For his first legislative initiative, one might say House Speaker Tom Leonard swung for the fences. The Republican from DeWitt has said all along that it is his intention to attempt to eliminate the state’s income tax and to give the hard-working citizens in this state some tax relief. On Wednesday this week, the House of Representatives sat through a grueling 12-hour session while the Speaker tried to strongarm the necessary 55 votes for passage, only to fall three votes short.
After many failed attempts to garner enough support, those in favor wanted to be on record, and so the House put up a vote to lower, but not eliminate the state’s income tax, and it failed. Those voting no argued that with the many problems this state has, including failing infrastructure, cutting our income tax in Michigan would be irresponsible and would put many things at risk. Of the various proposals, it was estimated that the state could stand to lose $1 billion to almost $10 billion per year in revenue.
MITA staff raised strong concerns about the potential income tax cut, as the new road funding money that was passed in 2015 relies on $600 million of general fund money coming directly from the state’s income tax. If the original proposal had passed (which, over time, completely phased out the state’s income tax) that entire $600 million would be taken out of the transportation budget. In addition to the money that has already been promised for transportation, it is widely known amongst lawmakers that more money is needed for infrastructure maintenance and repair in our state.
As other groups have also asked, MITA would like to see a replacement for the general fund money from a more stable and guaranteed revenue source. If a user fee type solution to replace the $600 million in general fund money was an option, MITA would not have the concerns with the proposal to lower the income tax that we currently do.
As this is one of Speaker Leonard’s top priorities, we anticipate that the issue will come up again in the future. As things develop, MITA will keep its members informed on any developments. If you have any further questions, please feel free to contact Mike Nystrom, MITA’s Executive Vice President, at mikenystrom@mi-ita.com or Lance Binoniemi, MITA’s Vice President of Government Affairs, at lancebinoniemi@mi-ita.com. They can also be reached at 517-347-8336.
