Yesterday, Governor Rick Snyder, along with Lieutenant Governor Brian Calley and Budget Director John Nixon, presented his budgets for fiscal years 2012 and 2013 before the appropriations and tax policy committees of both state houses. While the budget for 2013 is non-binding, the Governor stated it is time that Michigan begins to look at the future implications of each individual year’s budget.
The Governor began his presentation by saying , “What we are doing today should have been done in 1990, then again in 2000, then again in 2005 and every year since. For too long state policymakers have been putting off the need to address the structural deficit and the need to truly balance the budget without gimmicks and one time fixes. This budget does that.”
Snyder’s budget contains combined cuts of $1.5 billion, with most of those cuts coming to K-12 schools, universities, revenue sharing, and employee compensation. Of that $1.5 billion, $1.2 billion are permanent spending cuts and $324 million are “structural reforms” (mostly a shifting of funding for early education and higher education to the school aid budget, which has historically funded strictly K-12 education).
Snyder’s budget also contains the promised elimination of the Michigan Business Tax and replaces it with a 6% corporate tax, creating another hole of $1.8 billion. However, all but $254 million of this $1.8 billion shortfall is made up by a state income tax “flattening”.
Income tax exemptions to private and public pensions are proposed for elimination, saving the state around $900 million. The Earned Income Tax Credit (EITC) would be eliminated, addressing another $400 million, and other phase-outs of tax exemptions would erase an additional $150 million.
Of particular interest to Michigan Community Health Centers, the budget does not contain any significant cuts to Medicaid. It appears that Snyder will not propose any cuts to eligibility, provider rates or services, including “optional services” like dental. In order to support this decision, the Governor did propose a new 1% assessment on all paid health care and insurance claims.
Copies of the budget, the press release, and the slide presentation used at the budget presentation yesterday can be found at http://www.michigan.gov/budget.