[A-List] Opposition to pension tax grows

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Opposition to pension tax grows
Some GOP senators join Dems in fighting key Snyder proposal
Karen Bouffard / Detroit News Lansing Bureau

Lansing — Gov. Rick Snyder's plan to tax pensions is meeting stiff
opposition in the state Senate where 10 members of the Republican
majority said Tuesday they won't support it, leaving him short of a
majority needed to pass it.

The plan is part of Snyder's sweeping budget proposal that includes
eliminating the Michigan Business Tax and replacing it with a 6
percent corporate tax.

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Taxing pensions would raise about $900 million to help close a $1.4
billion deficit and make up a $1.8 billion shortfall in business
taxes.

The governor moved swiftly Tuesday to say his reform plan still is on
track in the Senate.

"I don't think (the pension tax is) is in trouble at all," Snyder told
reporters after a speech in Lansing.

"We're going to continue the path we're on. It's the right path for
Michigan and we're going to continue to have good dialogue with
legislators."

But Lt. Gov. Brian Calley, who helped shape Snyder's plan to fix
Michigan, said the governor is open to negotiation on the details of
his reform plan.

"We're prepared and ready to work with our partners in the Legislature
with compromise and give-and-take on every element of our plan,"
Calley said. "We're open to the idea of compromising as we move
through the entire process of budget and tax reform."

A Detroit News count of Republican senators found enough oppose the
plan that if they joined the 12 Democrats who are expected to vote
against it as well, Snyder won't have the 19 votes he would need to
pass the pension plan in the 38-member chamber. At 19 votes, passage
would be assured because Calley would be called on to cast a
tie-breaking vote. Snyder wants to wrap the pension plan into one
massive tax reform bill, which has yet to be introduced in the House
or the Senate.

"Senator Whitmer doesn't think there is a Democrat in the Senate who
would vote for a tax on pensions," said Katie Carey, spokeswoman for
Senate Minority Leader Gretchen Whitmer of East Lansing.

Snyder's plan "is not a removal or an end of an exemption — it's a tax
increase, no question in my mind," Senate Finance Committee Chairman
Jack Brandenburg of Harrison Township said Tuesday. "I think it's a
real thumb in the eye of the mandate that was given by the people Nov.
2," he said, referring to pledges many Republicans made during the
campaign to not raise taxes.

Besides Brandenburg, Senate Republicans Patrick Colbeck of Canton,
Mike Green of Mayville, Geoff Hansen of Hart, Joe Hune of Whitmore
Lake, Rick Jones of Grand Ledge, John Moolenaar of Midland, Mike Nofs
of Battle Creek, David Robertson of Grand Blanc and Tory Rocca of
Sterling Heights said they're against the plan.

Snyder proposed the tax on private and public pensions in February as
part of his budget proposal for the fiscal year that starts Oct. 1.
Social Security checks, however, would not be taxed.

Currently, public pensions are exempt from income tax while private
pensions are exempt up to $41,200 for single filers and $90,240 for
joint filers. Only Michigan, Alabama, Mississippi and Pennsylvania
exempt most or all public and private pension income from taxation.
House support stronger

Snyder's tax plan appears to have more support among Republicans in
the House. Ari Adler, spokesman for House Speaker Jase Bolger,
R-Marshall, said Snyder's proposal will be introduced this week in the
lower chamber, sponsored by Rep. Jud Gilbert, R-Algonac.

"It's being put in as the governor proposed, and our plan in the House
is to use that as a starting point and get a full review under way,"
Adler said.

"There certainly is agreement that the pension tax is one of the more
politically difficult parts of the plan, but they're not ready to
dismiss it."

The governor has asked lawmakers to approve his plan as just one or
two massive bills with few line items rather than signing off on each
detail of his proposal. Senate Republicans have not agreed to lump it
all together, and Majority Leader Randy Richardville, R-Monroe, said
he will insist on line items to ensure the Senate retains its
authority over the budget.

It's up to the Senate majority whether it votes on an omnibus bill,
which Snyder proposes, or in another fashion more to their liking, for
instance, separate bills dealing with various issues, as budget bills
have traditionally been handled.

Lawmakers say they've been swarmed with calls from angry pensioners.

"The calls and e-mails taken in this office are 100 to 1 against the
proposal," said Mike Murray, chief of staff for Sen. Mike Kowall,
R-White Lake, who's undecided on the issue.

Senate Appropriations Committee Chairman Roger Kahn of Saginaw was the
only lawmaker contacted by The News who said he supports taxing
pensions.

He said many people in his district agree with Snyder that everybody
should share in the pain of fixing Michigan's structural deficit.

"In my district, the calls on this are surprisingly strong in support
of it," Kahn said. "I just got off the phone with a guy on a pension,
and he buys into the governor's expectation of fairness."
Searching for alternatives

Richardville is working with the Republican caucus to find a way to
replace the $900 million Snyder hopes to raise with the pension tax,
spokesman Matt Marsden said. The Senate has not agreed to Snyder's
plan of forcing lawmakers to vote on his tax plan in its entirety,
Marsden added.

Alternatives under discussion include increasing the amount of the 6
percent corporate tax, or further reducing government spending.

"I don't want to see a $900 million tax burden placed on the backs of
a million and a half tax filers here in Michigan," Hune said. "I would
rather cut the budget than see a tax placed on retirees."

Hune said the Department of Community Health budget would be on his
list of potential targets.

Brandenburg has the Department of Corrections in his crosshairs. He
said Snyder should privatize the department, believing companies can
run prisons more cheaply.

Sen. Jim Marleau, R-Lake Orion, said maybe business should have to
shoulder more of the burden.

"All of this is because we're changing the MBT," Marleau said. "We
have to come up with a way to come up with the shortfall … look at
what would a 7 percent (corporate tax) do instead of 6 percent."

Democrats seized on the opposition to the tax on pensions by sending
out a fundraising e-mail on Tuesday.

"Senate Democrats are not going to allow this to happen without a
fight," Whitmer said in the letter. "We will … stand up for our
seniors by opposing efforts to tax the pension checks they spent their
lives earning."

kbouffard at detnews.com

(517) 371-3660

Detroit News Staff Writer Paul Egan contributed.

>From The Detroit News:
http://detnews.com/article/20110302/POLITICS02/103020373/Opposition-to-pension-tax-grows#ixzz1FSk4LKLS