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Snyder asks for ‘shared sacrifice’

Budget proposal doesn’t spare schools, seniors

February 17, 2011
Daily Press

LANSING (AP) - Gov. Rick Snyder is asking for "shared sacrifice" from everyone from senior citizens to state workers, public schools to city halls as he seeks to make up a huge budget gap with a massive budget overhaul.

Even before Snyder presented the plan to lawmakers Thursday, he was defending it, saying it would put the economically-troubled state on sound financial footing.

"We're getting rid of all the special-interest kind of items," he said. "This is approaching it as a total solution."

Snyder provided The Associated Press with a copy of the $45 million budget plan Wednesday evening. It includes $1.2 billion in permanent spending cuts to help deal with a $1.4 billion shortfall.

It would cut spending for public schools, universities and local governments while ending many personal tax breaks. It would eliminate before- and after-school programs, cut hundreds of state jobs and ask public employees for benefit or wage concessions.

The plan which is for the fiscal year that starts Oct. 1, also would drastically change the state's corporate tax structure so only large "C'' corporations pay business taxes.

Fact Box

Budget proposal details

Drops the individual income tax rate from 4.35 percent to 4.25 percent 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 budgeted $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.

The move would give businesses a $1.8 billion tax break, larger than the $1.5 billion Snyder originally estimated the switch would cost.

His proposal adds $1.7 billion to revenues by eliminating tax breaks for seniors and low-income workers 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.

Michigan currently has the nation's motion generous tax credits for seniors, and Snyder's proposal calls for eliminating the exemption on their pensions. That perk costs the state nearly $900 million a year. Snyder's plan wouldn't tax Social Security payments.

Some business tax credits would also be reduced or eliminated.

For example, Snyder would cap the amount of tax credits for companies that make movies in Michigan at $25 million. There currently is no limit.

Snyder would halt a scheduled decrease in the state income tax rate to keep the state from digging itself into a bigger hole. He would allow it to drop from 4.35 percent to 4.25 percent on Oct. 1, but would change the law that requires the rate dropping to 3.9 percent in future years. The scheduled decrease ultimately would have cost the state $700 million annually.

He proposes cutting public schools by 4 percent, or about $470 per student. School districts have barely kept up with inflation in the past eight years and were counting on getting more money because of an anticipated surplus in the school aid fund.

The state's public universities would get 15 percent less, but $83 million would be 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.

"It's forcing universities to be efficient," Nixon said.

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, which would have to be negotiated with unions. 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 also would see their state payments decreased. Most depend on the state for much of their funding other than what they can raise in property taxes. 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.

 
 

 

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