Legislators anxious to work on Snyder's plan

March 28, 2011
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Becky Bechler, Kent County’s lobbyist in Lansing, said the municipal incentive plan that Gov. Rick Snyder unveiled here last week wasn’t a bolt from the blue.

“Nothing, I think, was a surprise to anyone,” she said last week of the plan’s contents.

But Bechler, of Public Affairs Associates, also said state lawmakers are eager to get to work on the eight-bill package the governor is sending them that makes up his incentive plan, and she expects legislators will get something done on Snyder’s proposal in April or early May. In fact, lawmakers may complete their work on the governor’s initiative program before they finish tinkering with the budget Snyder sent them last month.

“Right now, I think both the House and the Senate are waiting for the Senate Republicans to respond to the governor’s budget. The Senate Republicans have indicated they would like to tweak the governor’s budget. Specifically, they’ve got 10 members that don’t want to vote on the pension tax, as it has been proposed,” said Bechler.

The governor’s budget would tax public pensions for the first time and end the current exemption for private pensions, which is up to $45,120 for single filers and $90,240 for joint returns. GOPers in the state Senate have been meeting privately to find another solution to that issue and to the governor’s tax plan for businesses.

“That doesn’t mean that some portion of the pension tax won’t be included. They still might do that, just at different levels. But they’re also looking at changing the current 6 percent corporate tax — perhaps increasing that to 7 percent and perhaps including S Corps in that,” said Bechler. “So there are a lot of different mechanisms with which they’re trying to perhaps offer another solution.”

The budget Snyder submitted would exempt an estimated 95,000 businesses from paying a state business tax because he feels that most already pay business taxes on their individual returns. About 137,000 businesses are taxed through the Michigan Business Tax, which Snyder wants to eliminate by the end of this year.

Businesses currently contribute 11 percent of the total revenue to the state’s general and school-aid funds, but that figure is expected to drop in the next few years if the governor’s plan is approved. According to an analysis of the proposal by Public Sector Consultants Inc. and Crain’s Detroit Business, the business contribution to those two funds would fall to 4.3 percent in fiscal year 2013. The tax cut for businesses has been estimated to be worth $1.8 billion and the new tax on pensions would cover roughly $1 billion of that cut.

Bechler said both the House and Senate are likely to agree with Snyder to get rid of the statutory revenue sharing program for cities, townships and villages, and reduce those payments to counties by up to 40 percent.

“While they don’t want to do it, they are probably going to do it. It doesn’t seem like that’s going to be a pushback by the Legislature at this time. So we’ll have to see what the Senate Republicans come up with,” she said.

If that happens, municipalities would still get the constitutional revenue-sharing payment. Counties, though, aren’t included in that distribution formula, which is also based on sales-tax receipts.

Bechler said legislators are still looking into the fate of the brownfield redevelopment and historic preservation tax credits. Snyder wants those credits to go away. “That’s another conversation they’re still having with the governor’s office. How they are going to handle that is still up for negotiations between the House, the Senate and the governor’s office.”

Bechler said Snyder will reveal his plan for education reform in April. “There will be some major protests on that one,” she said.

Bechler also said backers of the One Kent Coalition, which wants to consolidate the governments of Grand Rapids and Kent County into a new metropolitan unit, have made their case known in Lansing.

“The One Kent proponents have been very active in Lansing. Nothing has been proposed yet, but we can expect something soon.”

Bechler added that the future of the personal property tax will be taken up once the new tax structure is in place. The governor indicated earlier that he wants that tax erased, too. She also said lawmakers are debating whether to let milk buyers inspect dairy farms, a recommendation Snyder has made.

“Committees are meeting fast and furiously. I will say, this has been an aggressive legislative session.”

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