Thursday, March 12, 2009

Michigan Tax Revenue Falls Off a Cliff in February

Ouch! The Senate Fiscal Agency just released their February report of state revenue and it's a doozy. A couple of quotes:
While tax collections in February were expected to fall below last year's level, due primarily to the impact of the economic recession, the decline was much worse than expected . . . In addition, tax collections fell short of the estimate for February by almost $100.0 million.  Combined with the equally weak level of collections in January, tax collections so far in FY 2008-09 are about $200.0 million below the January 2009 consensus revenue estimate.

Interestingly, tax collections in the current fiscal year (which began in October 2008) were doing fairly well, until now. Last month, however, state tax revenue was down 31% from last year's February level. Sales tax revenue, a good proxy for economic strength, was down 17% year-on-year in February, while real estate transfer tax revenue was down 41%. Stunning. This indicates (along with Michigan's highest-in-the-nation unemployment rate of 11.6%) that the economic downturn is actually accelerating

This sets the stage for several possible outcomes. Although the structural budget problems aren't as bad in Michigan as in California, we are heading in California's direction in terms of budget meltdown, if the current trends continue. The politicians are in a tight spot here. They will almost certainly have to propose additional tax increases as well as budget cuts. The question becomes how does the Republican-majority State Senate react? They caved to last year's massive tax hike - will they do it again? How do they sell a tax increase when over 1 in 10 Michiganders doesn't have a job? When the Detroit Three continue to contract and lay people off in massive numbers? When house prices continue to decline, making it more and more attractive to simply walk away from mortgages?

Tuesday, March 10, 2009

2010 Census: Do I have to fill it out?

There's been some buzz lately about the upcoming 2010 census.

There are some very good reasons to be extremely skeptical of the probing questions the census asks. First, let's look at what the Constitution says about the census:
Article I Section 2: The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.

It's pretty simple. The federal government counts the number of citizens every ten years to apportion congressional representation to each state. However, the census has come to be an extremely probing process, asking for your name, age, race, and relationship status, among other things. And that's just the short form. The long form, which goes to a randomly selected set of people, asks 53 questions: everything from your income, how old your house is, and even what you use to heat your home. What does that have to do with apportioning members of congress? Good question.

There is a lot of resistance to answering these questions, and with good reason. One site I found, called Don't Trust the Census, makes a pretty good case for not filling out the probing questions. They point to research showing that census data was used in 1943 by the FDR administration to round up and put Japanese-Americans in concentration camps. So much for the census promise that "responses are confidential."

The main reason the Census Bureau cites for filling out the questions is to make sure that we get our share of the federal welfare state's booty:  "People who answer the census help their communities obtain federal and state funding and valuable information for planning schools, hospitals, roads, and more." Sure.

What to do? Well, federal law says that you can be fined $100 for not answering the census, but my research shows that the last people actually prosecuted for this were in 1973. The Census Bureau claims they've never prosecuted anyone for not filling out the form. I don't mind abiding by the constitution, so in 2000 I simply filled out the first question, asking how many people lived in my home, and I mailed it back. They sent one of their goons out to extract more from me, but I wasn't home, so they gave up. It was pretty simple.

Keep in mind that only 67% of the people responded to the 2000 census and no one was prosecuted for not responding.

Some additional links that popped up around the 2000 census:

Thursday, March 5, 2009

Michigan Unemployment Hits 11.6%. Time to Raise Taxes!


Today it was announced that Michigan's unemployment rate hit 11.6%. What is governor Granholm's reaction? She announces her support for an increase in gas taxes! Great idea! She has already succeeded in increasing the income tax by 12% and increasing business taxes by 22%. That seems to be working out really well. Not.

Her insatiable appetite for more of your money won't be quenched until no one in Michigan is left with a job.

"In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy." - Governor Granholm, State of the State address, January 25, 2006 (unemployment rate was 6.2%).