Governor Snyder's $56 billion budget spends more; GOP lawmakers seek tax cut

By David Eggert
Associated Press

LANSING (AP) - Michigan Gov. Rick Snyder on Wednesday proposed a $56 billion state budget that would spend more on education and sock additional money into savings but include no income tax cut that his fellow Republicans in the Legislature want.

The proposal, which has money to respond to Flint's lead-contaminated water, would significantly increase funding for schools with at-risk students and make a key change in how aid is allotted to K-12 districts.

Both majority Republicans and minority Democrats were generally receptive to the overall blueprint, which will be altered before it likely reaches the second-term governor's desk in June. Snyder said the plan was designed to address long-term retirement liabilities while investing in key areas such as education and job training and keeping in mind future budget pressures linked to past tax cuts and Medicaid expansion cuts.

"It's about taking care of the people of Michigan," he told the House and Senate budget committees.

While Snyder later told reporters he would not be "throwing gauntlets down" and dismissing a tax cut out of hand, he said legislators "need to propose what you're going to cut or (how) else you're going to raise revenue. As a practical matter, there's significant tax relief ... that has taken place already and there's pending ones coming."

The $56.3 billion budget for the fiscal year starting in October would spend 2.5 percent more than in the current year. Major components include:

- A 1 percent overall boost in the school aid budget, to $14.3 billion, which Democrats said is too low and which Snyder said is a record amount. Districts would receive between $50 (0.6 percent) and $100 (1.3 percent) more for every student, plus - in a wrinkle - an additional $50 for each one in high school. Snyder said it costs more to educate older students. He also proposed $150 million, or 40 percent, more to cover low-income, academically at-risk students and to allow another 131,000 such children to be factored into funding.

Advocates of publicly funded charter schools - which tend to run elementary schools instead of high schools - criticized giving schools more for high school students, and Senate Appropriations Committee Chairman Dave Hildenbrand, a Lowell Republican, said he had "some initial reservations." Proponents of cyber schools opposed Snyder's plan to give them less because their building costs are minimal.

- A $260 million deposit into the budget stabilization, or "rainy day," fund - bringing the total to $1 billion.

- Nearly $49 million more for the Flint emergency, including providing water filters to residents who should not drink unfiltered tap water. If approved, the allocation would bring total state spending on the man-made lead emergency - for which the Snyder administration has been deemed primarily responsible - to more than $300 million over three years.

"I'm pleased that Governor Snyder recognizes the large amount of work that still must be done in order for Flint and its residents to fully recover from the city's drinking water system being poisoned by lead through no fault of their own," Mayor Karen Weaver said in a statement.

- A scaled-backed $20 million deposit into a state fund for water and other infrastructure. Snyder asked for $165 million last year, but he and lawmakers settled on $5 million.

- Sizable boosts in funding for skilled trades training, economic development and the state police. Snyder wants the number of enlisted officers to surpass 2,000 again for the first time in 16 years.

- The adoption of a more conservative assumed rate of return on investments in state retirement systems, moving from 8 percent to 7.5 percent. The change would cost the state more annually but reduce risk, according to Snyder.

Lawmakers will begin their work in coming weeks. The biggest fight likely will be over taxes.

Republicans have expressed frustration that they have not enacted a broad-based cut for individuals despite controlling state government for six years.

House Speaker Tom Leonard, a DeWitt Republican, said he will push to reduce the 4.25 percent income tax to 3.9 percent - to which it was supposed to eventually return under a 2007 tax-raising budget deal that Snyder and GOP legislators later largely froze in their 2011 tax overhaul.

"It is well past time to give the people of Michigan the tax relief they deserve," Leonard said in a statement.

Lt. Gov. Brian Calley pointed legislators to tax and fee reductions already made under Snyder's watch. They include slashed business taxes, a cut for people who trade in their car or boat for a new one, a pending break for some homeowners and renters, and the elimination of extra fees imposed on people driving without insurance or proof of insurance.

Democrats, while amenable to Snyder's plan, also offered criticism by noting it would not boost the portion of state revenue-sharing payments to municipalities.

"This is a key component for local governments to fund much-needed public programs, like police and firefighting services," said Rep. Fred Durhall III of Detroit.

Published: Fri, Feb 10, 2017