Michigan is expecting a budget surplus, but the governor and the GOP-led state legislature have different ideas on the best way to return that money to Michiganders.
After Whitmer called on the legislature Thursday to approve a $500 rebate for Michigan’s working families, the state Senate instead passed a package of bills that include $2.7 billion in tax cuts.
In a letter sent to legislative leaders Thursday, May 19, Whitmer urged them to work with her on the proposed rebate plan “MI Tax Rebate Right Now,” saying “the pain being felt by people is tangible.”
Related: Gov. Whitmer wants to give $500 to working Michigan families
The details of who would be eligible for the money has not been specified. If all 10 million Michiganders received $500, the plan would cost $5 billion. If all 4.6 million employed Michiganders got $500, it would cost $2.3 billion.
The same day, the Senate approved HB 4568 and SB 784, legislation that would cost about $2.7 billion and would lower the personal income tax, increase the Earned Income Tax Credit and provide families a child tax credit.
Senators voted along party lines, passing HB 4568 in a 22-14 vote and SB 784 in a 22-15 vote, with Sen. Jim Stamas, R-Midland, being the lone Republican who voted against SB 784.
Gustavo Portela, Michigan GOP deputy chief of staff and communications director, said in a statement that if Whitmer is serious about providing relief to Michigan residents that she will sign this bill into law when it reaches her desk.
However, the Democrats voting along party lines against the bills, and the subsequent absence of a two-thirds vote, meant that even if the governor were to sign the legislation, it wouldn’t take effect until next spring.
In order for the SB 784 to go into effect, the House would still have to pass it.
Sen. Curtis Hertel, D-East Lansing, said on the Senate floor Thursday that the proposed tax cuts will not offer immediate relief for those families who need help now.
“At the end of the day, this is just a promise, but here’s the thing, you can’t buy gas with a tax cut in the future,” Hertel said.
Sen. Adam Holier, D-Detroit, said under this plan the small percentage of tax cuts afforded to low-income families like those in his district won’t be much help at all.
“To say that we want to help folks, to say that we care about people who are really in need, and in danger, I think we should really be centering on people who the cost of living has been so high on,” Holier said.
Senate Majority Leader Mike Shirkey, R-Clarklake, called Whitmer’s rebate plan a “pandering effort” and pointed to the long-lasting relief this tax plan hopes to provide.
“Let there be no mistake, our plan is sustainable,” Shirkey said.
If HB 4568 were to go into effect, the personal income tax would decrease from 4.25% to 4%, beginning with the 2023 tax year. An increase in the personal exemption of $1,800 would take effect for and after the 2023 tax year.
A per-child tax credit of $500 is also included in the plan from state lawmakers, as is a proposal to increase the Earned Income Tax Credit from 6% of a taxpayer’s federal EITC to 20%, beginning with the 2022 tax year.
Another provision would increase the senior exemption for those 67 and older, to $21,800 for single filers and $43,600 for joint filers, beginning Jan. 1, 2023. The exemption would also be indexed for inflation beginning with the 2024 tax year.
Beginning with the 2023 tax year, the proposal would also allow a credit for qualifying disabled veterans and their widows or widowers, equal to the amount of property tax paid on their home.
SB 784 mainly detailed the specifics of the disabled veteran part of the proposal.
The state’s Consensus Revenue Estimating Conference on Friday, May 20, showed that Michigan has $3 billion in additional revenue for the 2022 fiscal year.
“If we work together, we can provide real relief right now, so families can pay the bills and put food on the table,” Whitmer said in a statement. “And I am confident that we can continue in the spirit of collaboration to set up our parents, students, and districts for next school year and deliver on the kitchen-table issues that matter most to working families through our budget process.”
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