State Rep. Tim Melton (D-Pontiac)
By State Rep. Tim Melton
Rally at the Capitol
A rally will be held at the State Capitol on Tuesday, Feb. 22, at 9 a.m., and Wednesday, Feb. 23, at noon. They are intended to voice the people’s opposition to the Governor’s budget, and a number of bills being considered in the Legislature.
Gov. Rick Snyder presented his budget to the state Legislature this week. He outlined his plans to address the upcoming $1.7 billion deficit for next year. The Governor also presented a plan to restructure taxes in the state. A significant portion of the tax proposal includes cutting business taxes while shifting much of these taxes to individuals. His proposal essentially contains enough cuts to address the deficit, and then brings in additional taxes from Michigan citizens in order to eliminate the Michigan Business Tax.
The Legislature is faced with another difficult budget to balance for next year. I have serious concerns about the Governor’s proposal. The proposal shifts the tax burden to seniors and the working class, while cutting local governments and the services they provide in their communities.
Here is a brief overview of the Governor’s budget and tax proposals:
Education
- Higher Education cut 22 percent ($222 million)
- $83 million incentive fund to universities to not hike tuition rates
- Cut $470 in K-12 per pupil funding ($452 million), and eliminates categorical spending
- Community colleges are not cut
State Employee cuts
- Asked for unspecified concessions ($180 million)
Revenue Sharing
- Statutory revenue sharing is completely eliminated ($300 million cut)
- Revenue sharing payments to Auburn Hills will be reduced to $1.27 million
- Pontiac will lose about 57 percent in revenue sharing (approximately a $6 million cut
- Incentives for “best practices” will require locals to compete for $200 million pot of money, but won’t be announced until March 2012 and awards/payment could be much later
Corrections
- $51 million in direct spending cuts
- $32 million savings from privatizing food and privatizing prison stores and others
- Closing one prison saving $19 million
- Eliminates the public works program
Military and Veteran’s Affairs
- Privatize resident care aide service ($4.2 million)
Agriculture
- Eliminates the Dairy Farm Inspection program ($600,000) allowing the industry to police itself
Judiciary
- Eliminates six Trial Court judgeships ($940,000)
State Police
- $3.2 million cut; close state police posts
Human Services
- Instituting 48 month time limit on welfare (federal 60 month limit)
- 20 percent can extend beyond for hardship or disability, etc.
- Eliminate 300 positions in DHS.
- Family day care provider rate being cut from $1.60 to $1.35 an hour
Community Health
- No cuts to Medicaid reimbursement rates
- No cuts to Medicaid coverage
Tax Changes
- Replace Business Tax with 6 percent corporate income tax (approximately $1.5 billion cut)
- Only larger corporations pay
- Eliminate charitable giving tax deduction/credit
- Future business tax credits would end
- Current credits would be honored
- Phasing out film credits spend $25 million FY 12 from 21st Century Jobs Fund
- Eliminate credit for donations to public universities
- Tax increase on all income earners by freezing the income tax rate at 4.25 percent after October 1, 2011. Current law would drop the rate to 3.9 percent.
Tax Increases
- Tax public pensions ($128.8 million)
- Tax private pensions ($725 million)
- Change Homestead Property Tax credit to households ($320 million in additional tax revenue)
- Eliminate the Earned Income Tax Credit for working citizens ($340 million) – Estimates on the EITC credit elimination show approximately a $430 tax increase to individual working taxpayers in Auburn Hills and Pontiac
- 1 percent tax on all health insurance claims. Every claim filed by an individual will add a 1 percent cost
- Tax increase via cap in the income tax personal exemption at $75k single and $150k couple
Changes to Emergency Manager Law
House and Senate committees have been considering repealing and replacing the existing law on Financial Emergency Managers. Republicans have called for this legislation to be moved quickly because of pending financial emergencies to local governments. Despite the necessity for Financial Emergency Managers, I have some serious concerns about the legislation. I’m continuing to talk with committee members and legislative leadership to get some changes inserted in the bills.
Here is an overview of the bills:
- The process begins with a state review of a local government’s finances. The bills add a number of ways in which the state can begin the review and Financial Emergency Manager process. The local government must cooperate with state officials.
- The state will create a review team to focus on the finances of the local government, if a probable financial stress is determined in the preliminary review. The review team will create a financial consent agreement for the local unit of government. The bill allows the state to empower local leaders with some authorities of Emergency Managers.
- The Review team will report to the Governor within 60 days of their appointment. They may recommend whether the local unit is working to fix the financial situation and abiding by their consent agreement. The Governor may declare a financial emergency, and an emergency manager will appointed to run the local unit of government.
- The proposed legislation does a number of things to expand the powers of an Emergency Manager appointed to run a local government. These things include: Assuming all powers of the elected board and city manager or mayor, control all aspects of a community’s finances; terminate and impose union contracts; borrow on behalf of the local community; and dissolve the local unit of government.
These bills empower Emergency Managers to control all aspects of a local government, and supersede any local government provision. A few pieces modified of the bill include**: removing the ban that prohibited officials from the local government from running for election again, and allowing Emergency Managers to take over pension funds**. I fought for language that prohibits an Emergency Manager from taking over a pension fund, if the fund is over 80 percent funded. The bill is still early in the process. But, at this point, this added language would exempt the Pontiac retiree pension fund from takeover.
