LANSING (AP) -- Gov. Rick Snyder prepares to deliver his budget proposal that cuts spending for education, universities and local governments while ending many personal tax exemptions.
The plan includes $1.2 billion in permanent spending reductions. It also includes $1.7 billion in increased revenue by eliminating tax breaks for low-income workers, phasing out most senior tax breaks and getting rid of many other income tax deductions.
Snyder says he is trying to simplify the tax code by getting rid of special interest tax breaks.
Public schools will see a 4 percent cut, or about $470 per student. Universities will be cut 15 percent.
Details of Michigan Gov. Rick Snyder's $47 billion budget proposal, which he outlined to The Associated Press on Wednesday:
- Drops the individual income tax rate from 4.35 percent to 4.25 percent on Oct. 1; the tax will then remain at 4.25 percent rather than being decreased to 3.9 percent in future years as scheduled.
- Eliminates the state income tax exemption for pensions, but Social Security benefits will continue to be exempt.
- Eliminates the Michigan Business Tax and replaces it with a flat 6 percent corporate income tax on major corporations.
- Eliminates business credits awarded for films, brownfield redevelopment, the Michigan Economic Growth Authority, etc.,
although current commitments will be honored. Sets aside $25 million for film credits from the 21st Century Jobs Fund.
- Rolls funding for universities and community colleges from the general fund to the school aid fund, the main funding source for K-12 schools.
- Cuts per pupil funds $300, in addition to the currently budged $170 per pupil reduction.
- Eliminates statutory revenue sharing payments for cities, villages and townships in FY 2012, leading to a net savings of $92.1 million. The change impacts 509 local units of government. Increases constitutional revenue sharing by 4 percent, to $659 million.
- Includes $200 million for a new incentive-based revenue sharing program for cities, villages and townships that meet specific standards to be detailed in March.
- Sets a lifetime limit of 48 months for residents to receive welfare payments, with exemptions for incapacity and hardship.
- Closes the Shawono Center in Grayling, and cuts 20 beds in capacity at the Maxey Training School in Whitmore Lake, resulting in $787,000 general fund savings.
- Eliminates 300 field worker positions in the Department of Human Services.
- Closes one prison to be named later this year.
- Reduces the number of Michigan State Police posts, saving $3.2 million.
- Reduces state aid to libraries in the Department of Education budget by $2.3 million in the general fund, with $950,000 directed to the Michigan eLibrary, resulting in net savings of $1.4 million.
- Suggests privatizing food service and prison stores operations in Michigan prisons, and suggests that resident care aide services at the Grand Rapids Veterans' Home be competitively bid.
-Turns the dairy farm inspection program over to industry field representatives certified by the Department of Agriculture.
Ferris State University in Big Rapids sent the following response to Governor Snyder's proposal:
Governor Rick Snyder's announcement today that higher education funding will be cut by 21.9 percent is an unprecedented challenge to Ferris State University and its students.
If enacted in its entirety, the cuts would mean the loss of nearly $10.6 million to the University - or more than $780 for each student enrolled.
This would be the largest funding decrease in the history of the University. "By any standards this is a historic shift in how the state funds higher education," said Ferris President David Eisler. "Michigan's needs well-educated, productive workers who will reverse the state's economic situation.
We will work to temper the negative impact these cuts will have on producing the graduates our state needs." Although the scope of Gov. Snyder's proposal is historic, the university has already taken steps in line with the fiscal realities of the state. In the past two years the university has reduced its staffing by more than 100 full and part-time positions.
This and other actions should help reduce the impact of the state's disinvestment, although the size of the cuts means extremely difficult decisions lay ahead. "Our first priority is our students and the continued high quality of their education," said Eisler. "During my eight years as president, we have never increased tuition to cover reductions from the state. We remain dedicated to constraining costs and maintaining quality."
The governor has proposed a reserve fund of $83 million for universities that hold tuition increases to less than seven percent. Assuming all state universities hold costs below this level - as Ferris State University has done since at least 2003 - the impact would be a 15 percent reduction in funding. That reduction would still be the largest in the university's history at more than $7.3 million. A 21.9 percent reduction in funding at Ferris State University would mean that the state would contribute approximately 21 percent of the cost of a student's education. With a 15 percent cut the state would still contribute less than a quarter of the cost of a college degree.
The impact of other details of the governor's plan, such as rolling funding for higher education into what would effectively become the K-20 budget, remain to be seen. "Over the past decade in Michigan our state government has steadily stepped away from its financial responsibility to public universities," said Eisler. "What was once a state commitment to higher education has now become the financial responsibility of our students and their families. This is a disappointing turn of events that is not likely to be reversed." The governor's proposal will be reviewed before a budget is passed by the state legislature.
The university will remain engaged with lawmakers to shape legislation to keep a Ferris education within the reach of the record number of students who are enrolled. This is in keeping with Ferris State University's continued commitment to educational access, student success and providing graduates to lead Michigan's economic recovery.
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