Snyder Releases Some Budget Details

By: Associated Press
By: Associated Press

Gov. Rick Snyder's proposed budget would cut spending for public schools, universities and local governments while ending many personal tax exemptions, the governor told The Associated Press on Wednesday, a day before he was to present the proposal to lawmakers.
The $47 billion proposal includes $1.2 billion in permanent spending cuts to help deal with a $1.4 billion shortfall in the budget year that starts Oct. 1.
It adds $1.7 billion to revenues by eliminating tax breaks for low-income workers, phasing out most senior tax breaks and getting rid of many other income tax deductions, such as one for donating to public universities. Personal deductions would be phased out for individuals making at least $75,000 or couples making at least $150,000.
"This is approaching it as a total solution," Snyder said. "We're getting rid of all the special-interest kind of items."
Under his plan, public schools would see a 4 percent cut, or about $470 per student. Intermediate school districts would be cut 5 percent.
The state's 15 public universities would get 15 percent less, but $83 million would being set aside to be shared with universities that kept tuition increases around 7 percent or less, according to state budget director John Nixon. Community colleges would get the same $296 million they're getting now.
Spending on universities and community colleges would be switched from the state's general fund to the school aid fund. School districts have criticized the move, saying it would draw money away from public schools just as the school aid fund begins to again build a surplus that could allow per-pupil payments to rise. In all, $12.2 billion would go to funding public schools, while $1.4 billion would be set aside for universities.
State employees are going to be asked for $180 million in cuts. Nixon said he expects unions will agree to increase the share of health care premiums workers pay and make other changes rather than cutting wages.
Local governments would see their state payments cut. Most depend on the state for much of their funding because they can't raise their tax rates. Local governments have complained for years that revenue-sharing cuts have left them increasingly unable to provide basic services, such as police and fire protection.
Some revenue sharing is required under the Michigan Constitution, and that actually would increase 4 percent under Snyder's plan to $659 million. But more than 500 governments also split $300 million annually in statutory revenue sharing payments, and they would get nothing under Snyder's plan. Snyder would put aside $200 million for a new incentive-based program that would reward cities, villages and townships that agree to share services or change their pension plans from defined benefit plans to defined contribution ones.
The Republican governor wants to cut business taxes by $1.8 billion by switching from the unpopular Michigan Business Tax to a new 6 percent tax on corporate income that would affect only large corporations. That cut is larger than the $1.5 billion he originally said the switch would cost.
Snyder's budget maintains Medicaid payments for health care providers. It gets rid of a 6 percent tax on health maintenance organizations that doesn't meet federal guidelines and replaces it with a 1 percent tax on all health claims.
Nixon said the governor would like to close a state prison, although no decision has been made yet on which one should go. The budget recommends closing the Shawono Center in Grayling and reducing the capacity at the Maxey Training School in Whitmore Lake, two detention and treatment centers for young men.
The plan also calls for eliminating 300 field worker positions in the Department of Human Services, before- and after-school program and reducing the hourly rates paid to unlicensed aids and relatives in the child day care program.
The plan still must be approved by the Republican-controlled Legislature. Snyder plans to give lawmakers just two combined bills, rather than separate ones for each department. That could make it harder for lawmakers and special interest groups to pick apart the governor's proposals.
One of Snyder's bills would include all education funding; the other would include everything else.

Details of Michigan Gov. Rick Snyder's $47 billion budget proposal, which he outlined to The Associated Press on Wednesday:
-- Drops the individual income tax rate from 4.35 percent to 4.25 percent on Oct. 1; the tax will then remain at 4.25 percent rather than being decreased to 3.9 percent in future years as scheduled.
-- Eliminates the state income tax exemption for pensions, but Social Security benefits will continue to be exempt.
-- Eliminates the Michigan Business Tax and replaces it with a flat 6 percent corporate income tax on major corporations.
-- Eliminates business credits awarded for films, brownfield redevelopment, the Michigan Economic Growth Authority, etc., although current commitments will be honored. Sets aside $25 million for film credits from the 21st Century Jobs Fund.
-- Rolls funding for universities and community colleges from the general fund to the school aid fund, the main funding source for K-12 schools.
-- Cuts per pupil funds $300, in addition to the currently budged $170 per pupil reduction.
-- Eliminates statutory revenue sharing payments for cities, villages and townships in FY 2012, leading to a net savings of $92.1 million. The change impacts 509 local units of government. Increases constitutional revenue sharing by 4 percent, to $659 million.
-- Includes $200 million for a new incentive-based revenue sharing program for cities, villages and townships that meet specific standards to be detailed in March.
-- Sets a lifetime limit of 48 months for residents to receive welfare payments, with exemptions for incapacity and hardship.
-- Closes the Shawono Center in Grayling, and cuts 20 beds in capacity at the Maxey Training School in Whitmore Lake, resulting in $787,000 general fund savings.
-- Eliminates 300 field worker positions in the Department of Human Services.
-- Closes one prison to be named later this year.
-- Reduces the number of Michigan State Police posts, saving $3.2 million.
-- Reduces state aid to libraries in the Department of Education budget by $2.3 million in the general fund, with $950,000 directed to the Michigan eLibrary, resulting in net savings of $1.4 million.
-- Suggests privatizing food service and prison stores operations in Michigan prisons, and suggests that resident care aide services at the Grand Rapids Veterans' Home be competitively bid.
--Turns the dairy farm inspection program over to industry field representatives certified by the Department of Agriculture.

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  • by Clara Location: Jackson on Feb 21, 2011 at 01:11 AM
    Can't believe I voted for him. The rich get richer and the poor get poorer...but let them eat cake, right, Rick?
  • by brian on Feb 18, 2011 at 06:05 PM
    Snyder is going to balance the budget by taxing our social security and retired military (those who served and sacrificed the most) of course Snyder never served in the military. Just like Reagan he wants to put the deficit on the backs of the poor.
  • by anonymous on Feb 18, 2011 at 08:49 AM
    Yes, jobs will return. Ha ha ha, but it will be slave labor and conditions that forced the creation of unions in the first place. Poor houses will return. If America is going down, Snyder and his friends will make sure they are the last to be effected.
  • by henry Location: St. Johns on Feb 18, 2011 at 04:56 AM
    What do you think "BUSINESS" is?! Business is the prices that you and I pay for their products and services. The higher the business taxes, the more you and I pay for products and services. The tax is simply passed on to consumers. The "working people" will increasingly be the "Non working people" if we don't fix the business tax system in this state.
  • by Martin Location: Eagle on Feb 17, 2011 at 04:01 PM
    Well there you are... a rich man running Government (He) the new governer has no idea about working people going to the store with 20 bucks trying to feed your family. He proposes to cut state employees wages, cut teachers, tax seiniors income, take money from the poor, and give tax breaks to BUSINESS.... really? really Rick? Robin Hood is reverse?? He said he will work for a buck!! HA he is sooo rich how does that mean ANYTHING? What did he spend JUST to get this job? well there you go. WAKE UP NERD!! Can we sell Rick to China?
  • by Donna on Feb 17, 2011 at 02:19 PM
    Cristin and David, I concur. By the way, I think on this and other instances, that WILX has a definate slant on the news. Most local and network news do, but at times, it's seems extreme to me, just saying. Not everyone agrees or disagrees completely with the "Budget Bombshell" as it has been coined. Entitlement runs deep in America, and most certainly Michigan. We're better than that, right? But I don't know of too many people that really want cuts on our seniors....I don't.
  • by david Location: lansing on Feb 17, 2011 at 01:05 PM
    When are all of you who complain about cuts in education funding going to begin pressuring your school districts to consolidate? THERE IS NO MORE MONEY! Not from businesses or individuals. Why do we need 10 different school districts in Ingham Co. 10 Superintendents, 10 Administrations, 10 Back Offices, 10 Busing Operations, 10 Food Service Operations, and on and on. It's time for radical change! As for the other cuts, again, THERE IS NO MORE MONEY! Seniors, state workers, low income folks, the middle class, the rich...ALL have to contribute more and expect less from the government. This is by definition an emergency. Handle it. The founders of this state and this country would be so ashamed of the whining and the lack of individual responsibility and resource we seem to have. Gimme, Gimme, Gimme is over.
  • by A Voice Location: Michigan on Feb 17, 2011 at 11:39 AM
    Why doesn't Gov. Snyder propose that the state legislators, their staffs, and his cabinet work for only $1 dollar this year and the next? As for bringing jobs back to Michigan; I don't have much hope of his plan succeeding. Businesses, especially the multi-nationals, want their workers, the people who actually do the work, to work for $1 a day. (While those at the top pay themselves hundreds of thousands of dollars, or more, a year.) Businesses also don't want to be concerned with worker safety or complying with the environmental regulations. Cuts into profit. Even if by some far off chance businesses did locate here, there is no guarantee that they would hire people from the ranks of the unemployed. Did anyone see the recent article about the common practice of how employers are only filling their available positions with people that are already working---that those unemployed need not apply?
  • by Cristin Location: Small town Michigan on Feb 17, 2011 at 11:24 AM
    MI is "BROKEn"! We NEED Snyder to break out of the nerd shell and BE our "Bad Boy"! Cuts are necessary! Maybe not all the propsed cuts, but we are on the right track! I will agree with many on the fact of no cuts mentioned to our State Legis. With MI being one of the top 3 highest paid in the nation(at $91,650 with per diam), it is OBVIOUS that there need to be some cuts. This is a second job for many of these elected officials and they are paid fully regardless of the amount of days in session. MI needs a "Bad Boy"! Hey Snyder!...I like your mention of cuts "across the board" so why leave out our 110 Reps. & 38 Senators? Oh, and regarding the Tax on pensions...Not excited (being fiscally responsible, saving, blah, blah), BUT I understand MI is 1 of only TEN states that has an exclusion. Threats of leaving this state won't help, especially when you look at the other 9! Also, please consider "work for welfare" after 48 months. Possibly cooking for prisoners or volunteering in schools????
  • by Ginger Location: mason on Feb 17, 2011 at 11:21 AM
    We agree that it is sad that seniors who have worked and paid all this money, now have to be trying to survive with less income. Retirement should not be a struggle, yes we all need to cut back but almost welfare status is not good.
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