No consensus for raising – or cutting – taxes in 2014

Michigan residents are well aware of problems facing the state – rising college costs, declining quality of K-12 education and the dilapidated shape of the state’s pockmarked road system.

But in conversations and scientific polling of more than 5,500 people across the state, Michigan residents cannot agree on whether they are willing to pay more in taxes – except for roads – to solve those very problems.

“People want something for nothing, that’s what it boils down to,” said Bill Ballenger, editor and publisher of Inside Michigan Politics and a long-time observer of the state’s political moods. He has served as both a state representative and senator in Lansing.

Indeed, in comprehensive Community Conversations undertaken by The Center for Michigan over the past seven months across all corners of the state, residents overwhelmingly found a need for reform and funding to address serious concerns.

But just 35 percent of people who participated in community conversations are willing to pay higher taxes. A nearly equal amount – 34 percent – want to see reduced taxes. And 31 percent think current tax rates shouldn’t change. In polling, 43 percent support tax cuts, 21 percent would like to raise taxes, 36 percent would keep them the same.

The results cut across most demographic groups as well: No group – not white, African American, wealthy or the middle class – showed majority support for a tax increase. And only a slight majority of blacks favored of tax cuts.

The bottom line is, there is little support for tax changes in either direction.

“(When it comes to public money) the main problem is revenue. It is not only about raising taxes, it’s about making decisions based on what the desired impact is and the best way to accomplish goals,” said one conversation attendee. “We need to be smarter about how we spend money as well.”

The surprise may have been the slight majority that supported additional taxes for improving roads. A harsh winter has made it obvious to every motorist that Michigan has long spent less per capita on roads than the  state’s challenging weather demands.

Despite a strong four-in-five residents saying college affordability is an “urgent priority,” it falls behind K-12 education as an area where residents say the state should target new funding, should there be any.

For presidents of universities, superintendents of local school districts and other state leaders, that means they cannot expect strong public support for a jolt of new revenue from higher taxes. What they’ll have to live with are modest increases as the state’s economy rebounds, perhaps some relief from the estimated $1 billion-plus state budget surplus this year – and continued calls to find savings in waste and streamlined services.

For those who look to Lansing for aid, the message has been received.

“You’ve got to control costs,” said Michael Boulus, executive director of the Presidents Council, State Universities of Michigan, which represents the state’s 15 public universities. “That’s No. 1.”

In terms of state and local tax burden, Michigan ranks No. 21 in the nation, just below the national average, according to an analysis of 2011 Census data by the Tax Foundation, a nonpartisan Washington think tank. Neighboring states Ohio and Indiana had similar rates; while Wisconsin, Minnesota and Illinois had markedly higher rates. The push to keep taxes lower in Michigan dates back decades, with most ire focused on the state’s old property tax system that was overhauled in 1994 under Proposal A, which lowered crushing property taxes while increasing the state sales tax from 4 to 6 cents.

The state remains divided on taxes – and there’s little appetite for a tax increase. The no-new-taxes pressure is felt most acutely in Republican legislative districts, said Bernie Porn, president and pollster for EPIC-MRA in Lansing.

With the fiscally conservative Tea Party elements of the Republican Party still active, even more moderate Republicans are wary of approving a tax increase and launching the ire of a ready-made coalition of adversaries.

Though they should also note that, in nearly equal measure, there is no public mandate for a tax cut.

“There is just a huge number of districts where the Tea Party supporters’ votes can cause problems in Republican primaries,” Porn said.

So that leaves government leaders to focus on doing the same with less – or with not much more as the economy improves and tax collections rise.

Colleges looking to trim

For a decade, significant cuts to higher education have flipped the equation on how college costs are funded. Where once the state footed 75 percent of institutional costs and students paid the remainder through tuition, today students typically carry 80 percent of the burden, and the state 20 percent.

And with parents and students weary of tuition increases that have created a rising financial burden, university presidents have looked to make changes on the spending side of their ledger. The Presidents Council estimates that cost-cutting measures have trimmed nearly $224 million from the budgets of the 15 universities through pay freezes, cuts, conservation and collaboration among institutions that often fight to enroll the same students.

The biggest savings was a $45 million reduction in health-care costs and among those, five universities – Michigan State, Wayne State, Central Michigan, Ferris State and Grand Valley State – worked together to get steeper prescription drug discounts.

Looking at the bottom line differently has put universities – and other tax-reliant institutions – on a different footing. They realize they must first look to the spending side of the budget. Then look again. These days, looking to Lansing for a lifeline is an unproductive distraction.

“This isn’t new. This is a 10-year trend,” Boulus said.

Michigan’s reluctance to loosen the purse strings is not unique. In a 2007 report, the Tax Foundation found that, on average, Americans felt they got about $7,244 in value from federal spending – adding up what they felt was spent in services per person on roads, national defense and poverty programs. The reality? The government spent $12,124 for every person.

When asked about core tax issues, Michigan residents held a common view: If you’re going to cut any taxes, cut property and income taxes. If you’re going to raise any, raise them on businesses, not individuals, was the largest vote-getter among residents in community conversations.

Ballenger has watched the state for decades and has seen slight shifts in the electorate’s comfort with new taxes. One shift is occurring now, with increased support to fix potholes that are driving people crazy in both peninsulas. But he doesn’t expect widespread calls for new taxes. It’s just not in voters’ blood.

“I don’t think it’ll ever change,” he said.