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Snyder Budget Plan Calls For Higher Gas Tax, Education Bump

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LANSING (WWJ/AP) - Gov. Rick Snyder has proposed a $50.9 billion budget that he says is responsible and focused on the future.

Snyder on Thursday presented his plan raise state gas taxes and vehicle fees, expand Medicaid to more uninsured adults and double the number of 4-year-olds in a preschool program for at-risk kids.

Speaking to state lawmakers, Snyder said the federal government is a mess and financial issues in Washington are a threat to Michigan’s future. “We don’t print money like the federal government. We need to live within our means,” Snyder said.

“It’s clear that Michigan is on the comeback,” Snyder said. “We are creating more jobs, our unemployment rate has improved, personal income for families is increasing, and our population is growing again. The measures we have taken to fix our tax system and get our budget in long-term balance are paying dividends. I am pleased to recommend a budget that keeps the momentum moving in the right direction.”

 - CLICK HERE to view a budget proposal summary provided by the governor’s office -

The Republican governor’s spending plan, which needs approval from the GOP-led Legislature, also calls for socking more money in a rainy day fund, a bigger state police force and a modest 2 percent boost in spending on K-12 schools, universities and community colleges.

In providing a more detailed plan to fix ailing roads and bridges, Snyder proposed increasing the 19-cents-a-gallon gasoline tax and 15-cents-a-gallon diesel tax to 33 cents for both, with the tax fluctuating after a couple years depending on fuel consumption and construction costs. He is dropping previous calls to replacing the per-gallon tax with a levy at the wholesale level.

Vehicle registration fees would rise, too, under Snyder’s plan. The typical family overall would pay $120 per vehicle more each year in gas taxes and vehicle fees – a tough sell even if people recognize roads are in bad shape.

Snyder and business groups say Michigan will be stuck with much larger repair bills in the future if lawmakers do not act.

Snyder also formally recommended making 470,000 more residents eligible for Medicaid – a move he said would initially save the state $200 million a year. That, too, is looked at with skepticism by Republican legislators who worry the federal government will renege on a promise to cover 100 percent in the first three years, phasing down to 90 percent in 2020 and after.

The governor said the state would save on Medicaid because more people who now receive mental health services and medical care from state-funded programs would instead be covered with federal money. He called for setting aside $100 million a year of those savings so Michigan can pay 10 percent of the cost for new enrollees down the line. He said the expansion would effectively cost Michigan nothing until 2035.

“This isn’t about just moving dollars around. This is actually substantively improving an outcome of better care at a lower cost,” he told The Associated Press on Wednesday.

Snyder also wants to boost the number of low-income children receiving dental care. His proposal would cover 70,500 children in Ingham, Ottawa and Washtenaw counties. Currently more than 440,000 children in 75 of the state’s 83 counties are enrolled in the program.

Public schools, universities and community colleges would get 2 percent more overall funding in the fiscal year that starts Oct. 1.
He asked lawmakers to double enrollment of 4-year-olds in a preschool program for kids at risk of failing. Over two years, the number of participants in the Great Start Readiness Program would rise from 32,000 to 66,000.

Democrats and school officials will likely support Snyder’s call for more early childhood funding but complain that overall education spending is not going up enough. Snyder and GOP legislators cut education funding significantly in 2011 and slightly increased it last year – after a few years when it was propped up with federal stimulus money.

K-12 districts that now get the minimum amount of aid would receive $34 more per student this fall, with the minimum grant being raised from $6,966 to $7,000. Mid-level and wealthier districts would not get the extra money but could qualify for additional funding if they meet performance benchmarks (up to $100 per pupil) or “best practices” ($16 per student) – incentives similar to what the governor included in his last budget.

Though the focus traditionally has been on per-pupil funding levels, the Snyder administration says that is not the best gauge of school spending because of a change in paying for retirement benefits for school employees. A 2012 law limits the portion of districts’ payroll required to go toward the retirement system, so Snyder’s administration is budgeting to spend $430 million for excess liabilities – or the equivalent of $250 per student.

Districts have grappled with mandatory retirement payments eating more of their budgets.

The amount each university and community college gets would depend on its ability to meet performance standards – such things as graduation rates, how much research and development they do and the number of graduates in high-demand degree programs.

Snyder also called for higher hunting and fishing licenses fees, $25 million in tax incentives for movie makers – half what is allocated in the current budget – and hiring a net 107 more state troopers. Though the budget generally does not specify where new troopers must be based, Snyder likely will decide to again target crime-ridden Detroit, Flint, Pontiac and Saginaw.

He proposed putting $75 million more in the rainy day fund, which would total $580 million. It was near empty when Snyder took office.

“This is not the time to go back to the bad habits that caused the financial messes of the last decade,” Snyder said.

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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