Rick Snyder releases 17-page executive budget memo, outlining deep cuts in spending
Gov. Rick Snyder's office has released a 17-page copy of the governor's executive budget recommendations for fiscal years 2012 and 2013, laying out plans for large cuts in funding to schools, universities and municipalities throughout the state.
Businesses would see tax breaks as the Michigan Business Tax is repealed and the state focuses on economic development.
Rick Snyder speaks at a town hall event last year. Snyder's office released the governor's executive budget recommendations this morning.
Ryan J. Stanton | AnnArbor.com
In his cover memo, Snyder repeats what he said in his State of the State address — that reinventing Michigan demands the state break "the bad habits of the past." Snyder says state government has been spending more than it receives for far too long, and a gaping budget deficit and serious problems have resulted.
"These are problems that cannot be fixed with accounting gimmicks or a one-time infusion of federal money," Snyder writes in his letter. "These are problems that require the resolve to make tough decisions. I have been clear that the months ahead will not be easy. They will involve difficult but necessary changes to bring Michigan’s budget into structural balance."
Snyder repeats his calls for shared sacrifice, and says his budget will lay the foundation for economic growth, job creation and a robust future for Michigan.
"It’s a responsible budget that cuts $1.8 billion and tackles other necessary reductions for a long-term solution to our problems, while providing a critical safety net for Michigan citizens in need and preserving core, essential services," Snyder writes. "It provides the course correction that is needed to help businesses succeed and create jobs."
The budget is being submitted in conjunction with a restructuring of Michigan’s tax system, including eliminating the Michigan Business Tax — to be replaced with a flat corporate income tax set at 6 percent. A scheduled reduction in the individual income tax rate from 4.35 percent remains and will be fixed at 4.25 percent under Snyder's plan.
Snyder notes in his proposal that Michigan is one of only three states in the nation that exempt most or all of pension income from state income tax. He says his plan will broaden the base of taxpayers by including all those earning private and public pensions.
Snyder is calling for adoption of his budget plan by May 31.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.
Comments
snapshot
Mon, Feb 21, 2011 : 7:45 p.m.
If a person has a $45,000 annual income from working, they pay taxes, why is the same pension income excluded? That's not fair to working folks.
Roger Roth
Sun, Feb 20, 2011 : 8:42 p.m.
Topcat says, "Many of the recipients of pensions own homes free and clear and have accumulated other assets over the years." I thought that's what we were supposed to do. You know, work hard, be good, keep your nose to the grindstone, help your neighbor, don't be foolish with your hard-earned money and maybe you'll do OK in retirement. It's pretty clear that those who can afford to run and get elected believe they know what 's best for everyone else. Rick's agenda is to advance the war on the middle class worker. Working class people all over the world are rising up. What the aristocracy doesn't understand is that a disenfranchised middle class will only eventually bleed the aristocracy dry. If they nurture a healthy, prosperous, happy middle class, aristocracy too will flourish. Greed! What Rick is telling us is that middle class workers have to pony up to help corporations give them jobs that the corps, after it becomes advantageous to their shareholders, can, because the fed encourages them, ship those jobs overseas and hang their workers out to dry, along with their health insurance and pensions. Americans are catching on to this ploy. The people who immediately benefit from this scheme are people like Rick. He's our millionaire governor. I know a new day is coming to America. If public employees in Wisc. are not treated with fairness, respect and dignity by their state government, then I will do all I can to mobilize my fellow public employees for solidarity. Our federal government has spent trillions on wars and bailing out criminals and the poor city workers in one small city in Alabama have not had a pension payment for months--because the city is out of money. This country has gone haywire. Yet, American Ricks are doing just fine. They're all set; it's you and I who have to get our government in financial order. BOSH!!! Congratulations to the MI electorate!
Sallyxyz
Sat, Feb 19, 2011 : 2:13 p.m.
Ann arbor guy says: "You have no right to complain that a Republican governor seeks to raise taxes on the poor and give big business tax breaks. This is standard operating procedure for the Republican Party and you should have known better before your cast your ballot." Not everyone on this forum voted for Snyder. Please stop making that assumption. Many did NOT vote for Snyder but still need to live with the result of his election. Many will also leave Michigan as soon as they can.
Sallyxyz
Sat, Feb 19, 2011 : 1:29 p.m.
Taxing pensions to pay for corporate tax breaks, while companies use those breaks to outsource and hire from abroad, is wrong, on every level. If the pensions are to be taxed, it needs to be done in a graduated manner, and not pull the rug out from under people who are already retired and counting on income to survive and pay bills. Not every retiree owns a paid-off home, some rent, some have mortgages, and property taxes are high in MI for those with paid off homes. Health care costs are increasing rapidly for retirees, medicare and out of pocket medical costs are rising rapidly, and with flat or minimal SS increases, pensions will be needed to pick up other costs of living. Allow the first 20,000 of a pension to be tax free for low income retirees (those living on under 30,000/year). Any new system of taxing pensions needs to be gradually introduced and those already retired need to be grandfathered in, not gouged at the expense of corporate tax breaks. The flat tax in MI needs to be changed. A better system is to have several levels of tax, lower percentages for lower incomes, for example, starting with 3% for low income, rising to 6% for high tax brackets.
tim
Sat, Feb 19, 2011 : 3:01 a.m.
What we don't have and need is real leader that can convince people that there are some really good things that are worth paying for ( like a world class education for our kids ). The way to pay for it is spread the financial burden to ALL- don't pick winners and losers - don't point fingers-- just inspire people to do/vote those changes in.
Grace York
Fri, Feb 18, 2011 : 8:20 p.m.
Although I agree that there should be some income tax paid on pensions (including my own), I'm concerned about changing rules in the middle of the game, taxing the entire pension, and the place where it is going. People who retired awhile ago, particularly the 70+ crowd, and those who were told to retire or be fired before they had saved enough, will be hurt the most. There needs to be a grandfather/grandmother clause to protect these people or only taxing pensions over $25,000. Using pensions to pay for business tax breaks won't go over very well. Seniors would prefer to invest in education. Perhaps a less-than-recommended pension tax could be combined with the forgotten 2% service tax or a slightly graduated income tax (to help the working poor) in order to pay for the business tax and education. The state has virtually privatized its public universities. Eliminating the tax credit for contributions to universities is a double blow.
ann_arbor_guy
Thu, Feb 17, 2011 : 8:49 p.m.
I certainly hope that none of the people on this message board that are shocked or disappointed in the Governors budget proposal voted for him. You have no right to complain that a Republican governor seeks to raise taxes on the poor and give big business tax breaks. This is standard operating procedure for the Republican Party and you should have known better before your cast your ballot. If you want to see where this is all headed just read the Gail Collins article in the New York Times today about Texas. The article is called "Mrs. Bush, Abstinence and Texas" and it will give you a glimpse of how constant reductions in education and State services will effect Michigan in the long run "....students in Texas currently rank 47th in the nation in literacy, 49th in verbal SAT scores and 46th in math scores". This is what the people of Michigan voted for and received, enjoy.
Roadman
Thu, Feb 17, 2011 : 7:01 p.m.
Governor Snyder is promoting economic growth via tax cuts to businesses. He has a GOP-controlled House and Senate that is likely to pass his proposed budget. The Michigan Single Business Tax is one of the greatest obstacles to economic progress in Michigan and will soon be gone. God bless Michigan and Governor Snyder!
denise1inaa
Thu, Feb 17, 2011 : 6:38 p.m.
There is no doubt we need to generate more jobs in Michigan but my bet is that the businesses will gladly accept the tax breaks, NOT hire in the state, and will outsource many of the jobs overseas in the cheap labor market.
rusty shackelford
Thu, Feb 17, 2011 : 6:12 p.m.
Part of the problem is that we have not agreed to fund things that we as a state have said we want. The best solution is not necessarily to cut things we need or want; it could also be to find new ways to pay for them. Here are a few novel ways to raise state revenue that would have a relatively minimal effect on the economy. Some would be easier to enact than others. I invite others to hit "reply" and list other ideas. 1. Raise sales tax by 0.5%. 2. Increase taxes on those making several times the median income. 3. A 1% or less tax on services. 4. Create toll to enter the state on I-94 and I-75. 5. Cut staff for legislature. Eliminate state Senate and grow the size of the state House by half the current size of the Senate. Make legislature part time with decreased salary and benefits. 6. Reduce allowable truck tonnage. Require permit (with fee) to exceed tonnage. MI currently has the highest allowable weight in the nation. 7. Charge sales tax on purchases made on the Internet. This would perhaps bring in the most money, and would be helpful to local businesses since it would prevent remote ones from cheating on sales tax. 8. $1 state surcharge on ticketed events. 9. Require smog checking; fine those who do not comply. 10. Increase state tax on gasoline by 1 cent. 11. Institute surtax on luxury items. 12. Decriminalize drug possession for personal use. Instead of paying millions to incarcerate drug users, fine them and increase the state coffers. 13. Small surtax on medical marijuana dispensaries. 14. Add one non-refundable cent to bottle deposits. Pay 11 cents, get 10 back. 15. Institute deposit for all bottles, not just carbonated beverages.
jcj
Thu, Feb 17, 2011 : 7:09 p.m.
I don't see 4 ,5,12 working. I don't have much problem with the others. I would certainly be for a city tax on U of M tickets.
rusty shackelford
Thu, Feb 17, 2011 : 6:44 p.m.
I meant for cars. Several states already do this.
Craig Lounsbury
Thu, Feb 17, 2011 : 6:40 p.m.
A good list, I could live with it. does #9 refer to cars? or industry? or both?
Basic Bob
Thu, Feb 17, 2011 : 6:07 p.m.
You got to love all the public service employees who identify themselves as the "poor" or the "working class", while collecting a salary way over the median, generous fringe, health care, and retirement benefits. Many possessing multiple degrees, fancy homes, and foreign luxury cars. The money spent on their lavish lifestyle should be redirected to the real poor and working class who have none of these things. That is the class warfare I want to see.
rusty shackelford
Thu, Feb 17, 2011 : 6:15 p.m.
What are you basing any of that on? I don't see any public employees calling themselves poor. If they possess fancy homes or luxury cars, it is due either to having no children or having a spouse in a more lucrative profession; they are middle class but are by no means wealthy. The solution isn't to make more people poor but to help those who are poor now better their lot.
Lovaduck
Thu, Feb 17, 2011 : 6:04 p.m.
I receive Michigan pension in a southwestern state, and I have to pay income taxes on it here. I was surprised that Michigan DOESN'T tax pension income, especially during this time of economic crisis. We don't however have high property taxes and Michigan does compared to here. Our schools are funded by goods and services tax, and state income tax. And as a result we have poor schools. It seems one gets it coming and going. I DO understand, at the risk of making Michiganians really angry, why Gov. Snyder may have to make this step. No, I'm not a conservative, and I'm not just saying "Suck it up, seniors", but we all have to make sacrifices. It seems that everyone wants everyone ELSE taxed, or THEIR programs cut---not "mine".
tim
Thu, Feb 17, 2011 : 6 p.m.
I hope Snyder proposes Vouchers as a replacement for de-funding public education--- parents need all the help they can get to supply their kids with a quality education. Don't get me wrong I like our public schools but that much cutting will be devastating. It would be better to find a private school for our kids, but who can afford it? Oh yea Snyder can
rusty shackelford
Thu, Feb 17, 2011 : 5:59 p.m.
I can see why cutting business taxes is a good idea in terms of creating new investment in the state. But that should have been coupled with a tax increase rich people, rather than middle class and working class seniors. A new tax bracket is needed for those making several times the median wage.
Oregon39_Michigan7
Thu, Feb 17, 2011 : 5:51 p.m.
My biggest problem is that businesses get a tax cut while the working class and middle class see our taxes go up. Everyone needs to pay their fair share, including businesses.
Allison
Thu, Feb 17, 2011 : 5:44 p.m.
Okay so you are cutting education and you are cutting from the Department of Corrections. If you want to keep kids out of jails you need a better education system, you can cut the DoC all you want but beef up the Education please!!! It's no use saying we will cut the business tax the CEO's will just hold onto that and keep things the way they are now. Educate our kids, keep them out of jail maybe they will bring more business to Michigan maybe they will start their own instead of ending up in jail or dieing or just not making it to college at all.
oldman
Thu, Feb 17, 2011 : 5:29 p.m.
Oh, I forgot to mention that everyone says education is the key to our future so what does Rickie do? Cuts education. Thanks
cinnabar7071
Thu, Feb 17, 2011 : 9:21 p.m.
Rusty I pay $5K per year for my sons private school, plus I also pay towards public schools. I don't mind that public schools cost so much more, it's that they under perform that has me mad.
limmy
Thu, Feb 17, 2011 : 6:10 p.m.
Why not? His children go to a private school. Why would anyone think he cares about public schools?
rusty shackelford
Thu, Feb 17, 2011 : 5:54 p.m.
District schools are allocated $8-$9k per pupil. Are there quality private schools that charge half that? I suppose maybe parochial middle schools if you're a member of the parish, but I honestly can't think of a private high school that charges anything less than $9k per year in tuition; most charge much more.
cinnabar7071
Thu, Feb 17, 2011 : 5:42 p.m.
Private schools educate better for about half the cost. And your point was?
Bertha Venation
Thu, Feb 17, 2011 : 5:27 p.m.
Not really what I was hoping for.
Nathan Bomey
Thu, Feb 17, 2011 : 5:26 p.m.
Here's my developing story on the tax elements of Snyder's proposal. <a href="http://www.annarbor.com/business-review/rick-snyders-budget-proposal-includes-massive-cuts-to-business-taxes-credits-for-film-high-tech-batt/">http://www.annarbor.com/business-review/rick-snyders-budget-proposal-includes-massive-cuts-to-business-taxes-credits-for-film-high-tech-batt/</a>
oldman
Thu, Feb 17, 2011 : 5:26 p.m.
How about we give business a tax break based on how many jobs they create. The more jobs the bigger the break. Taxing folks on a fixed income is real smart. When money isn't an issue for you I guess it doesn't matter.
Mush
Thu, Feb 17, 2011 : 5:24 p.m.
I read through the budget. The most troubling item to me is the $1.8 billion the governor proposes for the Department of Corrections. That's more than he's proposing for higher education. He wants to close an adult prison, close a juvenile prison and reduce the number of prisoners in a second juvenile prison, but he's not going after the source of the problem: prison sentences that are way too long and cost tax payers way too much. The vast majority of criminals in our state prisons are there for non-violent crimes. There is absolutely no evidence that long prison sentences reduce recidivism. If minimum prison sentences were reduced, fewer criminals would qualify for state incarceration and local governments would have to get more creative in how they deal with their criminals, such as implementing mandatory work programs rather than jail time they also can't afford. In terms of the percent of population in jail or prison, Michigan has the highest rate among Great Lakes region states. For comparison purposes, Michigan, like the rest of the U.S., incarcerates its population at six times the world average and seven times the rate in Canada and Australia. If long prison sentences actually made us safer, I'd say it's worth the cost. But, they don't and way too much of our hard earned money is going into what is essentially a babysitting service where criminals spend their days teaching each other how to be better criminals.
Basic Bob
Thu, Feb 17, 2011 : 6:21 p.m.
I agree that it is too much. But it is better than the $2 billion they spent in 2009. Annual cost for maximum security inmate: $41,000 Secure level I: $24,000 Community community supervision: $2,100 Source: MDOC 2009 Annual Report
cinnabar7071
Thu, Feb 17, 2011 : 5:48 p.m.
"U.S., incarcerates its population at six times the world average" Do death sentences have any do with these #'s
skfina2
Thu, Feb 17, 2011 : 5:11 p.m.
So the governor wants shared sacrifice? Among whom? Because as I see it, pensioners will take a hit, public employees like me will take a hit, but the wealthy? Um....not so much. Is Magglio Ordonez giving up any of his $17.8 million salary? Nope. Is Rip Hamilton coughing up any of his $12.65 million? Again, nope. How about Matthew Stafford? Giving up any of his $9.5 million? No way, Jose. Is GM CEO Ed Whitacre sacrificing any of his $9 million for the common good? Heck, no. Shared sacrifice my patootie. Let's call it what it is: an assault on the working class, and a free ride for the rich. Thanks, Rick! Can I have my vote back, please?
John B.
Thu, Feb 17, 2011 : 6:54 p.m.
None of his proposals is in any way surprising. If you thought he would do otherwise and voted for him, that is your own fault, I'm afraid. We have one Political party that is by, of, and for the top 2%, and another party that tries to represent the other 98% of us, but it is an uphill struggle in an environment where lies, if repeated often enough, can become truth. (Remember where else that worked oh-so-well)? It's really that simple, when you boil it all down to its essence and eliminate the (rather abundant) noise.
bugjuice
Thu, Feb 17, 2011 : 5:08 p.m.
Where's the "shared sacrifice"? I guess having to wait a little longer for a tee time with Rick and Mike Finney is considered sacrifice.
sh1
Thu, Feb 17, 2011 : 5:04 p.m.
So interesting to note regular posters here who have been anti-tax all along finally found a tax they like. And they were so worried we were going to tax the rich. It must be a relief.
demistify
Thu, Feb 17, 2011 : 5:01 p.m.
"It's a responsible budget that cuts $1.8 billion...." That sounds like a really good start on dealing with a persistent deficit. Snyder needs to heed the old advice: "When you find yourself in a hole, stop digging!". He proposes to cut the business tax, to reduce the income tax. The only revenue enhancer he mentions is soaking the retirees (not in the same ball-park). It is orthodox Republican class warfare: spare the rich, soak the poor, and trickle-down economics will solve everything.
a2grateful
Thu, Feb 17, 2011 : 4:56 p.m.
We need jobs. Lower business taxes should help spur our economic recovery. 47 states in the US subject private pensions to income tax. Given our circumstance, it seems reasonable that Michigan makes it 48. Social Security income remains untaxed under the plan. Health care reform for public employees is long overdue. Private sector employees have been subjected higher deductibles and copays for decades. Meanwhile, support for those in dire financial straights continues. Over 20% of our population will continue to receive state funded health care and food. 20%! Wow . . . there are many hurting people here! Question: If we don't revise our budget, what other alternatives are there?
tim
Thu, Feb 17, 2011 : 6:02 p.m.
Universal care would reduce those costs by 40% for both public and private employees
Mush
Thu, Feb 17, 2011 : 5:42 p.m.
"Lower business taxes should help spur our economic recovery." Maybe, if business owners use the money to expand their business. American businesses are awash in cash, stock value is soaring, investor return is soaring, but businesses haven't expanded or invested. The only thing lower business taxes will accomplish is tax increases for others.
skfina2
Thu, Feb 17, 2011 : 5:15 p.m.
How about raising revenue by increasing taxes on the wealthiest of our citizens? There's a thought.
bugjuice
Thu, Feb 17, 2011 : 5:13 p.m.
"Should help"? In your wildest dreams, maybe. There is no evidence whatsoever that tax cuts create jobs. In fact, the Bush tax cuts for the wealthiest two percent in our country resulted in the fewest jobs under any president in history while increasing the deficit. Trickle down economics is a Republican myth. Cutting corporate and income taxes for the wealthy not only increases the deficit, there is no incentive for corporations to reinvest. The only incentive is to pay bigger profits to shareholders and CEO's
cinnabar7071
Thu, Feb 17, 2011 : 4:53 p.m.
The days of our children paying our way is over, if you don't have a job I suggest you get one.
David Briegel
Thu, Feb 17, 2011 : 4:51 p.m.
Gary is right. The hired hands to pay taxes. They need to be beholden to us. So should churches be taxed! Why didn't you know what his plan was before you voted for him?
David Briegel
Thu, Feb 17, 2011 : 4:55 p.m.
hired hands NEED to pay taxes.
Oregon39_Michigan7
Thu, Feb 17, 2011 : 4:47 p.m.
Reinvent Michigan by slashing education, raising taxes on the working and middle class, and cut taxes for business??
Top Cat
Thu, Feb 17, 2011 : 4:42 p.m.
There is not now and never has been a justification for pension income being tax free. It exists in MIchigan because the greedy geezer lobby happened to get lucky. Many of the recipients of pensions own homes free and clear and have accumulated other assets over the years. Low income does not equate to "poor" for many elderly. This is one (of many) sacred cows that need to be gored.
Hot Dice
Thu, Feb 17, 2011 : 6:16 p.m.
The greedy geezer lobby stole my lunch money and told me to get off their lawn!
bugjuice
Thu, Feb 17, 2011 : 4:32 p.m.
Raise taxes on the poor, pensioners and working people. Lower taxes on business. Why am I not surprised.
Gary
Thu, Feb 17, 2011 : 4:31 p.m.
If the governor is looking for new sources of tax revenue, he should consider taxing politicians on the large contributions they receive from businesses. Those "contributions" are actually payments for services rendered and should be taxed as income.
Kafkaland
Thu, Feb 17, 2011 : 4:20 p.m.
A quick reading of the full document seems to indicate a major shift in tax revenues by cutting business taxes and replacing the lost revenue with taxes on retirement income, like private or public pensions. So Snyder makes the elderly on fixed incomes pay for bigger corporate profits. This shift dwarfs in absolute dollars all the otehr cosmetic changes to the budget.
Ryan J. Stanton
Thu, Feb 17, 2011 : 4:15 p.m.
Watch live here now: <a href="http://www.clickondetroit.com/video/26899575/index.html" rel='nofollow'>http://www.clickondetroit.com/video/26899575/index.html</a>