House Speaker, Snyder at odds over tax cut plan

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan House Speaker Tom Leonard on Thursday defended quick committee passage of a sweeping income tax cut and phase-out plan that drew strenuous objections from Republican Gov. Rick Snyder.

The typically mild-mannered governor scolded House Republicans late Wednesday, saying he was “disappointed” a policy panel voted on the measure after a single 90-minute legislative hearing.

The disappointment is mutual, Leonard told reporters Thursday, highlighting a growing tax policy gulf between the new state House speaker and Snyder, who is entering the last two years of his final term.

“Was I disappointed last night about the governor’s comments and remarks? Yes, but let me be clear: I’m going to continue to fight for the hardworking taxpayers of the state, and I want to put more money into their pockets,” said Leonard, R-DeWitt.

The House Republican plan, which could be put up for a floor vote as early as next week, would cut Michigan’s 4.25 percent income tax to 3.9 percent in 2018 and then gradually eliminate the tax over the following 39 years.

Supporters say it could stimulate the economy and would fulfill a promise made when then-Gov. Jennifer Granholm and state legislators raised the rate to 4.35 percent in 2007. The rate was scheduled to roll back to 3.9 percent by 2015 but was frozen at 4.25 percent under Snyder.

Critics argue the tax cut plan could devastate the state budget and force steep cuts in critical government services. It would cost the state about $1.1 billion in projected revenue during fiscal year 2019, according to the House Fiscal Agency, which amounts to roughly 10 percent of the state general fund.

Snyder reiterated Wednesday he has “serious concerns” about the budget impact and urged a “longer and broader consideration” of possible consequences.

Leonard disputed the suggestion the bill was rushed through committee, noting it was introduced several weeks ago to great fanfare, which he said has led to a flurry of lobbying activity from supporters and opponents.

“We have been very clear it’s one of the top issues on our agenda,” Leonard said. “It’s not a difficult bill to understand.”

House Republicans want to move the policy bill quickly so that income tax relief can be a serious part of negotiations over the 2018 budget, which Snyder and legislators both hope to wrap up by mid-June. The Michigan Constitution requires a balanced budget by the time the fiscal year starts in October.

The tax cut plan will likely change before final passage, Leonard said, noting he hopes to find a “landing spot” that both he and the governor can live with. His top priority is cutting the income tax rate to 3.9 percent.

Leonard argued a recent state surplus, which includes $330 million in one-time money, could minimize the need for massive budget cuts. But revenue projections show the proposed tax cut would force significant reductions in year-over-year general fund spending.

“Right now, I want to make certain we’re doing this well enough before the budget is passed so we can sit down, have that conversation and see where those cuts ought to occur,” Leonard said.

The speaker’s comments came as House Republicans unveiled their new “action plan” for the two-year session that began in January.

The legislative blueprint includes caucus calls to help workers “keep more of what they earn” and force “state government to live within its means.” It promises a thorough review of all state departments during the budget process.

The 14-page action plan highlights a number of House Republican goals but, unlike versions from the past two sessions, does not include many specific policy proposals.

The caucus says it hopes to reduce auto insurance rates, protect religious freedoms and “guard against policies that chip away at the protections afforded to our unborn children.” The plan also calls for continued discussion how to address unfunded liabilities at the local government level.

Many of the items, “like making car insurance affordable, ending unsustainable public employee legacy costs, and expanding options for job training have been talked about but eluded lawmakers for too long,” said Rep. Tim Kelly, R-Saginaw Township, who led the House Policy Development Committee.

“These are not insurmountable tasks for us in Lansing, but they are serious issues that we are committed to tackling for everyone in Michigan.”

House Minority Leader Sam Singh, D-East Lansing, panned the GOP action plan.

“Republicans never run out of ideas when it comes to making life more difficult on hardworking middle-class families,” Singh said in a statement. “What’s worse is pushing a tax plan that will require drastic cuts to our public schools, road funding and local police and firefighters. It’s time we retired this sad old playbook and put building a strong middle class first again.”

One of the more provocative parts of the House Republican action plan is a section stating that school vouchers or education savings accounts — which would allow public tax dollars to follow students to private schools — should “remain at the center of our discussion” over education policy.

Michigan voters rejected a school voucher ballot proposal in 2000, and Kelly made clear that House Republicans are not going to lead the charge for another ballot initiative.

“We’re all aware we’ve got a state constitution that prohibits the use of public dollars on private education,” said Kelly, who also chairs the House Education Committee.

He hopes the action plan “sparks some conversation” and alluded to the fact President Donald Trump recently appointed Michigan school voucher proponent Betsy DeVos as his U.S. Secretary of Education.

“I suspect there might be some things coming out of Washington in the next few years that may avail themselves to where there might be some options that we can work around,” Kelly said. “As I’ve said, I’m going to push choice as far as the law allows.”