{"id":10055,"date":"2017-02-15T17:29:44","date_gmt":"2017-02-15T21:29:44","guid":{"rendered":"http:\/\/blogs.mml.org\/wp\/inside208\/?p=5446"},"modified":"2017-02-15T17:29:44","modified_gmt":"2017-02-15T21:29:44","slug":"house-committee-reports-bill-eliminating-state-income-tax","status":"publish","type":"post","link":"https:\/\/mml.org\/inside208\/2017\/02\/15\/house-committee-reports-bill-eliminating-state-income-tax\/","title":{"rendered":"House Committee Reports Bill Eliminating State Income Tax"},"content":{"rendered":"

 <\/p>\n

A plan to eliminate the state\u2019s income tax was voted out of a House committee Wednesday morning. The first full fiscal year impact of this plan would reduce the state’s General Fund by over $1.1 billion, or roughly 10%. \u00a0The Michigan Municipal League is actively\u00a0opposed to this proposal as it could jeopardize the essential services that Michigan citizens rely on, such as police and fire protection, schools and roads.<\/p>\n

We need your help to oppose this bill by contacting your State Representatives and letting them know how\u00a0this proposal will hurt your community and their constituents.<\/p>\n

The House Tax Policy committee reported\u00a0House Bill 4001<\/a>,\u00a0a complete repeal of Michigan\u2019s 4.25% personal income tax.\u00a0 The\u00a0state income tax brings in more than $9 billion towards the FY16-17 state budget<\/a>\u2026about 70% of the state\u2019s current $10.8 billion General Fund and more than 20% of the $12.6 billion School Aid Fund.\u00a0 While the bill would phase out the income tax by .1% per year over about 40 years, the initial reduction would move the rate to 3.9% on January 1, 2018.\u00a0 The first full, fiscal year impact of over\u00a0$1.1 billion would occur in FY18-19.<\/p>\n

Supporters in committee cited the state\u2019s current estimated\u00a0budget surplus and previous statutory changes\u00a0lowering the rate to 3.9% that were never implemented as reasons to move this bill.\u00a0 It is expected that the House majority will propose\u00a0an alternative to the Governor\u2019s recommended budget that will reflect the cuts necessary to achieve the reductions that this change would require.<\/p>\n

When a similar conversation took\u00a0place in Lansing in 2015 as part of the road funding debate,\u00a0MML commissioned a report\u00a0<\/a>to examine the impact of a proposed $350-700 million diversion of GF\/GP dollars towards road funding would mean to the rest of the state\u2019s budget. \u00a0The results of that analysis were not pretty and those same concerns hold true today\u2026items of direct interest to municipalities like revenue sharing, PPT reimbursement dollars, PILT payments, fire protection grants, distressed community grants, and community development funding were all identified as programs that would be at risk in a scenario where the state General Fund undergoes this type of reduction. In addition, the final product of the\u00a0road funding deal, which obligates\u00a0an eventual $600 million of income tax dollars will never be able to be met if the income tax is eliminated.<\/p>\n

Following opposition from the State Treasurer, the education community and the MI League for Public Policy, the MML\u00a0joined in testimony against this proposal, urging the committee to consider the budget consequences of such a reduction.<\/p>\n

Michigan\u2019s broken fiscal model for local governments simply will not allow for any additional cuts to state support for municipalities. \u00a0The League continues to advocate for\u00a0full restoration of revenue sharing. \u00a0This proposal would eliminate any ability for that reinvestment to occur. \u00a0While the legislature may view this as a policy debate, a decision of this magnitude will have real-life consequences for every resident of this state.<\/p>\n

The bill passed committee on a 7-4 party line vote, with two Republican members\u00a0abstaining. \u00a0It is very likely that the full House will move on this bill quickly now that it is on the floor, possibly ahead of any matching alternative budget proposal.\u00a0\u00a0Please\u00a0contact your State Representative<\/a><\/strong>\u00a0<\/strong>today and let them know of your concerns about how such a drastic reduction in state revenues will\u00a0impact the residents and services in your community.<\/strong><\/p>\n

Chris Hackbarth is the League\u2019s director of state & federal affairs. He can be reached at<\/em>\u00a0<\/em>517-908-0304\u00a0<\/em>and\u00a0chackbarth@mml.org<\/a><\/em>.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

  A plan to eliminate the state\u2019s income tax was voted out of a House committee Wednesday morning. The first full fiscal year impact of this plan would reduce the state’s General Fund by over $1.1 billion, or roughly 10%. \u00a0The Michigan Municipal League is actively\u00a0opposed to this proposal as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-10055","post","type-post","status-publish","format-standard","hentry","category-uncategorized","mml-onemagnify-plugin"],"acf":[],"yoast_head":"\nHouse Committee Reports Bill Eliminating State Income Tax - Inside 208<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mml.org\/inside208\/2017\/02\/15\/house-committee-reports-bill-eliminating-state-income-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"House Committee Reports Bill Eliminating State Income Tax - Inside 208\" \/>\n<meta property=\"og:description\" content=\"  A plan to eliminate the state\u2019s income tax was voted out of a House committee Wednesday morning. 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