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Leonard Prefers MPSERS Over Income Tax Cut As Part Of Budget

May 2, 2017

Courtesy MIRS News

A $39.4 billion state government spending plan for Fiscal Year (FY) 2018 moved out of the House Appropriations Committee today with roughly $280 million left on the balance sheet and a majority Republican caucus eyeing teacher pension reform as a top priority.

House Speaker Tom LEONARD (R-DeWitt) told reporters today that his caucus would like to see individual tax relief, retiring debt and putting more money into infrastructure as top priorities after having trimmed $272 million off of Gov. Rick SNYDER‘s budget recommendation. 

But when asked which of the three would be his top priority, Leonard said, “I think I’ve been very clear from the day that I’ve been elected speaker of the house back in November that my top priority was fixing our broken teacher retirement system or MPSERS. My absolute top priority since the day I was elected speaker of the house. If that is something we can get accomplished, I’m for it.” 

This puts Leonard on the same page of Senate Majority Leader Arlan MEEKHOF (R-Olive Twp.), who told MIRS on Friday that reforming the Michigan Public School Employees Retirement System was his top budgetary priority for FY ’18.

Despite efforts from Snyder and Republican lawmakers to curtail the rising unfunded liability with MPSERS, a report released last month bumped up on-paper debt in the teacher pension’s system from $26.7 billion to $29.1 billion. It went from roughly 63 percent funded to 60.1 percent funded. 

Part of that rise is due to a lower rate of return, but fiscal conservative think tanks are questioning if the state has a proper handle on the costs. 

Leonard’s comments run counter to the House Republicans’ zeal to move an income tax rollback this session, which would prevent a standoff with Snyder over the issue.

Reporters asked the Governor today if he was “enthusiastic about a tax rollback,” to which he responded, “I don’t see a rollback really being that viable at this point in time. I think that is challenging.” 

Snyder said Michigan government does not have a lot of “on-going dollars” to do an income tax rollback. Michigan does have some one-time funds at its disposal, which leaves him more amenable to potentially a one-time tax rebate. 

Leonard said, “We’ll see how the discussions go. I’m proud of the fact that our appropriations committee did their due diligence, did their work, scaled back the budget. And now we can have those conversations.” 

HB 4323, the “Big Bus” omnibus bill, includes funding for everything except K-12 funding, higher education and community colleges. It uses $8.39 billion in General Fund spending. Spending within the budget was not substantively changed from what moved out of the various appropriations subcommittees. 

House Appropriations Committee Chair Laura COX (R-Livonia) said the committee’s goal was to spend less state money in FY ’18 than it is doing this year. And it was all achieved “with a 2.2 percent reduction in the state budget.” 

“This budget prioritize issues that are important to Michigan residents — schools, higher education, public safety, physical and mental health,” Cox said. “I am proud of the fiscal responsibility demonstrated by the subcommittee chairs and the hard work they put into drafting an efficient and accountable budget that works for all Michiganders.” 

The budget bill moved to the House floor for expected action next week along a party-line vote. Rep. Robert KOSOWSKI (D-Westland) and Rep. Sylvia SANTANA (D-Detroit) opted not to vote on reporting the bill. 

Rep. Fred DURHAL III (D-Detroit) and other Democrats voted against the budget, saying House Republicans were making room “to give massive tax breaks to their wealthy friends.” 

“We all know that Michigan families are in desperate need of tax relief, but this is not the way to go about doing it,” Durhal said. “We cannot decimate critical programs like Meals on Wheels or the Michigan Conservation Corps, or continue to slash revenue sharing and other funds for local municipalities, and expect people to want to live in Michigan.”

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