Where Michigan governor candidates stand on taxes, spending

Where Michigan governor candidates stand on taxes, spending
July 17, 2018 Bridge Magazine

Fix the roads. Improve schools. Cut taxes. Slash college costs and provide help to those suffering from opiate addiction.

Anyone paying passing attention to Michigan race for governor has heard grand ideas about spending plans and tax changes for some of the state’s biggest problems.

But details about some proposals are more plentiful than others leading to the Aug. 7 primary.

Today, Bridge Magazine examines the spending and tax plans of governor candidates: Republicans Lt. Gov. Brian Calley, Attorney General Bill Schuette, State Sen. Patrick Colbeck, and Dr. Jim Hines; Democrats Gretchen Whitmer, a former state senator, Dr. Abdul El-Sayed and businessman Shri Thanedar; and Libertarians Bill Gelineau, a title insurance company agent, and John Tatar, who owns a construction company.

Brian Calley, Republican

The lieutenant governor to term limited Gov. Rick Snyder is largely running on the record of the past eight years.

Spending:

  • Expand and improve treatment options for those suffering from the opioid crisis.
  • Increase school security, and “transform” the welfare application process to make it more tailored to the needs of individuals.
  • Improve reading scores of third graders by working with schools and teachers to promote the best strategies, which could include reading coaches and adult volunteers.

Taxes:

  • Improve roads by using surplus general fund dollars, rather than increasing taxes.
  • Offers few specifics about how he’d pay for much of his agenda. Nowhere in Calley’s website or campaign literature does he mention any type of tax. In a response to Bridge, which asked how Calley felt about the income tax, a campaign spokesperson trumpeted the state’s economic rebound and added the Snyder administration increased the homestead property tax credit and restored and increased the income tax exemption.
  • Will not sign a pledge sought by Americans for Tax Reform, which has been a de facto litmus test for many conservative Republicans nationwide. ATR calls for a pledge to fight “any and all” tax increases.  “Lt. Gov. Calley has a strong record of tax cuts but doesn’t sign pledges to interest groups,” said campaign spokesman Mike Shrimpf.

Patrick Colbeck, Republican

The aerospace engineer and state senator from Canton opposes tax increases and calls for increased use of analytics to improve government efficiency.

Spending:

  • Invest in longer-lasting, better roads that cost more up front but save money in the long run. His website points to one system that costs 15 percent more but lasts four times as long.
  • Spend more on K-12 education without raising taxes by creating “student-specific savings accounts.” That would allow parents, not the state, to pay fees for pay-to-play extracurriculars like sports and band through tax-deferred accounts. Colbeck doesn’t estimate how much money that would raise or if it would be enough to negate state funding increases in K-12 that have averaged 2.5 percent over the past seven years.

Taxes:

  • Eliminate the state income tax. Colbeck acknowledges it would be difficult (the tax generates about $10 billion a year for the state) and would have to happen over time.
  • Save the state $3.5 billion by restructuring Medicaid through a  preventive care program that could save the state 20 percent in Medicaid costs. That estimate is high: Of the $18 billion spent on Medicaid in Michigan, only $3.1 billion comes from the state’s general fund money. So 20 percent works out to $620 million.
  • Oppose business tax incentives. Colbeck says eliminating the income tax would do far better to lure businesses to Michigan.
  • Has signed the Americans for Tax Reform pledge to vote against any and all tax increases.

Dr. Jim Hines, Republican

The Saginaw doctor has never before run for public office and says he can improve the state’s business climate.

Spending:

  • Fix the roads without raising taxes by instead dedicating 0.35 percent of the state’s income taxes, $875 million, for two years to pay for roads.
  • Make college more affordable. Hines has not said specifically how he would do so. One solution: “I will promote scholarships, internships, apprenticeships and other creative solutions to keep Michigan higher education available and affordable.” Hines also would encourage dual enrollment that allows high school students to gain college credit cost-free and seek to improve transfer agreements between lower-cost colleges and universities.

Taxes:

  • Reduce the state income tax to 3.9 percent, its level before it was increased in 2007 under former Gov. Jennifer Granholm, a Democrat. The tax was lowered to 4.25 percent in 2011 when Snyder, a Republican, ushered through tax reform.
  • After two years of diverting money for roads, lower the income tax over time until it gets to 3.9 percent. Hines does not say how he would make up for the lost funds as governor. The Hines campaign, asked by Bridge to better explain, said the candidate would look at “freezes and/or cuts in some areas of the budget”  that would be identified during the early days of administration.
  • Has signed the Americans for Tax Reform “pledge” to vote against any and all tax increases.

Bill Schuette, Republican

The attorney general wants to cut taxes, improve infrastructure and improve education.

Spending:

  • Improve state reading scores by putting a “reading coach” in every elementary school in the state and appointing a state literacy director in his cabinet.
  • Start new training opportunities to return jobless adults back into the workforce.
  • Encourage schools to build facilities that serve both students during the day and the community during non-school hours. Part of the plan includes improving the economy, which would improve bond ratings to borrow money. On a $10 million project, a half-percentage point lower interest rate would save a school district $2,400 a month in payments, or $600,000 over 20 years.
  • Encourage public-private partnerships. Schuette wants the state to create a “digital hub” for student internships and opportunities.

Taxes:

  • Oppose new taxes. Schuette said he can fund his spending priorities by cutting “wasteful or unsuccessful” programs, which he doesn’t identify.
  • Roll the income tax rate back to 3.9 percent. Schuette’s plan does not specify how he would compensate for the lost funds.
  • Has signed the Americans for Tax Reform “pledge” to vote against any and all tax increases.

Dr. Abdul El-Sayed, Democrat

The former director of the City of Detroit’s Health Department wants to increase government services and taxes.

Spending:

  • Implement universal health care coverage through a plan called “Michicare,” a single-payer health system for all of the state’s nearly 10 million residents.
  • Spend $1.5 billion more a year for infrastructure, $600 million to start a “Clean Water Bank,” and billions more for a “Shared School Infrastructure Bank.”
  • Provide free college for families earning under $120,000, universal free pre-kindergarten education  and tax credits on student loans of college graduates who stay in Michigan.

Taxes:

  • Fund Michcare by taking the state’s Medicaid dollars and adding them to new payroll and business taxes that would create a system that would cover everyone. El-Sayed estimates it would save the average person thousands a year (no more high deductibles and premium payments), even with the 0.75 to 3.75 percent graduated payroll tax. Businesses would have to pay too but those with less than $2 million in gross receipts would be exempt. But El-Sayed claimed the costs would be a fraction of what companies already spend on health care.
  • Fund infrastructure improvements  by tacking on a 15 percent excise tax atop a 10 percent tax proposed on recreational marijuana should voters approve it at the November ballot. El-Sayed would also raise another $600 million annually through higher gas and diesel taxes and increased registration fees on farm and logging trucks.
  • Borrow $600 million to fund a “clean water bank” that would aid communities upgrade water and sewer systems. El-Sayed would ask voters to approve a bond, which would paid back with tax dollars, private sources and savings from other areas from the state budget, like a reduced corrections budget if his criminal justice reforms were adopted.
  • Seek a 4 to 5 mill statewide property tax to fund school facility improvements. It could save taxpayers money, El-Sayed said, if, after the state absorbed all existing school building debt (estimated at $13.7 billion), local school districts eliminated the taxes they levy for facility improvements.
  • Allow the creation of local transit sales taxes to help cities, and create a commission to study whether cities and counties should be allowed to levy local sales taxes.  In Michigan, unlike many states, there is only the state sales tax.
  • Cut tax abatements for businesses, which would raise taxes for many of them.

Shri Thanedar, Democrat

The Ann Arbor businessman is pushing for better access to college and infrastructure improvements.

Spending:

Taxes:

  • Replace Michigan’s flat 4.25 percent income tax with a graduated income tax. The higher the income bracket, the more people would pay in taxes, a proposal Thanedar says could raise $1.8 billion more in annual revenue. (State voters crushed ballot proposals for a graduated income tax in 1968, 1972 and 1976.)
  • Increase the corporate tax rate from 6 percent to 7.5 percent for corporations with gross receipts between $350,000 and a $1 million and 10 percent for those over $1 million. The increase in corporate rates would generate $1.8 billion per year.
  • Ask voters in 2019 for a $1 billion bond for  infrastructure, money that would have to be paid back with tax dollars. He doesn’t say where that money would come from specifically.

Gretchen Whitmer, Democrat

The former Senate minority leader is calling for more spending on education and roads.

Spending:

  • Reform state education with universal pre-kindergarten education, tripling the number of elementary school reading coaches, adding school counselors and nurses, and making it easier to get state-aid on child care.
  • Raise pay for teachers.
  • Start a two-year “scholarship” that allows Michigan residents to attend two years of post-secondary education, including skills or vocational training, for free at any point in their life –  either right after high school or in mid-career.
  • Fix the damn roads,” by creating a “bank” from which to pull money for road, water, sewer and high-speed Internet infrastructure.

Taxes:

  • Pay for the “Rebuild Michigan Bank” in part with user fees. That would require legislative approval; if lawmakers balk, Whitmer would ask voters to approve a bond, which are loans that would have to be repaid. She doesn’t say from what sources that debt would be paid. Bridge asked her campaign for an explanation.
  • Pay for education reforms by devoting all of the money in the state’s school aid fund to fund K-12 education. In recent years, $3.4 billion has been taken out to pay for other areas,including higher ed.
  • Repeal the tax on retirement income that was allowed following the 2011 tax reform package championed by Snyder. She does not say how the money lost by repeal would be made up and her campaign did not respond to questions from Bridge seeking further information.

Bill Gelineau, Libertarian

The former chair of the Libertarian Party of Michigan is running on less government and fewer taxes.

Spending:

  • Legalize marijuana and redirect the majority of taxes on them, 80 percent, to taxpayers through an equalized tax credit. Gelineau says marijuana shouldn’t be taxed at a higher rate than other items. A legalization referendum on  the ballot in November would tax it at 10 percent, which would raise $100 million to $200 million per year.
  • Eliminate the Michigan Strategic Fund, a state agency that doles out a host of tax credits that divert over $500 million per year from the state government per year, according to the Citizens Research Council. 
  • “Repair our infrastructure” by focusing on “proper priorities,” which Gelineau doesn’t specify.

Taxes:

  • Change the Headlee Amendment to the Michigan Constitution, a 1978 law that limits the growth of the state budget by mandating that all taxes, fees and other revenue sources cannot exceed 9.49 percent of personal income in Michigan. Gelineau would drop the cap to 8.55 percent –  which require approval from two-thirds of the Legislature since it would change the constitution.
  • Fund environmental cleanups by perhaps taxing companies that use toxic materials.

John Tatar, Libertarian

The Redford construction company owner also seeks a host of tax cuts and a dramatically smaller government.

Spending:

  • Rebuild infrastructure. He says Michigan already collects enough taxes but taxpayers are getting “conned” and “played” by “Lansing usurpers” who waste money.
  • Clean up pollution by making companies pay for spills.
  • Eliminate the state Senate and make the House of Representatives part-time. That would require statewide referendums.

Taxes:

  • Repeal the state income tax. He doesn’t say whether he would replace the $10 billion it generates.
  • Reduce property taxes by an unspecified amount and eliminate the tax on retirement.

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