Republican Gov. Rick Snyder has faced criticism from the University community and the state for his tax plans and proposal to cut 15 percent of higher education funding since his budget proposal was released last month. Most recently, the first-term governor has garnered national attention on MSNBC.
The network’s “The Rachel Maddow Show” aired a video titled “Michigan is Screwed” earlier this month condemning several of Snyder’s proposed policies. With more than 760,000 views on YouTube, the video discusses legislation that will allow the state to replace publicly elected officials with emergency financial managers appointed by Snyder’s administration if a city is in danger of bankruptcy or facing serious financial strife.
Despite objections from Maddow and Michigan residents who claim the legislation is a threat to democratic principals, Snyder spokesman Ryan Kazmirzack said the emergency financial manager system has been in place in Michigan since 1990 to protect citizens who live in a financially unstable city.
The public uproar against Snyder’s plans has spawned recent protests on campus and at the State Capitol Building in Lansing over the past month. Cries of “kill of the bill” erupted on March 8 against the Emergency Financial Manager legislation, and five students were arrested in Lansing on March 16 while protesting Snyder’s proposed budget. However, Snyder signed the bill into law that same day last week.
While Snyder has faced discontent from members of the University community for his proposal to cut higher education funding, spurring several campus protests after the announcement that the governor would be this year’s Spring Commencement speaker, Kazmirzack said Snyder is not anti-education.
“The governor worked very hard to protect education,” Kazmirzack said. “It is a painful cut. He, more than anybody, understands the value of education, but we have to get our budget under control.”
The financial inefficiency of state universities is the primary reason for the cuts, Kazmirzack said, adding that Snyder believes community colleges run more efficiently and therefore will not be subject to any loss in funding.
Kazmirzack added that while the tax rate will not rise for any citizen, Snyder has proposed to cut earned income tax credits — tax refunds that reward citizens with low incomes for working instead of relying on welfare programs.
“The governor doesn’t believe (this) will stop people from working,” Kazmirzack said. “He’s taking that money and making sure we don’t cut Medicaid. The governor felt it was more important that people on the low-income end were able to receive medical care.”
The tax changes are necessary to balance the budget and make the state’s tax system fair for all residents, Kazmirzack said. Currently, retirees in the state are exempt from any income taxes, even those who do have a large source of income, he said.
“Michigan is one of only four states that do not charge taxes to seniors,” Kazmirzack said. “A (retired) couple with a pension of $65,000 a year would not pay any state income taxes, while a family making $50,000 a year would pay.”
However, other state lawmakers, including State Sen. Rebekah Warren (D–Ann Arbor), don’t think that Snyder’s proposed changes would benefit the state. Warren said she expects to see major alterations to the budget before it is approved.
“(I’ve) seen some serious concerns on both sides of the aisle,” Warren said. “A lot of my colleagues really have concerns about balancing our budget on the backs of those folks who are one step above poverty.”
Kazmirzack said that the state’s current tax code is “riddled with loopholes,” and proposed cuts to business taxes are widely misunderstood among Snyder’s constituents.
“People are trying to make it sound like businesses are not paying anything,” Kazmirzack said. “What they ignore is that even after the tax cuts, businesses will be paying more than everyone else.”
Small businesses face more strain than large corporations, which currently pay a 6-percent income tax, while small business owners pay business income and personal income taxes. Snyder’s 2012 fiscal year budget proposes to keep large corporations at a flat 6-percent corporate income tax, but tax small businesses 4.25 percent, which is equal to the statewide income tax on Michigan residents for the next fiscal year, according to Kazmirzack.
“If I own a small business, I get double-taxed,” Kazmirzack said. “This is one of things that makes Michigan really uncompetitive for jobs. It discourages growth; businesses are not inclined to come into Michigan.”
Though there have been mixed responses to Snyder’s business tax cuts, Public Policy Prof. John Chamberlin said it is too early to know if Snyder’s approach to balancing the budget will be effective or damaging.
“(Snyder) may turn out to be right, and he may turn out to be wrong,” Chamberlin said. “Whether the business tax cuts really jump start the economy is a matter of faith.”
Despite disagreements over several aspects of the governor’s proposed budget, Snyder is aiming to pass the legislation by May 31.
— The Associated Press contributed to this report.