By DANIEL HERATY
When Gov. Rick Snyder announced his budget Feb. 17, he said tough decisions would have to be made.
The proposed 2011-12 budget is $18.5 billion, with a deficit of $1.4 billion.
But some of those decisions have been met with criticism — and a little understanding — in Dearborn and Dearborn Heights.
“It has a rather dramatic and difficult effect for the coming year,” Heights Mayor Daniel Paletko said.
“I’m not sure what is going to be passed by Lansing, “ he said.
Dearborn Mayor John O’Reilly Jr. said he understands the position the governor is in.
“I’m empathetic with the governor’s plight,” he said, adding that Snyder has “a lot on the table,” including trying to dramatically overhaul Michigan’s budget structure.
He said Snyder is trying in one year to fix what has been happening for the last five or six: deferring the lack of revenue from year to year.
Paletko said his city already has taken steps to save money, including a flat pay rate for all city employees, that he had hoped would be enough.
He said Dearborn Heights has had discussions with communities including Garden City, Taylor and Redford Township about possibly combining resources, as was done recently with Dearborn’s and Dearborn Heights’ libraries.
Paletko said Snyder’s plan makes it hard for communities to know how much revenue is coming from the state in the next few years.
He said the governor’s proposed tax on pensions will be difficult for those who rely on that for their income, and that the tax could affect the city’s population.
“Many seniors may leave Michigan for a state where there is no tax on the pension,” Paletko said.
O’Reilly said he has no problem with the pension tax as long as the pension comes from the employer, and not the retiree contributing themselves.
“If an employer over and above your salary is setting aside money, then it’s like deferred income,” he said.
Paletko said eliminating the state’s film incentive is another cut that will have a negative effect on the area, and not just monetarily.
“Everyone was excited about having films shot in the city,” he said. “There was a good feel.”
O’Reilly said he realizes the thinking behind ditching the incentive.
“I wish we could keep it,” he said, “but I understand why he’s getting rid of it.”
Paletko also expressed concern that the business Snyder is hoping to attract by eliminating the Michigan Business Tax may not be so quick to want to come here.
“He’s taking a risk that they may not come in,” Paletko said. “Decisions (by the companies) are not made primarily on the taxes.”
O’Reilly said Dearborn anticipated Snyder’s budget cuts in its recently announced cost reductions.
“It factored in our projections,” he said.
(Daniel Heraty can be reached at [email protected].)