State Legislature
10:54 am
Mon March 7, 2011

Pension tax alternatives on the table for legislators this week

Michigan legislators are planning to discuss alternatives to Governor Rick Snyder's budget proposals this week.

One hot button issue is Snyder's plan to place a tax on pensions. That tax is estimated to raise $900 million.

It would go a long way in eliminating the state's budget deficit which is estimated around $1.5 billion.

It's angered a lot of seniors, and lobbying groups, like the AARP, are putting pressure on legislators in Lansing to keep the tax exemption on pensions in place (the AARP plans to hold a rally in Lansing on March 15th).

Laura Weber, with the Michigan Public Radio Network reported that Michigan Senate Republicans are meeting early this week to try to come up with alternatives to the pension tax plan.

Weber spoke with Republican State Senator Tory Rocca who said his opposition to taxing pensions is simple:

"It’s a tax increase, and on top of that it’s a tax increase on senior citizens, and if you look at what their cost of living is and what their cost of living increases are, they tend to have a higher cost-of-living increase than other people because a lot of their cost-of-living is weighted toward health care, which does increase at a rate greater than the rate of inflation every year."

The Associated Press reports that State Senate Majority Leader Randy Richardville didn't say whether Snyder's pension tax plan had enough support to win approval.

But he did say that if legislators want to scrap the tax plan, they'll have to find money elsewhere. From the AP:

Richardville said that if the Senate opposes pieces of Snyder's proposal they will have to balance it out by cutting programs or finding revenues somewhere else within the budget.

That's $900 million more, which could mean more proposals out of Lansing for bigger cuts.