Michigan House Ends Spring Session with Resounding Note

The Michigan House ended its spring session last week on a resounding note by approving landmark legislation to help direct more funding into public school classrooms and give all Michigan taxpayers needed tax relief.

The measure to put more money into our classrooms reforms the Michigan Public School Employees' Retirement System, which unfortunately has liabilities of more than $45 billion. Schools will ultimately have to pay for this enormous debt.

Many people may not realize that our public schools currently pay 27 percent of their total payroll, on average, into the employee retirement system. These payments could increase as high as 35 percent if nothing is done to help schools. 

Under the House-approved plan, public school employees hired on or after Aug. 1, 2012, would have the option to receive an existing hybrid defined-benefit, defined-contribution plan or a straight defined contribution 401(k) account. Many state employees are already on 401(k) plans, and it's only fair that the state's school employees do the same.

School employees hired on or after Aug. 1, 2012 would no longer receive retirement health care but would receive matching employer contributions up to 2 percent of compensation deposited into a 401(k) account.

The House also approved a broad-based tax relief plan for all Michigan taxpayers through reductions in the state income tax rate. The plan decreases the current income tax rate of 4.35 percent to 3.90 percent over the next six years, saving taxpayers almost $2 billion by 2018.  

The House also approved a plan to raise the state personal exemption tax deduction from $3,700 per person to $3,950 per person, effective Oct. 1. It will then increase to $4,000 per person, effective Jan. 1, 2014, and move to $4,100, effective Jan. 1, 2017.

It's important to point out that the tax relief proposals are based on realistic revenue projections, and can be done without raising taxes or reducing current state programs and services. 

The House this month also approved legislation to help struggling Michigan school districts and municipal governments receive low-interest emergency loans. I sponsored one of the bills in the package and helped shepherd them through the House Local, Intergovernmental and Regional Affairs Committee.  House Bills 5566-70 allow the state treasurer to make $100 million available to schools and governments in distress.

Some of our local cities, township, villages and schools have struggled with declining revenues due to the state's economic hardship. These important measures provide another tool for stressed municipalities to help deal with a financial emergency that actually could cost taxpayers more in the long run.

The extra funding may be issued until Sept. 30, 2018, under the legislation.  The program currently contains $5 million annually in funding for the loans.

As we continue our work to help improve the economy and make government more accountable, I'm always willing to hear from local residents. Please let me know what types of legislation you think the Legislature should consider in the future.

Mark Ouimet is the state representative for the 52nd District. He can be contacted toll free at 1-855-627-5052 or at markouimet@house.mi.gov.