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Details of Whitmer’s 1st state budget proposal

March 5, 2019

Details from Michigan Gov. Gretchen Whitmer’s first budget proposal:

ROADS

She proposed passing a 45-cents-a-gallon gasoline and diesel tax increase that would be phased in between this October and October 2020, raising $2.5 billion more annually for road and bridge work. She wants to no longer divert up to $600 million from general funds to the transportation budget. The new revenue would be targeted to the most heavily traveled and “economically significant” roads rather than be divided under a current formula that critics say favors rural areas.

RETIREMENT TAX

She proposed repealing a 2011 law that eliminated or reduced exemptions from the taxation of pension and other retirement income, saving more than 400,000 families an average of $800 annually.

EARNED INCOME TAX CREDIT

She proposed doubling the earned income tax credit for low-income earners from 6 percent of the federal credit to 12 percent. It would be phased in over two years and benefit 750,000 households. The average credit would increase by more than $150 by 2021.

BUSINESS TAX

She proposed making 150,000 businesses pay the equivalent of a 6 percent income tax instead of the lower 4.25 percent personal income tax. It would raise $280 million per year initially for the state, but the net tax hike would be $105 million because those S corporations, partnerships and limited liability companies could deduct state tax on their federal returns, State Treasurer Rachael Eubanks said.

DRINKING WATER

She proposed spending $120 million to help municipalities and utilities meet tougher lead rules following Flint’s water crisis, combat chemical contaminants known as PFAS, provide drinking water revolving fund loan forgiveness and other steps. Whitmer also proposes spending $60 million to install hydration systems in schools that have lead plumbing and fixtures.

K-12 SCHOOLS

She proposed increasing “operations” funding for K-12 schools by 3.6 percent, the largest in 18 years if non-operating categories are not included such as retirement costs, adult education and borrowing. The minimum per-student allowance — which most districts receive, including charters — would increase from $7,871 to $8,051, a $180 increase. Districts at the higher end would get $8,529, or $120 more than the current $8,409 allotment. Whitmer proposed a new weighted funding system to recognize the higher costs to educate special education, at-risk, and career and technical education students.

LITERACY/PRESCHOOL

She proposed boosting early literacy initiatives, including tripling literacy coaches, and an expansion of the Great Start Readiness Program so more 4-year-olds can attend preschool.

HIGHER EDUCATION

She proposed increasing funding to universities and community colleges by 3 percent. To be eligible, they must hold tuition increases to no more than 3.2 percent. Whitmer also proposed creating the Michigan Reconnect Program to provide tuition-free instruction for adults seeking training, certification or associate’s degrees in specialized careers. It would cost $110 million over two years. Whitmer proposed tapping a fund that former Gov. Rick Snyder and legislators established last year to boost workforce training. Universities would no longer be funded with school aid dollars but instead with general funds.

SCHOLARSHIP DELAY

She discussed her proposed “Michigan Opportunity Initiative” to provide high school graduates with two years of tuition-free education at a community college or scholarships for the first two years at a four-year school. It would begin in fall 2020, however, not this coming academic year, and therefore will wait until the 2019-20 budget.

LOCAL GOVERNMENTS

She proposed a $42 million boost in revenue-sharing to municipalities, including a 3.2 percent increase from sales tax revenue that the state constitution requires be given to them and 3 percent more in statutory payments.

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Source: State Budget Office