2003 Senate Bill 852 (Postpone income tax cut)

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Public Act 239 of 2003

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Introduced in the Senate on December 2, 2003, to postpone the Jan. 1, 2004 one-tenth percent income tax cut for as long as the balance in the Budget Stabilization Fund (BSF, or "rainy day fund") remains below $250 million. The bill would leave the tax at 4.0 percent, rather than cutting it to 3.9 percent on Jan. 1, 2004 as is required under current statute.
- Referred to the Senate Finance Committee on December 2, 2003.
  - Referred to the Senate Government Operations and Reform Committee on December 9, 2003.
    - Reported in the Senate on December 10, 2003, with the recommendation that the substitute (S-3) be adopted and that the bill then pass.
- Substitute offered in the Senate on December 10, 2003, to replace the previous version of the bill with one which increases from 3.9 percent to 4.00 percent the state income tax rate for the period Jan. 1, 2004 until July 1, 2004. After July 1, the rate will drop to 3.9 percent. Under current law, the rate would drop from 4.0 percent to 3.9 percent on Jan. 1, 2004. The subsitutute also tie-bars the bill to Senate Bill 672 and 673, which eliminate 40 percent of the Single Business Tax businesses pay on their employee health insurance costs. Those bills must therefore become law in order for this one to become law. The substitute passed in the Senate by voice vote on December 10, 2003.
Passed in the Senate (24 to 14) on December 10, 2003, to increase from 3.9 percent to 4.00 percent the state income tax rate for the period Jan. 1, 2004 until July 1, 2004. After July 1, the rate will drop to 3.9 percent. Under current law, the rate is 3.9 percent beginning Jan. 1, 2004. The bill is tie-barred to Senate Bills 672 and 673, which eliminate 40 percent of the Single Business Tax businesses pay on their employee health insurance costs. See also House Bill 4367 and Senate Bill 556. [Vote Details and Comments]
Received in the House on December 10, 2003.
- Referred to the House Tax Policy Committee on December 10, 2003.
Failed in the House (45 to 61) on December 16, 2003, to increase from 3.9 percent to 4.00 percent the state income tax rate for the period Jan. 1, 2004 until July 1, 2004. After July 1, the rate will drop to 3.9 percent. Under current law, the rate is 3.9 percent beginning Jan. 1, 2004. The bill is tie-barred to Senate Bills 672 and 673, which eliminate 40 percent of the Single Business Tax businesses pay on their employee health insurance costs. See also House Bill 4367 and Senate Bill 556. [Vote Details and Comments]
Received in the House on December 18, 2003.
Passed in the House (64 to 46) on December 18, 2003, to increase from 3.9 percent to 4.00 percent the state income tax rate for the period Jan. 1, 2004 until July 1, 2004. After July 1, the rate will drop to 3.9 percent. Under current law, the rate is 3.9 percent beginning Jan. 1, 2004. The bill is tie-barred to Senate Bills 672 and 673, which eliminate half of the Single Business Tax businesses pay on their employee health insurance costs. See also House Bill 4367 and Senate Bill 556. [Vote Details and Comments]
Signed by Gov. Jennifer Granholm on December 23, 2003.

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1) Steve Phelps [by Anonymous Citizen on December 22, 2003]
We all will have to hold our wallets tighter now that the republicans caved in on the tax increase. When will any of them understand that we do not now or ever want higher taxes. If necessary, cut everything down to nothing so that we can continue to afford to live in this state.
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2) Rep. Huizenga's "no vote explaination" [by Admin003 on December 19, 2003]
Rep. Huizenga, having reserved the right to explain his protest against the passage of the bill, made the following statement:

"Mr. Speaker and members of the House:

It was a difficult but necessary decision to vote 'NO' on SB 852, the pause in the income tax reduction. While great progress has been made in the budget process we can, and must, do a better job of putting in place structural budget reforms. Michigan ranks high in personal tax structure (16th in the nation) but even higher in our business tax obligations (5th in the nation) and clearly we need to continue to make Michigan a more friendly place to do business. We are constantly trying to attract businesses to Michigan but we must be more concerned about our current employers who are under constant pressure to be more and more efficient.

The same must hold true for government at a federal, state and local level. We must be smarter and more efficient as to how we deliver core essential government services while protecting as much as possible programs such as education and healthcare. This new agreement, which finally included House of Representatives input, is a step in the right direction. With strong bi-partisan passage of the pause in the income tax reduction I was given the opportunity to register my voice, as well as the voice of many constituents and businesses in the 90th district who said 'this is good, but we could do better.' There is a looming $700 million problem on the horizon for the state's budgets that will start to be negotiated in January. The more fiscal adjustments that can be made now, the fewer we will need to do this coming spring. It is disingenuous to say we have 'cut government to the bone' while forcing our local governments and universities to take a 5% reduction and while knowing that there will be additional cuts made in just a few weeks. Because of these reasons I voted 'No' on Senate Bill 852."
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3) Rep. Sheen's "no vote explaination" [by Admin003 on December 19, 2003]
Rep. Sheen, having reserved the right to explain his protest against the passage of the bill, made the following statement:

"Mr. Speaker and members of the House:

I am voting against the income tax roll back, because I believe we should have made cuts in other areas to provide those additional education dollars, and not take it out of the pockets of Michigan citizens. Had we done nothing, the citizens of Michigan would have received a tax cut; because we did something their taxes are higher. I support the result, but I don't support the method of achieving it. Michigan's economy, its businesses, its schools, and its citizens would have been farther ahead, better off, and more capitol would have been generated, if we had retained the income tax cut, and made additional cuts to the states budget."
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