Snyder tries to temper tax cut fervor
LANSING, Mich. (AP) — Michigan tax revenue estimates are holding steady with earlier projections, leading Gov. Rick Snyder’s administration on Thursday to try to temper some lawmakers’ fervor for a state tax cut to coincide with fixing an unintended consequence of the federal tax overhaul.
Revised revenue estimates for the combined $23 billion school and general funds were little changed at the conclusion of a semi-annual meeting. Top Snyder officials said growth in future revenue in the next three budget years is largely already earmarked for increased road construction, previously enacted cuts to personal income taxes and business equipment taxes, and the eventual elimination of extra fees for traffic violations.
“It’s pretty tight,” said state budget director Al Pscholka, saying a combined $2.8 billion in tax relief is already on the books for the 2019, 2020 and 2021 fiscal years.
The Republican governor this week proposed a fix to ensure that taxpayers do not see their state income taxes rise. Because the state tax code is tied to the federal code, there is concern that the elimination of the federal personal exemption in the recent tax law also nixed the state exemption and will lead to a big tax hike if no action is taken.
While Snyder is proposing to quickly keep the state exemption intact and boost the exemption to $4,500 by 2021 to offset other affects — it is now scheduled to rise to $4,300 from $4,000 — some leading Republicans in the GOP-controlled Legislature want to go further.
Sen. Jack Brandenburg, of Macomb County’s Harrison Township, on Thursday proposed boosting the exemption to $4,800, calling it “meaningful relief.”
That would equate to slightly more than $21 for an individual or $85 for a family of four.
House Speaker Tom Leonard said his GOP caucus will “very soon” propose a tax cut that would go further than what Snyder wants. A proposed income tax cut was defeated by the chamber last year.
“We can afford to give our citizens tax relief,” he said.
Pointing to more than $200 million in leftover unspent funds from the last fiscal year, Leonard also prioritized quickly forgiving the debt for more than 300,000 drivers who owe outstanding state “responsibility” fees. Snyder has balked due to concerns about the budgetary impact.
“The time for excuses is over,” Leonard said.
Countered Snyder spokeswoman Anna Heaton: “The governor is open to having a discussion about it during the budget cycle.”
Snyder next month will propose the final budget blueprint of his eight-year tenure, and Democrats said he and majority Republican should focus on boosting infrastructure and education spending. House Minority Leader Sam Singh cited two state reports showing that schools are underfunded by $1,200 per student and that $4 billion more is needed for roads, bridges and other infrastructure.
“It’s deplorable and it’s time for us to take action,” he said.
During the revenue-estimating session Thursday, economists agreed that the general fund will grow 1.1 percent this year and 0.3 percent next fiscal year, reflecting modest economic growth offset by increased tax credits claimed under the old Michigan Business Tax system, a reduction in taxes assessed on business machinery and other factors such as shifting more general dollars to the transportation budget. The school aid fund is projected to grow 3.1 percent and 2.9 percent this year and next.
“The employment continues to improve. The economy continues to improve,” said state Treasurer Nick Khouri.