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 cuts. Those 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.