Whitmer nixes GOP lawmakers' hopes for a tax cut in 2024

Lansing — Democratic Gov. Gretchen Whitmer threw cold water Monday on Michigan Republicans' calls for further tax relief this year, saying she doesn't believe "any proposals on that front" will advance in the Legislature.

"I don't see any big, sweeping changes," Whitmer told reporters of the state's tax system after speaking at a Martin Luther King Jr. Day celebration in downtown Lansing.

Whitmer's comments came three days after Michigan officials set new revenue projections, expecting state government to continue a streak of end-of-year surpluses. Last week, state Rep. Sarah Lightner, a Springport Republican who serves as minority vice chairwoman for the House Appropriations Committee, argued the financial outlook provided an opportunity to deliver a tax cut.

Asked if she had any appetite for additional tax relief this year, Whitmer replied on Monday, "I don't think you're going to see any proposals on that front."

The governor said under her administration, state government had paid down debt and built up a rainy day fund. It's unclear what level of surplus state leaders will be working with this year, Whitmer said.

"I think our house is in good order," Whitmer said. "We always knew we'd have a moment where we would have to really be smart about how we spend these dollars. But I feel good about the situation we're in."

Michigan has experienced a string of years recently when revenues exceeded expectations. In 2023 — the first year of Whitmer's second term — state lawmakers approved an overhaul of state tax laws, decreasing taxes on retirement income and boosting the Earned Income Tax Credit, which benefits low- and moderate-wage workers.

The change in the EITC was slated to begin for the 2022 tax year. But because the broader tax overhaul didn't get enough votes to take effect early, Michigan residents couldn't claim the expanded credit on their annual tax filings until this year.

So, beginning Feb. 13 — the day the tax overhaul law takes effect — the Whitmer administration will mail refund checks averaging $550 directly to about 700,000 households that qualify for the EITC.

But Republican lawmakers have called for broader and additional tax cuts. They've focused on the state's personal income tax rate, which dropped from 4.25% to 4.05% for 2023 because state revenues outpaced inflation.

There's an ongoing legal battle over the interpretation of a policy that tied the rate to revenues, but the rate is currently expected to increase back to 4.25% for 2024, as Whitmer herself acknowledged Monday. The anticipated increase would occur amid frustration among voters over the economy and the prices of consumer goods.

In a Jan. 2-6 poll of likely Michigan voters, commissioned by The Detroit News and WDIV-TV and released last week, two of the top three concerns among participants were jobs and the economy (16%) and inflation and rising prices (7%).

Michigan House Minority Leader Matt Hall, a Republican from Richland Township, labeled, in a statement last week, the expected increase in the income tax the "tax hike" Democrats wanted.

“Workers and job providers are looking for relief from the high costs of living, but Democrats spent 2023 fighting tooth and nail to raise the income tax and take even more money from all of us," Hall added.

Whitmer will detail her policy priorities for 2024 during her State of the State address on Jan. 24.

Currently, Democrats hold a majority in the state Senate, but in the House, the seats are split 54-54 between Democrats and Republicans. That will change after two special elections in districts that favor Democrats in April.

cmauger@detroitnews.com