Information on Proposal 5 from MCMCH

From the Michigan Council on Maternal and Child Health (MCMCH):
 
The Danger of Proposal 5

Six statewide proposals will be on the ballot on November 6th.  One has the potential to alter Michigan’s tax policy and the state budget in a dramatic way. 

Proposal 5 would require a 2/3 majority vote of the State House and the State Senate, or a statewide vote of the people at a November election, for the State of Michigan to impose new or additional taxes, expand the base of taxation or increase the rate of taxation. The measure would effectively lock in the state’s tax code in its current form, since no tax measure in Michigan history has ever garnered 2/3 support of the Legislature.

 

Proposal 5 is particularly troubling for maternal and child health because it could easily damage public health and health care funding in Michigan.  The most direct example is the state’s Health Insurance Claims tax, the 1% tax on all claims used as matching funds for Medicaid  — its value to the state is around $1.2 billion. The current claims tax expires on January 1, 2014.  If Proposal 5 is approved, any action on the Medicaid Claims tax would require a super-majority vote – putting the $1.2 billion of Medicaid funds in serious jeopardy.

 

A broad-based coalition called Defend Michigan Democracy, representing almost every type of statewide advocacy organization and headed by Governor Rick Snyder, leads opposition efforts to the proposal.  The major talking points opposed to the proposal: 

 – Proposal 5 changes the state constitution and creates minority rule in the Legislature by giving the powers to control tax policy to a small minority of just 13 senators.
 – Proposal 5 is funded almost entirely by a lone Detroit billionaire named Matty Moroun.  Moroun family campaign donations in Lansing are huge and bipartisan. If Proposal 5 passes, any such contributor only needs to control the votes of 13 state senators or 37 state representatives (out of 148 state lawmakers) on future tax votes. 

 – Proposal 5 would essentially make it impossible for the Legislature to pass balanced solutions to the state’s budget problems. That would mean partisan gridlock in Lansing, higher local taxes, and more cuts to education, health care, public safety and other essential services. 

 – The state credit rating would likely be downgraded. This warning has come from Gov. Snyder’s budget director and directly from Wall Street, which does not like extreme budget policy that makes it impossible for a state to reach balanced budget solutions. 

 – Only a handful of states have super-minority requirements, and they tend to be poorer, or have struggling economies and ongoing state budget crises. Nevada has the nation’s highest unemployment rate. Mississippi is the poorest state in terms of per capita income. California failed to meet its constitutional deadline for balancing the state budget 16 out of 20 years because of legislative gridlock. Of the 10 states with some form of super-minority requirements, seven have unemployment rates above the national average; seven have per capita incomes below the national average.