Governor Snyder made his roughly $52 billion
dollar budget recommendation to the Legislature on Wednesday. With adjustments
for interdepartmental grants and transfers, the total spending will be $51.2
billion.
The largest individual source of funding for
the budget will be federal money at about $21.1 billion, or 41.2 percent of the
total budget. Of that portion, more than $12 billion will go to the Department
of Community Health, largely for Medicaid.
Local units of government, including schools
and community colleges, will receive $16.477 billion in spending.
The administration stated that 75 percent of
the budget will be spent on health, human services, and education. 10 percent
will go toward job creation, 6 percent toward public safety, another 6 percent
to government services, 2 percent to environment, and less than 1 percent to
the Budget Stabilization (“Rainy Day”) Fund, bringing the total reserve amount
to $822 million.
Tax
Proposal
Governor Snyder unexpectedly strayed from
expectations by proposing an increase in eligibility for the state’s property
tax credit. Governor Snyder’s first budget slashed the eligible income limit
for the state property tax credit from $82,650 to $50,000.
The Governor has proposed to raise this level
to $60,000, which will aid low to middle income families. Most legislators had
entertained the idea of an income tax cut, but Governor Snyder’s Administration
noted that more than half the benefit of such a cut would benefit families
making over $100,000.
Under the proposal, 200,000-250,000 people
would be eligible for the tax credit. Additionally, the formula for calculating
the credit would be more generous.
In the first year, the cost of the program
would be greater than $200 million because it would be retroactively applied to
2013. In the future, it will cost $102.7 million per year.
Those already eligible for the credit will
not need to do anything different when filing their taxes this year, according
to Lieutenant Governor Brian Calley. Those who will become newly eligible will
be required to file an additional form later this year.
Higher
Education
An additional $77 million will go toward
Michigan’s 15 public universities. This represents a 6.1 percent increase,
which is the largest since 2001. One-half of the new funds will be distributed
across the board based on the university’s 2011 funding, rather than through
performance metrics.
The other half will be distributed based on
weighted undergraduate completions in critical skills areas, research
expenditures, 6-year graduation rates, total completions, administrative costs
as percentage of core expenditures, and the number of students receiving Pell
Grants.
Universities would also be required to limit
tuition increases to 3.2 percent to receive performance funding.
Community
Colleges
Community college funding will be increased
by 3 percent under Governor Snyder’s proposal, but for the first time will
require community college’s to keep tuition increases below 3.2 percent in
order to receive performance-based funding.
The additional $8.9 million will be applied
in the same manner as funding for higher education, with half being equally
distributed while the rest is based on performance metrics.
K-12
Under the Governor’s budget, K-12 school
spending would be $13.8 billion, a 3.2 percent increase.
The increase includes an average increase of
$100 per pupil for K-12, an additional $65 million for the Great Start
Readiness Program, and $50 million into the Michigan Public School Employees
Retirement System (MPSERS).
Lower-spending districts would receive up to
$111 per student, and districts at the top of the scale would receive an
additional $83 dollars per student.
According to the Governor, the goal was to
reduce funding disparities between districts.
Local Governments
The Governor’s
proposal also included dramatic funding increases in revenue sharing to aid
local governments that have seen major cuts in recent years.
The constitutional
portion of revenue sharing earmarked from sales tax revenues to cities,
villages and townships would rise by 3 percent to $765 million.
Governor Snyder also
recommended $271.8 million for statutory revenue sharing, a 15 percent increase
from the current fiscal year. This total is still below the $300 million from
the year before the Governor took office.