Whitmer: Cut taxes, boost schools. Michigan GOP agrees, but devil’s in details

LANSING — Could there be common ground after all between Gov. Gretchen Whitmer and Republicans who control the Legislature?

On Wednesday, the Democratic governor used the last State of the State address of her first term to propose tax cuts, investments in mental health initiatives and the biggest school-aid budget in decades. 

Despite being at odds with Whitmer over the past three years, Republicans have similar goals for this year. But details may vary significantly — and this is an election-year, which could make progress harder, experts say.

“Thematically, I think there are things that Republicans and Democrats will hear and find common ground,” said David Guenthner, the senior strategist for state affairs of the free market Mackinac Center for Public Policy in Midland.

However, “the details are going to be a bit thorny or a lot thornier to work out,” he said.

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Hours before Whitmer’s speech, Senate Majority Leader Mike Shirkey, R-Clarklake, outlined priorities for this year that shared similarities to ones by Whitmer, including heavy investment into the state’s mental health system.

But he devoted much of his discussion with reporters to blasting Whitmer as “ineffective” and “tone-deaf” and saying her COVID-19 policies caused “economic turmoil.”

Over the years, though, Whitmer and Republicans have come together to pass major policies, including a 2019 overhaul of the state’s no-fault insurance system that led to $400 per car rebates, as well as $1 billion in state incentives that led to Tuesday’s announcement by General Motors Corp. of $7 billion in electric car investment in Michigan.

“I know at times our nation’s capital feels hopelessly gridlocked, but at our state capitol, Republicans and Democrats have shown we can come together to put Michiganders first,” said Whitmer, who spoke from a Detroit Diesel plant in Redford Township.

For the second straight year, Whitmer’s speech was virtual, a safety precaution due to COVID-19. 

Whitmer also used the speech to push for a cap in insulin prices and a $2,500 rebate for electric vehicle sales. 

Here are other highlights, including areas where she could find agreement with Republicans:

Agreement No. 1: Cut taxes

Whitmer wants to repeal the “pension tax” — a promise she made while running for governor in 2018. The proposal would do away with former Gov. Rick Snyder’s so-called “retirement tax” that applies a 4.25-percent income tax on pensions depending on when the taxpayer is born. 

“If we phase it out over the next few years, we can save half a million households in Michigan an average of $1,000 bucks a year,” Whitmer said Wednesday. 

Shirkey, who voted for the pension tax in 2011, told reporters he would only consider the repeal if it affects “all citizens.”

“If what she is proposing will affect all pensioners and all citizens, then I think that’s something that we would be interested (in) looking at,” he said. 

Whitmer and Shirkey also agree in principle on plans to increase the state’s Earned Income Tax Credit for low- and moderate-income families. They did not offer details.

More than 738,000 Michiganders received a total of $110.6 million in earned income tax credit during the 2019 tax year, averaging $150 per capita, according to the state Department of Treasury.

Senate Republicans want taxes cut in a different way.

Legislation lowering individual and corporate income tax rates to 3.9 percent advanced Wednesday out of the Senate Finance Committee. The rate is now 4.25 percent for individuals and 6 percent for corporations. The bill — Senate Bill 768 — would also offer a $500 tax credit per child under the age of 19. 

A legislative analysis estimates the measure would cost Michigan $1.6 billion in fiscal year 2022 and $2.3 billion per year for the next two fiscal years. 

The proposal comes when the state is flush with cash, but much of the revenue is one-time federal stimulus money.

Shirkey said there needs to be more conversations about the bill.

“The worst possible thing to do is to implement a tax cut and then, three years later, we reverse that,” Shirkey said.

Agreement No. 2: Record funding for education

Whitmer and Shirkey both want to see record-high funding in education.

“Soon, I’ll introduce a school aid budget that will mark the biggest state education funding increase in more than 20 years — without raising taxes,” Whitmer pledged Wednesday night.

Michigan ranked 25th in K-12 school spending last year, according to an August 2021 report by the Education Data Initiative. Elementary and secondary schools spent ​​$11,783 per pupil annually.

Both Whitmer and Shirkey said they are committed to policies that keep students in classrooms. Earlier in the pandemic, Whitmer’s administration shut down in-person instruction, but those decisions are now left to school districts.

“In-person learning is critical to social development and mental health,” Whitmer said in her speech. “That’s why we will do everything we can to keep kids in the classroom.”

Educational policies could be crucial in this year’s election, as Republicans nationwide have criticized school closures and mask requirements imposed by Democratic governors.

Agreement No. 3: Invest in mental health

After a Nov. 30 shooting in Oxford High School that killed four students, many lawmakers have talked about the importance of spending on mental health initiatives.

Whitmer proposed a “bold investment” next year to help schools hire over 560 nurses, social workers and counselors. She did not offer specifics.

According to news reports, there are 6,300 licensed school counselors in the state, but only about 2,100 are practicing. 

Whitmer also hopes to be able to retain and recruit mental health workers in the state. 

Republican lawmakers have expressed intentions to address mental health, but in their own way. 

Last year, Shirkey and state Rep. Mary Whiteford, R-Casco Township, introduced legislation that would eliminate the state’s process of contracting with community mental health agencies to provide treatment.

Shirkey suggested the state could tap into the over $7 billion in unspent COVID-19 relief money to invest in mental health services and provider retention and recruitment.

“If this pandemic has not done anything else, it has exacerbated … the need for us upgrading our mental health services,” he said.