Governor’s budget continues key investments, urges Legislature to abandon risky revenue cuts

For Immediate Release 
February 7, 2018

Alex Rossman

Snyder recommends funding for education, roads, public safety, healthcare and more

LANSING—Following Governor Rick Snyder’s 2019 budget presentation, the Michigan League for Public Policy voiced support for his calls for continued investment in vital programs, and echoed his warning against reckless tax cuts by the Legislature. The League also called for a solution to Michigan’s ongoing revenue problem, and urged action on its own budget priorities as ways the Legislature can have a more significant impact on state residents’ well-being than a tax cut.

“There were a lot of great proposals in the governor’s budget today, including new and first-time funding for Early On, efforts to increase the existing low level of Family Independence Program cash assistance, and continued investments to support Michigan’s kids and families through ‘heat and eat,’ the Healthy Michigan Plan, lead pipe replacement in Flint, roads and public safety,” said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “These are all longstanding priorities for the League and we appreciate the governor’s recognition that they are key to a better Michigan for everyone. But these very items could be first on the chopping block for the Legislature as they seek to reconcile hundreds of millions of dollars in ineffective and unaffordable tax cuts that give very little money back to most taxpayers.”

While the governor’s budget contained many positives today, there weren’t a lot of dramatic funding increases, because the money is simply not there as a result of previous policy decisions. The major tax cuts passed over the past several years have put Michigan’s budget in an untenable situation where we are unable to make significant investments in all of the things that state residents, businesses and communities depend on. League budget experts continue to sound the alarm on the decline in the purchasing power of the state’s General Fund—which is now estimated to be nearly 6 percent lower than the level in 1968 when adjusted for inflation.

“Michigan has a revenue problem, and has for decades. Lawmakers are still budgeting like it’s 1968,” Jacobs said. “The Legislature is still trying to make Michigan competitive with other states while picking the wrong role models. The Legislature is still underinvesting in nearly everything kids, families, workers and businesses depend on. And disregarding past mistakes, the Legislature is still looking to cut taxes when they should be raising revenue.”

As the budget process gets officially underway today, the League continues to outline its own budget priorities and 15 related policy recommendations. A recent poll from EPIC-MRA showed that the League’s priorities are Michigan voters’ priorities, and resonate much more than “Keeping state and local income taxes low,” an important point with the state budget’s current revenue constraints.

“We don’t work in a vacuum and we know that calling for new investments in our current fiscal climate is bold. But our budget priorities are optimistic and aspirational—here are 15 things we think would better serve the people of Michigan than a tax cut,” Jacobs said.


The Michigan League for Public Policy,, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

On Tax Day, don’t mess with taxes

Over spring break, my son needed to use books by a specific author for homework. Not having any of these books, my family jumped in the car, drove on our newly-paved street, passed the local fire department and stopped at the public library to see if any of these books were available. Without even thinking, we used or saw services provided by our taxes in the less than 10 minute drive.

I think about all of the amazing services taxes provide us. They provide us good public schools, vibrant communities, safe and drivable streets, public safety, parks, libraries, a trained workforce and so much more.

However, there are lawmakers who are trying to cut or eliminate our state income tax. And while paying less in taxes sounds like a good idea, what any income tax cut does is provide a big break to Michigan’s wealthiest taxpayers while providing little to our residents who need it most. Additionally, an income tax cut won’t change what residents do with their money, as the impact would be felt in small amounts throughout the year as workers receive their paychecks instead of in lump-sum payments. A $260 payment is more noticeable than $10 more in each of your paychecks.

The Upside of Taxes

The Upside of Taxes

While most Michigan taxpayers would not see a significant impact on their pocketbook, even a small cut will significantly impact our ability to provide the things that Michigan residents rely on and need. Eliminating the state income tax without a replacement could cost the state nearly $10 billion, and even a small 0.1 percentage point reduction (from 4.25% to 4.15%) could cost the state more than $250 million on a full-year basis. And the income tax helps fund our schools, our colleges and universities, clean water, roads, and all of the good things that government provides us.

It’s been said that Michigan needs a game-changer. Cutting taxes won’t do this. We know this because we’ve done it before.

  • In the 2011 tax shift, Michigan cut business taxes by about $1.6 billion, and now net business taxes only provide about 2% of our total state-sourced revenues.
  • The state has started phasing out personal property taxes, which were paid by businesses to local governments, schools and libraries, and required the state to reimburse them for their lost revenues.
  • The state is also implementing a sales tax exemption for the value of a trade-in when buying a vehicle.

And many bills are introduced and enacted that cut or eliminate taxes on specific items or for specific entities, so much so that our state and local tax revenue as a percent of personal income has dropped 12% between 2004 (10.48%) and 2014 (9.22%).

So instead of more tax cuts, Michigan should look at investing in the things that Michigan residents, communities and businesses rely on. Perhaps this will truly change the game.

So as we mark Tax Day today, don’t despair! Remember that paying taxes is what helps make Michigan great. (And if you haven’t yet done your taxes and need help, you might qualify for some free tax help. Go to to find out.)

— Rachel Richards

EVIP madness

Jason Escareno

Jason Escareno

As I was filling out my NCAA bracket last week I had an epiphany—maybe this is how statutory revenue sharing is going to be decided in the future, thanks to a complicated Snyder administration program known as EVIP. For example, municipalities could get ranked and placed into a bracket with one another, advance by submitting more meaningless documentation to the state, and maybe receive enough to provide some of the public safety services they have had to stop delivering.

The odds of how much, if any, statutory revenue sharing a municipality will receive are surely similar to the largest of March Madness office pools. (more…)