With the passage of the Headlee Amendment in 1978, Michigan shifted much of the local and regional control of our taxes to Lansing. What was supposed to keep ‘Big Government’ spending in check by limiting local property tax increases and specifying that state revenue cannot grow beyond 9.5% of total personal income has left huge deficits in our economy. For fiscal year 2013, Michigan’s revenue was $6.5 billion below that limit. Collectively, state revenues have been more than $90 billion below that limit since 1979.
The passage of Proposal A (1994) also changed how we tax and fund our public schools, shifting taxation away from local authorities and allowing the state provide a per-pupil allowance based off of each districts enrollment. Schools now rely on a portion of our sales tax, use tax, lottery and and Michigan’s economic prosperity in order to provide adequate funding for education.
Both the Headlee Amendment and Proposal A work good when the economy is thriving. They are designed to limit government taxation, legislative spending and provide equal funding per K-12 student. However, when the Michigan’s economy is underperforming and we have lost population and high-paying jobs, they present significant revenue shortfalls to adequately fund our roads, infrastructure, police and fire services, state revenue-sharing, K-12 and higher education among other services that affect our veterans, seniors, community and mental health programs and . Michigan has a severe budget problem. With nearly $392 million in revenue shortfalls predicted for Michigan’s 2017 general and school aid budget, we cannot solve our budget shortfalls with one-time fixes of funding. We need structural fixes.