Snyder signs $176M tax relief bill

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Republican Gov. Rick Snyder on Wednesday signed a $176.3 million personal exemption expansion law he said should save an average family of four more than $100 a year once fully implemented in 2021.

The accountant governor has resisted larger tax cuts due to budget concerns, including a personal income tax rate reduction plan that narrowly failed last year in the House. But he called the new law a responsible way to “give some dollars back to our citizens.”

“When you look at tax reform in any fashion, I always view it as simple, fair and efficient in a fiscally responsible way,” Snyder said in a signing ceremony at the Michigan Capitol. “What we’re doing here today meets all those benchmarks.”

The legislation won unanimous and bipartisan support in the House and Senate this month after Snyder and legislative leaders brokered a deal that will also see the state forgive any outstanding “driver responsibility fees,” which the governor had resisted on budgetary grounds. He is expected to sign that law in coming days.

Snyder opened the door for renewed tax cut talks in January when he proposed a “fix” to address what he called “unintended consequences” from recent federal tax code overhaul signed by President Donald Trump.

The federal action inadvertently eliminated personal exemptions that taxpayers use to claim the state version, according to the Snyder administration, which warned the change could cost Michigan taxpayers $1.5 billion a year without action.

The new law protects the state-level personal exemption and raises it to $4,900 by 2021, up from the current $4,000 and the $4,300 it was expected to reach with inflation. Once fully implemented, it is projected to reduce annual general fund revenue $134.3 million and School Aid Fund revenue $41.9 million.

The bill was sponsored by Sen. Jack Brandenburg, R-Harrison Township, who said he has spent most of his 14 years in the Legislature pursuing tax relief.

“It was worth the wait,” he said Wednesday.

Brandenburg has proposed more aggressive tax cut plans in the past, including a 2017 bill to gradually eliminate the state’s 4.25 percent personal income tax, an idea he said he’s still working on.

“Anytime you can put money in people’s pockets it means a lot, I think,” Brandenburg said.

The Michigan League for Public Policy, a nonprofit focused on “economic opportunity for all,” has warned the new law could force “drastic cuts to vital services” in future years.

But Snyder, who is term-limited and cannot seek re-election this year, said he feels “comfortable” with the personal exemption expansion.

The $56.8 billion state budget he proposed earlier this month did not account for the lost revenue. With slow growth in discretionary funds coming into the state general fund, Snyder had said lawmakers should identify any resulting spending cuts if they are going to cut taxes.

“The good part is I believe that we have the revenue to do this and to do it in a way that I don’t believe will require any cuts,” the governor said Wednesday. “We’re well positioned to do this. We manage our waist line well as a state.”

Snyder was joined at the signing ceremony by Lt. Gov. Brian Calley, Senate Majority Leader Arlan Meekhof of West Olive, House Speaker Tom Leonard of Dewitt and other GOP lawmakers.