Expanding budget options: Tax expenditures and the Michigan legislative process

The leadership in the Michigan House of Representatives is now committed to putting in place a tax expenditure review process. Never before in any state have the House Speaker, Appropriations Committee Chair, and Taxation Committee Chair agreed on the need to assess which tax ependitures continue to meet their intended goals. This review process is the product of a Michigan House Task Force. The significance of its report must be understood in light of the nature of tax expenditures, the failed efforts in other states to stem the rising tide of tax expenditures, and the strategies employed by the Task Force during its deliberations. The result was the adoption of a process that among other things requires tax expenditures and direct expenditures to be considered together in the budgetary process, and establishes a subcommittee of the House Taxation Committee with close ties to the House Appropriations Committee and with jurisdiction over all tax expenditure legislation. The Task Force succeeded in coping with difficult economic conditions and dangerous ‘political minefields’. The key political strategy was initially to adopt a general review process, and only then, to deal with specific tax expenditures. Only the first stage of this ‘two-stage strategy’ is now completed. The more conflict-laden second stage must still be implemented. Numerous tax expenditures will certainly survive, but the new review process may well encourage more responsible decision making.