Michigan Gov. Rick Snyder laid out his taxing and spending proposals Thursday for the 2014 fiscal year.
Every state except Vermont is required by either constitutional or statutory law to balance their budgets.
The slow recovery has allowed states—which must cut in times of
crisis—to spend more. In his presentation, held before the state Senate’s Appropriations Committee, Snyder requested an estimated 5 percent increase from fiscal year 2013 for a total of $50.9 billion.
Snyder’s proposals show for increases in education, public safety and social services. The most talked about proposals are an expansion of Medicaid and statewide road improvements.
As a result of the Supreme Court’s decision over the Patient Protection and Affordable Care Act of 2010, states now have the choice of whether or not to expand Medicaid. Medicaid is the federal health insurance program for the poor and needy which is administered at the state level.
With his proposal, Snyder rebuffed many of his fellow Republican lawmakers who have rejected the expansion over worry about its cost. The Obama administration and U.S. Department of Health and Human Services have tried to convince state lawmakers across the country that the expansion is worth the expense.
“I’d say it’s as good a deal as any state is going to get,” said Kathleen Sebelius, the secretary of Health and Human Services, in an article by Politico.
Congressional Budget Office reports show that federal funds will cover approximately 93 percent of the cost of expansion for the first nine years.
The expanded health insurance would cover an estimated 470,000 citizens of the state, and is expected to save the state money as health care costs continue to consume state and local budgets.
Health care spending increased much faster than revenues between 1987 and 2011, data from the Pew Research Center on the States showed. While preliminary data from the Nelson A. Rockefeller Institute of Government shows further growth in overall state tax collections this year, health care spending is projected to increase twice the size of the American economy in the decades ahead.
To pay for statewide road repairs, Snyder wants to increase fees for vehicle registration and raise gas taxes. As of January, a chart from the American Petroleum Institute showed Michigan among the states with the highest gas taxes (federal, state and local taxes combined).
“If you use the roads more, you should pay more,” Snyder said in his testimony. “If you use the roads less, you should pay less.”
Data from the Tax Policy Center showed at the state level a 0.19 cent tax is levied per gallon of gasoline according to estimates from 2011.
Gas taxes have typically been used to fund road maintenance. Tax collections from gas taxes have continued to fall. Higher prices and better fuel economy standards have lowered demand which equates to less consumption of motor fuel and less tax revenue.
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