LANSING (WWJ/AP) – Michigan Governor Rick Snyder has unveiled his first budget, a $45 billion cost-cutting plan he says includes tough decisions that will help fix the state’s massive budget shortfall.

The first-year Republican governor made his budget presentation Thursday morning to a joint session of the House and Senate Appropriations committees and the Senate Finance and the House Tax Policy committees.

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Snyder said many people will have to make sacrifices in the budget, and to show he will share in that he plans to take a $1 salary this year. Snyder is calling for spending cuts for schools, universities and local governments and ending many personal tax breaks.

The budget also would eliminate before- and after-school programs, cut hundreds of state jobs and ask public employees for concessions.

Political insiders believe it could be a tough sell for the governor.

This includes former Senate Majority Leader Mike Bishop who tells WWJ that some of Snyder’s ideas might not be as popular as he hopes — in particular, the pension tax issue and the Michigan Business Tax.

“The private pension tax proposal that he has is one that the legislature has discussed in previous occasions and has not had the political desire to do that. So, that’s one he’ll wrestle with,” says Bishop.

As for the replacement of the Michigan Business Tax, Bishop says, “The replacement of the MBT is an issue that’s going to have to be resolved in a way that is acceptable to folks. The MBT has become the target of most of the criticism out there, and I do believe that whatever he puts on the table is not going to be as popular as he might think it might be.”

WWJ Lansing Bureau Chief Tim Skubick says the key points of the budget will make a lot of people cringe. From a $470 per pupil cut across the board for every school district in the state and universities taking a 15-percent hit, to aid for cities being cut by 33-percent and the film tax credit being frozen at $25 million.

“This stuff is explosive stuff,” said Skubick.

According to Skubick, Governor Snyder will present two budgets – one for education and a second that will cover everything else.

A copy of the $45 billion budget plan shows the spending plan includes $1.2 billion in permanent spending cutsThose cuts will affect public schools, universities, local governments and state workers. 

Here are the main points of the plan:

–The proposal includes cutting public schools by 4 percent, or about $470 per student.

–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.

–The budget would eliminate before- and after-school programs, cut hundreds of state jobs and ask public employees for benefit or wage concessions.

— When it comes to state employees, many are going to be asked for $180 million in cuts, which would have to be negotiated with unions.  The plan also would eliminate some state jobs, including 300 field worker positions in the Department of Human Services, six trial court judgeships and an undetermined number of state police posts. It would privatize some state jobs, such as those of the cooks and store clerks at prisons.

–The plan would change the state’s corporate tax structure so only large “C” corporations pay business taxes. The move would give businesses a $1.8 billion tax break. 

–Snyder’s 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.

–The budget proposal also eliminates or reduces some business tax credits.  For example the amount of tax credits for companies that make movies in Michigan would be capped at $25 million. There currently is no limit.
–The budget 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.

The Associated Press contributed to this report.

Comments (11)
  1. John says:

    Is this Governor out of his mind? Has he not noticed the mass exodus of graduating college students and laid-off auto workers/ITworkers from this state? Now he wants to tax the majority of the people left here – Senior Citizens. AND, he wants to slash education spending, which will basically bankrupt most, if not all, of the school systems out there. AND, he wants to do away with the Michigan charitable donation tax deduction, which means that I will stop donating to Michigan charities. THIS is what I voted for? I say to Governor Snyder – put your money where your mouth is, and slash YOUR pay and benefits at least 50%. I haven’t had a raise in pay since 1999, and have taken 5 pay cuts since then. I’ve seen most of my coworkers displaced by outsourcing. My father is a GM retiree, and his pension already took a major hit when GM filed bankruptcy – now you want to tax what’s left? I heard that Governor Snyder does not call himself a career politician, and he doesn’t care if he is in office only one term – he may get booted out of office if he continues like this.

    1. Jeff says:

      Maybe you don’t deserve a pay raise.

    2. TaterSalad says:

      Settle down John. Greed is talking! Keep the taxation fair across the board and maybe the state can get out of the Grandholm mess because she just “kicked the can down the road” for the next governor. Do you want to end up like California, New York or New Jersey or Wisconsin. These are “heavy” entitlement states and now the nail has come to a head.

  2. Bill says:

    Kill the grandma tax!

  3. TaterSalad says:

    As a retiree with a pension and living in Michigan, I do not have any problems with taxing my pension as long as it is a fair taxation across the board with all sources being brought to the table. Keep it fair and the whining will win over greed. If it is NOT fair across the board, then we have problems!

  4. Randy says:

    How in one breath can you say NO NEW TAXES and then propose TAXING RETIREES PENSIONS ?

  5. george says:

    Because Michigan is one of only 4 states that do not tax pensions, it is a repeal of a tax break and not a new tax!

  6. Ron says:

    According to Kiplinger, there are at least thirteen states other than Michigan that do not tax pensions and two more that tax only a portion of pensions. Imposing a tax on current pensioners is tantamount to changing the rules of the game in the fourth quarter.

  7. Worried parent says:

    I am concerned for our schools. If a school district files for bankruptcy,due to major cuts then an emergency financial advisor can take over the district. I do not think these people will have our children’s best interest in mind. I have not been impressed with “Rob Bob” Teacher can lose their bargaining rights..and I truly beleive you get what you pay. I don’t want a scab making 10 bucks an hour teaching my kid. I moved to an affluent area and pay high taxes for a reason…to ensure my children get an exemplary education. Some cuts, I can understand, but this is way too much. How about our ISD’s taking the big cut? Why can’t special education be cut instead. All children deserve a basic education but the frills or extras sadly can’t be afforded by our state.

  8. KC says:

    Tatersalad, Wisconsin is not a “heavy” entitlement state! Don’t speak unless you know the facts.

  9. lisa says:

    How do we stop this guy. Is there anyone I can write to?

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