House to Vote on Billion Dollar Cut in Revenue

Jennifer Smith

By Jennifer Smith, MASB Director of Government Relations

DashBoard, Feb. 22, 2017

Last week, the House Committee on Tax Policy narrowly approved House Bill 4001 after approximately an hour of testimony. HB 4001 as introduced would change the income tax rate from the current 4.25 to 3.9% in 2018, and then each year following would roll it back by 0.1% until it was eliminated.

MASB testified in opposition to the bill and outlined its many concerns with this proposal, including the initial $1.1 billion hole it would create in the budget when the rate drops to 3.9%. This cut would hurt General Fund programs that benefit our families and schools, Also, as we’ve seen in the past, when the General Fund is stressed, more programs and higher education funding have been moved into the School Aid Fund. Gov. Rick Snyder has stated that he does not support the proposal, and would rather focus on investment in Michigan.

HB 4001 is now before the full House for debate. Yesterday, the House adopted a substitute that changed the bill from a complete repeal to a rollback to 3.9% over the next four years. Obviously this is better than total elimination, but our concerns with creating a hole in the budget that will total more than $1 billion in four years remain. 

The income tax currently makes up 70% of General Fund revenues, approximately 25% of School Aid Fund revenues and a growing share of transportation funding. Without a replacement for this revenue, the General Fund will face serious constraints.

Reducing the income tax is a priority for House Speaker Tom Leonard (R-DeWitt) and the bill could be voted on TODAY.

Thank you to all who have made calls and sent emails to your Representatives. We appreciate your advocacy, but we can’t stop yet. It’s not clear that enough votes exist to pass HB 4001, so please keep up those contacts! Call or email your Representative TODAY and urge a NO vote on this bill.

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