Lansing Update: April 21, 2011

In This Week’s Lansing Update:

  1. Governor’s Tax Plan Modified to Include Partial Restoration of EITC
  2. Senate Human Services Budget Passes Out of Appropriations Committee

Governor’s Tax Plan Modified to Include Partial Restoration of EITC

Low-income workers with children who qualify for the federal Earned Income Tax Credit (EITC) would also receive a $25 per child refundable state EITC under a plan announced this week. Lieutenant Governor Brian Calley, Governor Snyder’s point person on tax matters, disclosed to the House Tax Policy Committee during a hearing that a compromise has been struck to retain a portion of the credit that benefits low-income workers.

Michigan Catholic Conference has made preserving the state EITC its top priority this legislative session, and last week the seven diocesan bishops in the state urged preservation of the credit in a letter written to the governor and legislators calling for greater attention to the needs of the poor in the budget debate.

Michigan’s current EITC is 20 percent of the federal credit. Proposals to eliminate the credit were announced early this year by both the administration and the House majority caucus. Under the compromise unveiled by Lt. Gov. Calley this week, the $25 per child state EITC would accompany an increased Homestead Property Tax Credit for those earning under $20,000 per year. Combined, the diminished EITC and the increased Homestead credit would amount to over $100 million in the budget for the poor that was not in the original proposal.

Michigan Catholic Conference has stated that the diminished EITC is a “step in the right direction” and will continue to advocate for an increased credit in the future.

Senate Human Services Budget Passes Out of Appropriations Committee

The State Senate’s version of the Department of Human Services (DHS) budget passed out of the Senate Appropriations Committee this week with amended language sought by the Conference. The budget now awaits consideration from the full Senate.

Michigan Catholic Conference has long been a supporter of the Children’s Clothing Allowance policy, which provides approximately $79 to parents with children enrolled in the Family Independence Program to purchase new clothes for the school year. The policy was created by former Governor John Engler in the mid-1990s when the state’s General Assistance program was reformed.

The Senate’s budget cut $200,000 from the $12.8 million annual line item and, rather than passing the funds to the parents through a state check, the committee has created a “Clothing Purchase Card” that would be used to buy clothes. The original language allowed for the card to be used at Salvation Army, Goodwill and Volunteers of America. The Conference urged the legislation to be amended to allow for the cards to be used at faith-based retail stores as well, such as St. Vincent de Paul. The committee approved the amendment, and also included language to allow other retail stores to enter into an agreement with the state so the cards could be used at any retailer wishing to participate in the policy.

It is likely that the department’s budget will be ironed out in a conference committee as there are several points of difference between the House version and the Senate version of the DHS budget.