LANSING, Mich.(Detroit Free Press) -- Gov. Rick Snyder is recommending $103 million in tax relief for low- and middle-income Michigan families while proposing more spending on schools and Michigan roads in the 2014-15 state budget he unveiled at the Capitol this morning.
In putting together the election-year budget, Snyder was helped by improving tax revenues that have contributed to a budget surplus estimated at $971 million over three years.
"The comeback continues in Michigan; we're fueling Michigan's future in a positive way," Snyder told lawmakers at the Capitol in Lansing.
"Our role is to create an environment for a lot of growth to happen," he said. "Let's finish the job we started."
Democrats attacked the budget as an election-year transformation by Snyder that still does not go far enough.
"Better funding for our K-12 schools and state colleges and universities, increasing local revenue sharing for public safety and offering tax relief for Michigan families are all great ideas, and that's why we Democrats have been fighting for them for the last three years, but the governor and legislative Republicans opposed them at every turn," said Minority Leader Gretchen Whitmer, D-East Lansing.
Mark Schauer, the Democratic candidate for governor, said the budget is "filled with more fuzzy math and accounting gimmicks, and continues the same failed policies that have created the fourth worst unemployment rate in the nation." If elected governor, Schauer would make education "our No. 1 priority," said in a statement he issued.
Snyder is recommending tax relief through extending the Homestead Property Tax Credit, which, like the Earned Income Tax Credit and several other tax credits, was scaled back early in his administration. He said 1.3 million taxpayers will get breaks on their property taxes through his proposal and between 200,000 and 250,000 will be newly eligible.
"Taxpayers who qualify for and claim the existing credit will be issued a supplemental refund check in the summer of 2014," according to budget documents.
That means the money will arrive before the November election.
Currently, the tax credit is available to homeowners and renters with incomes up to $50,000. Only taxpayers whose property taxes exceed 3.5% of their income are eligible. Snyder's proposal would reduce that threshold to 3% of income and extend the income cutoff to $60,000.
"This ... clearly benefits people in the lower- and middle-income levels," Snyder told lawmakers.
About one-third of the tax break will go to seniors, said Budget Director John Nixon.
The cost of the tax break will top $200 million, with half of that for last year's taxes and the other half for this year.
The income cutoff to qualify for the property tax used to be $82,650, before Snyder and the Legislature changed it in 2011.
The budget recommends $52.1 billion in gross spending, including federal money, with the state general fund pegged at $10 billion.
Snyder also proposes:
¦ A 6.1% funding increase for state universities, though the extra money comes with strings attached, which include holding tuition increases to 3.2%.
¦ A 3% increase for community colleges, which will also be subject to the 3.2% tuition cap.
¦ A 2.8% hike for K-12 schools, with more than 80% of the $322 million in additional funding going to pay a teacher retirement bill that continues to spike upward.
¦ $17.5 million annually for 20 years is set aside in tobacco settlement reserves to resolve ongoing issues in the bankruptcy of Detroit and help minimize impacts to pensioners.
¦ An investment of $71.7 million for the Healthy Michigan Plan to implement expanded Medicaid coverage.
¦ $15.7 million in gross funding to expand the Healthy Kids Dental program into Kalamazoo and Macomb counties, providing dental care to an additional 100,000 children.
¦ Adding $120 million to the state Rainy Day Fund, bringing its balance to $700 million, plus adding another $122 million to a subsidiary reserve fund that Snyder wants to set aside to guard against possible future increases in the state share of Medicaid payments.
¦ An additional $65 million for the Great Start Readiness Program, eliminating the waiting list for early education.
¦ $254 million to match federal aid and maintain Michigan's roads and bridges and other transportation projects, as Snyder still waits for the Legislature to act on his earlier calls for $1 billion more a year for roads and bridges.
¦ $2 million in new funding for the Pure Michigan marketing campaign, bringing the total investment to $31 million in 2014-15.
¦ For local governments, a 3%, or $19.4-million, hike in constitutional revenue sharing payments for cities, villages and township, bringing the total to $764.9 million. Local governments will also be eligible for $36 million in incentive payments for adopting best practices, Snyder said.
¦ A total of $211.2 million in payments to counties, which Snyder said is the maximum they can receive under statutory revenue sharing.
¦ $17.8 million to train an additional 100 troopers and 31 motor carrier officers through the Michigan State Police Training Academy.
¦ A total of $6 million to fight invasive species that threaten woodlands and the Great Lakes.
¦ $3.5 million to hire and train 25 additional Department of Natural Resources conservation officers. Coupled with new conservation officers currently in training, this brings the total number of conservation officers to 227, up from 186 in 2010.
¦ $2.5 million for the development of a trail system from Belle Isle to the Wisconsin border.
¦ A Department of Corrections budget that holds roughly steady at $2 billion.
The budget session got a little testy at times. When state Rep. Fred Durhal, D-Detroit, wanted to talk about the prisons budget in light of the escape of a convicted murderer from the Ionia Correctional facility, state Rep. Joe Haveman, R-Holland, the chairman, said he would put Durhal on "a short leash" because it wasn't the time or place to bring that up.
"I'm not a dog, so you can't put me on a leash," Durhal replied, and continued with his question.
When Sen. Howard Walker, R-Traverse City, asked Snyder about discrepancies in how education spending is portrayed by Republicans and Democrats, Snyder replied, "Career politicians get confused about education funding," in an apparent reference to Schauer.
Snyder said a large share of the cuts came about from the elimination of federal stimulus money before he took office. "And there's an address at the White House that people should send their complaints to about that."
Budget director John Nixon said later in the presentation that you didn't need to be a certified public accountant to figure out that the state has increased education funding. "My fifth-grader can figure it out."
It also got silly at times, Lt. Gov. Brian Calley recalled the days when the House pulled all-nighters when they tried to get difficult budgets done.
"We slept together on the House floor," he said, as the audience began to snicker. "That doesn't sound right does it."
State Rep. Rashida Tlaib, D-Detroit, said the budget is "moving in the right direction," but doesn't go far enough.
"I wanted to hear more about need, the fact that we've got third-graders who can't read," she said, and the changes to the homestead property tax credit don't even make "a dent" in what was taken away in 2011. Restoring cuts to the Earned Income Tax Credit would have had more impact, Tlaib said.
Sen. Roger Kahn, R-Saginaw, chairman of the Senate Appropriations Committee, said there are competing suggestions about what form the tax relief should take and he has concerns about Snyder's proposal because it's an onging expense.
"I would prefer something more flexible because there isn't a lot of ongoing money that's available," Kahn said.
"It's a weak recovery. So counting on continued growth, that's alright, but you ought to hedge your bets a little bit."
Karla Swift, president of the Michigan State AFL-CIO, said the budget "is a shameful extension of Gov. Snyder's political campaign," and "try as he might, working people understand that Snyder is only pretending to share their priorities during an election year."