Michigan governor unveils $52 billion budget, tax cut for some

LANSING (AP) - Gov. Rick Snyder on Wednesday proposed a $52 billion election-year budget that includes a tax cut targeted to low- and moderate-income residents, spending increases on education and local governments, and state aid for bankrupt Detroit's pension plans.

The Republican governor broke from GOP and Democratic lawmakers pushing to use a $1 billion surplus for bigger tax relief and instead called for a tax cut targeted to households with less than $60,000 in annual income. It's a partial reversal from when Snyder and Republicans made fewer people eligible for the Homestead Property Tax Credit in the 2012 tax year while slashing business taxes.

"We have a surplus now. We have the opportunity to give something back. It's really aimed at people who are those hard-working folk," Snyder told lawmakers who sit on budget committees.

The income tax credit worth up to $1,200 is available to individuals with household "resources" - generally income - below $50,000. It's more substantial for seniors and the disabled.

Snyder wants to permanently raise the income cutoff to $60,000 - still short of the past $82,650 threshold - and change a formula so a larger percentage of property taxes are refunded for those who qualify for the break. An estimated 1.3 million taxpayers would pay $103 million less in taxes in year one, equaling about $79 per filing.

Refund checks would be mailed this summer since tax season already is underway and the cut would be retroactive to the 2013 tax year. All told, about 250,000 of the 360,000 claimants who lost the credit in 2012 could qualify again.

Democrats panned the governor's budget proposal, saying his tax cut and spending pale in comparison to his past decisions to raise taxes on individuals and cut funding to public universities and the traditional per-pupil grant for K-12 school districts. Snyder again defended his K-12 budget, where a nearly 3 percent rise in state-based funding would go toward pension and retiree health care costs and include a $100 average bump in the per-student grant.

"Now the governor thinks he can put his campaign hat on and throw out a bunch of paltry 'increases' and feel-good proposals to win over voters," said Senate Minority Leader Gretchen Whitmer, D-East Lansing.

As expected, Snyder officially asked legislators to allocate $17.5 million in the first year of a proposed 20-year, $350 million commitment to help bring Detroit out of bankruptcy by shoring up pension funds and keeping city-owned art.

from being sold.

He also suggested sizable funding increases for Michigan's 15 public universities (6 percent) and thousands of municipalities (9 percent) that have seen their state aid drop significantly for years - in addition to continuing to grow the state's savings account to $700 million. It was nearly empty when Snyder took office.

"Things are looking good this year," he said. "It's a very strong budget in terms of making significant investments in important areas."

Snyder didn't build into the budget his request for gasoline tax and vehicle registration fee increases, which stalled in the Legislature last year despite the state regularly not collecting enough in revenue to ensure federal matching aid. He wants to use some of the surplus to ensure the match comes through, but otherwise funding for road and bridge repairs would not differ much from now.

Details of Snyder's tax plan were probably the most anticipated piece of his budget - both because some majority Republicans already have sought to build support for dropping Michigan's income tax rate for good and Democrats, including gubernatorial candidate Mark Schauer, have reminded voters that they are paying higher taxes because of the governor.

Senate Finance Committee Chairman Jack Brandenburg, a Republican from Macomb County's Harrison Township, said he was "very disappointed" with Snyder's tax plan and that "average" people deserve more tax relief because he thinks the economy will continue to improve. Snyder, though, argued lower- to middle-income earners should get more help in a targeted way and stood by his 3-year-old decision to reduce business taxes.

He ruled out dropping the 4.25 percent individual income tax rate, he said, because more than half "the benefits would go to people (making) over $100,000."

The tax debate will play out in coming months in the Legislature, whose leaders want to finish budget work by early June. The next fiscal year starts in October.

The budget would spend about 2 percent, or $1.2 billion, more than in the current year.

Other highlights include $65 million more to free up 16,000 additional preschool slots for lower-income 4-year-olds and extra money to hire more state troopers and conservation officers.

Snyder also budgeted $5.4 million extra to provide dental coverage to 100,000 low-income kids in Macomb and Kalamazoo counties. Coverage would remain unavailable to kids in heavily populated Wayne, Oakland and Kent counties.