LANSING, Mich. (AP) — Gov. Rick Snyder on Wednesday proposed a $52 billion election-year budget that includes a tax cut targeted to low- and moderate-income residents and modest spending increases on education and road upkeep while asking lawmakers to help shore up bankrupt Detroit's pension plans.
The Republican governor, in a break from GOP and Democratic lawmakers pushing to use a $1 billion surplus for broader tax relief, instead called for a tax cut targeted to households with less than $60,000 in annual income. It is a partial reversal from when Snyder and Republicans made fewer people eligible for the Homestead Property Tax Credit in the 2012 tax year as part of slashing business taxes.
"We have a surplus now. We have the opportunity to give something back. It's really aimed at people who are those hard-working folk," Snyder told lawmakers at the Capitol who sit on budget committees.
The income tax credit worth up to $1,200 is available to individuals with household "resources" — generally income — below $50,000 and is less generous to those making between $41,000 and $50,000. It is more generous for seniors and the disabled.
Snyder wants to permanently raise the income cutoff to $60,000 — still short of the past $82,650 threshold — and change a formula so a larger percentage of property taxes are refunded for those who qualify for the break. An estimated 1.3 million taxpayers would pay $103 million less in taxes in year one, equaling about $79 per taxpayer affected.
Refund checks would be mailed this summer since tax season already is underway and the cut would be retroactive to the 2013 tax year.
Democrats panned the governor's budget proposal, saying his tax cut and spending levels pale in comparison to past decisions to raise taxes on individuals to offset reduced business taxes and cut funding to public universities and the traditional per-pupil grant for K-12 school districts. Snyder again defended his K-12 budget, where much of a nearly 3 percent rise in state-based funding would go toward pension and retiree health care costs.
"Now the governor thinks he can put his campaign hat on and throw out a bunch of paltry 'increases' and feel-good proposals to win over voters," said Senate Minority Leader Gretchen Whitmer, D-East Lansing.
Details of Snyder's tax plan were probably the most anticipated piece of his budget — both because some majority Republicans already have sought to build support for dropping Michigan's income tax rate for good and Democrats, including gubernatorial candidate Mark Schauer, have tried reminding voters that they are paying higher taxes because of the governor.
Senate Finance Committee Chairman Jack Brandenburg, a Republican from Macomb County's Harrison Township, said he was "very disappointed" with Snyder's tax plan and that "average" people deserve more tax relief because he thinks the economy will continue to improve. Lt. Gov. Brian Calley, though, argued lower- to middle-income earners would get more help under the governor's more targeted plan.
Snyder has urged caution on cutting taxes because much of the $1 billion in extra revenue over three years is temporary and not excepted on an ongoing basis.
The tax debate will play out in coming months in the Legislature, whose leaders want to finish budget work by early June. The next fiscal year starts in October.
The budget would spend about 2 percent, or $1.2 billion, more than in the current year. Highlights include:
— a 6 percent, or $78 million, operations funding increase for Michigan's 15 public universities. Their funding is down one-third from seven years ago and was cut significantly in Snyder's first year. Though university aid has risen and Snyder's increase would be the largest on a percentage basis in 14 years, funding remains below where it was when he took office. The schools could increase tuition no more than 3.2 percent or not get all their funding.
— a 3 percent, or $322 million, increase in state-based K-12 funding.
— another $65 million to free up 16,000 more publicly funded preschool slots.
— $5.4 million to provide dental coverage to 100,000 low-income kids in Macomb and Kalamazoo counties. About a half-million enrollees under age 21 now qualify in 78 counties. Coverage would remain unavailable to about 400,000 poor kids in heavily populated Wayne, Oakland, Macomb, Kent and Kalamazoo counties.
— roughly $250 million in money from the surplus for road and bridge maintenance. Legislators did something similar last year after Snyder's propose gasoline tax and vehicle registration fee hikes stalled.
Snyder's proposed 2014-15 budget: http://1.usa.gov/1irfTHH
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