By David Eggert, Associated Press
LANSING (AP) – Gov. Rick Snyder will propose growing Michigan’s savings account to $1 billion, even as Republican lawmakers push for an income tax cut.
State budget director Al Pscholka told The Associated Press on Tuesday that Snyder will ask to deposit a “sizable” $260 million to the budget stabilization fund — also known as the rainy day fund — in the next fiscal year. It would be the largest deposit since Snyder’s first year in office, when the fund had just $2 million.
The Republican will unveil his budget plan Wednesday. It will include no tax cuts.
Pscholka said it is smart to save money because of “one-time” tax revenues and looming budget pressures.
“It’s good conservative budgeting,” he said in a phone interview, adding that saving more and addressing liabilities in the Public School Employees Retirement System are “maybe not the sexiest” but are “very smart things.”
Lawmakers voted to permanently shift general funds to road and bridge repairs starting in 2018 as part of a 2015 transportation funding deal. Other squeezes include Medicaid expansion costs and the phase-out of business equipment taxes.
Snyder also will propose directing $1.2 billion to the teacher retirement system and continuing a formula whereby lower-funded K-12 districts get double the increase in state aid that higher-funded districts receive.
GOP legislators have called for gradually eliminating Michigan’s 4.25 percent income tax. Pscholka said the governor on Wednesday will note tax and fee reductions already made under his watch. They include business tax overhauls, a cut for people who trade in their car or boat for a new one and the elimination of extra “driver responsibility” fees imposed on people driving without insurance or proof of insurance.
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