Medicaid an “attractive
nuisance” to big-spending legislators, creating an incentive to expand
social welfare spending even in an environment of budget austerity. Every time
there’s an effort to trim this spending the call goes up, “Why would you want
to leave that federal money lying on the table?”
One solution would be to get rid
of Medicaid's federal matching funds with a fixed block
grant to each state. This reform is one of the features of a multi-state Health Care Compact
recently introduced in the House, the main purpose of which would be to
insulate Michigan from the worst effects of “Obamacare.”