Gov. Jennifer Granholm: Freeze on tax credit considered to save Promise scholarships
Gov. Jennifer Granholm and students from Eastern Michigan University and the University of Michigan rallied for support of the Michigan Promise scholarship today.
Tom Perkins | For AnnArbor.com
A freeze on an income tax credit that helps struggling families is being considered to save the merit-based Michigan Promise scholarship program.
Gov. Jennifer Granholm offered up the solution at a press conference today following a rally with students at Eastern Michigan University to drum up support for restoring the popular scholarship program.
The Michigan Promise program had provided up to $4,000 to in-state students in merit-based aid before it was cut out of the state budget Oct. 30 to save $140 million.
To save it, the state may freeze the Michigan Earned Income Tax Credit, a refundable federal tax credit available since 2008 that "helps working people achieve economic stability and security," according to the Michigan.gov Web site.
Gov. Jennifer Granholm signs autographs for EMU students Emily Gillingham and Antonio Cosme following the rally.
Tom Perkins | For AnnArbor.com
"That's a freeze on a scheduled tax cut, not an increase," she said.
At the rally, Granholm told an audience of about 140 from EMU, the University of Michigan and Washtenaw Community College that the extra tuition help will boost college access. She said the resulting graduates will help remake the state's economy, which is reeling from the loss of auto industry jobs.
She told students to make their voices heard.
"It's not too late to save the Michigan Promise, and I'm really here to ask for your help," Granholm said. "This promise should be kept, but we can't do it alone."
The stop was part of a tour of state colleges Granholm began last week to drum up support for the scholarship program.
Terry Stanton, spokesman for the Michigan Department of Treasury, said the credit was first available for returns filed in 2009. People who were eligible recieved a straight 10 percent refund based on income claimed on their federal tax return.
For the 2008 tax year, 706,600 returns claimed $144.6 million in Michigan EITC.
The Michigan EITC was scheduled to go to 20 percent for 2009 returns; Granholm is proposing keeping it at 10 percent or 12.5 percent, which would save between $125 million and $166.5 million.
Student leaders who addressed the audience before Granholm's speech encouraged their peers to vote and contact state senators. The Senate cut the program out of the higher education budget bill Granholm signed.
Four out of five students who spoke about the personal impact of the loss of the Promise Scholarship were low-income students paying their way through school. But only 300 of 2,400 EMU students who were due to receive Promise cash before the program was cut qualify for the federal, need-based Pell Grant, officials said.
Granholm also addressed "brain drain," the habit of Michigan college students to leave the state after graduating from college. She said progress is being made toward developing new sectors - like film, tourism, homeland security and alternative energy - to retain more college graduates.
Juliana Keeping covers higher education for AnnArbor.com. Reach her at julianakeeping@annarbor.com or 734-623-2528. Follow Juliana Keeping on Twitter
Comments
Joel A. Levitt
Tue, Nov 24, 2009 : 10:37 a.m.
Our state urgently needs a better educated citizenry and relief for our suffering neighbors. That is to say, our state government needs more money and needs it before people decide that our only distinguishing feature is that Michigan starts with the same letters as Mississippi. More money means more taxes, but only from those who can afford to pay, not from those who suddenly unemployed, nor from businesses that are struggling to keep afloat. The only sensible response to our situation that I have heard proposed is to do away with our current tax system (sales and other excise taxes, property taxes, the flat rate income tax and the single business tax) and replace it with a graduated income tax.
Blue Eyes
Tue, Nov 24, 2009 : 8:49 a.m.
It's great that the State made a promise to the students. Unfortunately, just like parents, you can't always keep promises. Many families need that credit to keep food on the table and a roof over their heads way more than the students need it. I would love for my daughter to have that $4,000 for school but if she doesn't have a place to live and something to eat, it won't work anyway. The students can always get loans/grants/ scholarships or even a part time job.
KJMClark
Tue, Nov 24, 2009 : 7:41 a.m.
The "promise" scholarship was a bad bit of politics from the start. They should have known we wouldn't be able to keep paying for it and never made such a "promise". I can't believe someone thinks it makes more sense to take promised money away from poor families instead, particularly in this economy. What they should consider is a tax credit for recent college grads that stay in Michigan. However, right now, they should forget the whole idea and help families that need it. New programs should wait until tax revenues are increasing again.
FreedomLover
Tue, Nov 24, 2009 : 4:29 a.m.
Government spending at all levels is unsustainable. Check out Recovery.gov. Federal "stumulus" spending on education is unbelievable. EMU has been awarded grants totaling over one million dollars. I bet if they want to keep the students they can find a few bucks to help out the really needy. Maybe some of these students will need to transfer to a less expensive community college.
Ignatz
Mon, Nov 23, 2009 : 6 p.m.
Let the Federal Government pay for higher education, after they get out of the military.
ybecuz
Mon, Nov 23, 2009 : 5:54 p.m.
lets see.. I work, I pay taxes which support all of the public higher education institutions which then use my money to buy properties that are removed from the tax rolls.I then can't afford the 20k tuition each year for my child. Because I work and pay taxes I don't qualify for any of the grants or low cost loans available to those that aren't working or pay taxes. Oh yea, my taxes also pay for the earned income credit in which people receive tax refunds greater than any taxes paid in. If only my child could run the 40 in 4.3, all my problems would be solved.
Macabre Sunset
Mon, Nov 23, 2009 : 4:56 p.m.
The state also made a promise to spend taxpayer money wisely and effectively. I think keeping that promise comes before adding to the entitlement burden.
Thick Candy Shell
Mon, Nov 23, 2009 : 4:08 p.m.
Or, maybe, everyone should pay for college by them selves. I got $0 in grants because my parents owned a business. It didn't matter that they made very little money on said business (less than $40,000 per year). I instead got loans and guess what, I paid them back over the course of 10 years. Deal with it! No one is deserving of anything!
BobbyJohn
Mon, Nov 23, 2009 : 3:19 p.m.
A promise was made, and not enacting a new tax credit makes more sense than breaking a promise that state residents counted on. I appreciate the governor's trying to work out a way to make sure the state lives up to its promise.
Macabre Sunset
Mon, Nov 23, 2009 : 1:41 p.m.
1bit, that's the kind of innovative thinking that completely escapes our state government. Sadly, there really aren't jobs for recent college graduates here. Jenny's better off bribing the film industry to make movies here at our expense. I think she's ready for her close-up.
halflight
Mon, Nov 23, 2009 : 1:11 p.m.
Yes, let's subsidize the college education of the middle class on the backs of the working poor. The "Michigan Promise" is just another way for Ms. Granholm and her allies to purchase the votes to keep themselves in power.. Granholm continues to believe she is better able to identify the growth sectors of the economy than Michigan's business community. Quite arrogant, as she has NO business experience. Instead of extending tax credits to flashy Hollywood projects and highly speculative "alternative energy" experiments, how about improving the overall tax and regulation environment in Michigan, and letting us decide where the best economic opportunities lie?
Macabre Sunset
Mon, Nov 23, 2009 : 12:58 p.m.
You can't make government big enough to provide everything for everyone. That's why the more Jenny does, the more jobs leave the state. The state already subsidizes higher education. Perhaps she shouldn't be desperately trying to reward parents who didn't make the decision to provide that promise on our own when it was time to start that college fund. We all have to make budgeting decisions. There is no reason a family can not plan for an in-state education if it's made a priority early enough. And I don't want to pay for the families that don't.