What To Expect In Snyder's Budget Proposal

By: Liam Martin Email
By: Liam Martin Email

LANSING --The state House Tax Policy Committee gathered Wednesday, anticipating Governor Snyder's budget proposal -- and expecting deep cuts across the state.

"There isn't much left. We've cut to the bone," state Rep. Mark Meadows, D-East Lansing, told News 10. "There have been cuts that have been on since Granholm was elected in 2002."

As for Snyder's proposal Thursday, News 10 has learned there will be some major changes proposed to tax policy, and here's how the math will work.

Snyder is expected to call for the elimination of the Michigan Business Tax, replaced with a flat 6 percent rate -- adding about $1.5 billion to an already $1.8 billion deficit.

To pay for it, he'll likely propose the elimination of some business tax exemptions (expected to reduce the deficit by about $2 billion), a reduction or removal of the Earned Income Tax Credit (which costs the state about $330 million a year) and a tax on pensions, which were previously exempt (extra revenues of about $1 billion from that).

Some lawmakers, like Meadows, are upset about the potential for new taxes on those last two groups.

"Instead of a broad-based tax increase that applies to everybody in the state, it only applies to low-income folks and retirees," he said. "I simply can't support those measures."

But others, including many Republicans, say the tax breaks for businesses must be recouped in the budget, one way or another.

"We wanna get down there and have a much better, stronger tax structure that supports business, and allows business to grow," said state Rep. Paul Opsommer, R-DeWitt.

And there are expected to be serious reductions in funding, including (1) Reduced pay and benefits for state workers; (2) Cuts to just about every state department, especially Corrections and the Department of Human Services; and (3) A potential pull-back in funding for non-mandatory services for Medicaid recipients.

In end, the governor, who will deliver his proposal alongside Lt. Gov. Brian Calley and budget director John Nixon at 11 a.m. Thursday at the Boji Tower, is expected to push for his budget to passed by June 1, and to leave the deficit at zero.

As for his rolled-up budget approach, which would force the legislature to award lump-sum amounts to each department and allow Snyder to then divy up how the departments spend that money -- both Republicans and Democrats have said they're not willing to relinquish that much power to the executive branch.


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