Senate Republican Caucus Budget Plan Near Completion

With the hope of finalizing the last 10 percent next week, the Senate Republican Caucus released details of their alternative fiscal year (FY) 2012 budget proposal. Characterizing the plan as 90 percent complete, the Caucus will reportedly meet during the upcoming break with some members participating via conference call to complete the proposal.

The Caucus’ alternative tax plan calls for a 6.75 percent business tax rate on both S-corps and C-corps, rather than Governor Snyder’s proposal to tax only C-corps at 6 percent. The estimated $353 million increase in tax revenue over the Administration’s proposal would help fill the roughly $900 million hole left by the Senate Republicans’ decision not to include the Governor’s proposed elimination of the public and private pension exemptions from individual income taxation.

Although not as significant as the Governor’s proposed business tax cut, the Senate GOP’s modified Corporate Income Tax (CIT) plan would still be a 50 percent cut to the $2.2 billion Michigan Business Tax (MBT), bringing in an estimated $1.1 billion.

$165 million in one-time money would be obtained by changing the eligibility date for children entering kindergarten from December 1^st to September 1^st (the first year would result in fewer enrolled children if the plan is adopted) while another $250 million in the plan is coming from draft budget targets set below the Governor’s recommendations.

This still leaves the Caucus about $130 million short of the $900 hole left by leaving out the “pension tax,” a number the caucus evidently has plenty of proposals to reach. Senator Howard Walker (R-Traverse City) has a K-12 budget draft to cut half-day kindergarten programs in half (saving roughly $245 million) and Senator Jack Brandenburg (R-Harrison Township) has proposed capping school districts’ “rainy day” funds; however, both of those concepts have been met with considerable resistance and are reportedly not among those being considered.

Labels: corporate income tax

posted by PAA Online , Friday, March 25, 2011 12:34 PM
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