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 Gov. Rick Snyder presented his "Shift and Shaft" budget to the state Legislature yesterday. He outlined his plans to address the upcoming $1.7 billion deficit for next year. The Governor also presented a plan to restructure taxes in the state. A significant portion of the tax proposal includes cutting business taxes while shifting much of these taxes to individuals. His proposal essentially contains enough cuts to address the deficit, and then brings in additional taxes from Michigan citizens in order to eliminate the Michigan Business Tax.

The Legislature is faced with another difficult budget to balance for next year. I have serious concerns about the Governor's proposal. The proposal shifts the tax burden to seniors and the working class, and shafts local governments and the services they provide in their communities.

Here is a brief overview of the Governor's budget and tax proposals:

Education

• Higher Education cut 22 percent ($222 million)
• $83 million incentive fund to universities to not hike tuition rates
• Cut $470 in K-12 per pupil funding ($452 million), and eliminates categorical spending
• Community colleges are not cut

State Employee cuts

• Asked for unspecified concessions ($180 million)

Revenue Sharing

• Statutory revenue sharing is completely eliminated ($300 million cut)
• Revenue sharing payments to Auburn Hills will be reduced to $1.27 million
• Pontiac will lose about 57 percent in revenue sharing (approximately a $6 million cut
• Incentives for "best practices" will require locals to compete for $200 million pot of money, but won't be announced until March 2012 and awards/payment could be much later

Corrections

• $51 million in direct spending cuts
• $32 million savings from privatizing food and privatizing prison stores and others
• Closing one prison saving $19 million
• Eliminates the public works program

Military and Veteran's Affairs

• Privatize resident care aide service ($4.2 million)

Agriculture

• Eliminates the Dairy Farm Inspection program ($600,000) allowing the industry to police itself

Judiciary

• Eliminates six Trial Court judgeships ($940,000)

State Police

• $3.2 million cut; close state police posts

Human Services

• Instituting 48 month time limit on welfare (federal 60 month limit)
• o 20 percent can extend beyond for hardship or disability, etc.
• Eliminate 300 positions in DHS.
• Family day care provider rate being cut from $1.60 to $1.35 an hour

Community Health

• No cuts to Medicaid reimbursement rates
• No cuts to Medicaid coverage

Tax Changes

• Replace Business Tax with 6 percent corporate income tax (approximately $1.5 billion cut)
• Only larger corporations pay
• Eliminate charitable giving tax deduction/credit
• Future business tax credits would end
• Current credits would be honored
• Phasing out film credits spend $25 million FY 12 from 21st Century Jobs Fund
• Eliminate credit for donations to public universities
• Tax increase on all income earners by freezing the income tax rate at 4.25 percent after October 1, 2011. Current law would drop the rate to 3.9 percent.

Tax Increases

• Tax public pensions ($128.8 million)
• Tax private pensions ($725 million)
• Change Homestead Property Tax credit to households ($320 million in additional tax revenue)
• Eliminate the Earned Income Tax Credit for working citizens ($340 million) - Estimates on the EITC credit elimination show approximately a $430 tax increase to individual working taxpayers in Auburn Hills and Pontiac
• 1 percent tax on all health insurance claims. Every claim filed by an individual will add a 1 percent cost
• Tax increase via cap in the income tax personal exemption at $75k single and $150k couple