[ ♪♪ ] >> WELCOME BACK.

THE GOVERNOR'S NEW BUDGET DIRECTOR, CHRIS HARKINS IS UP NEXT ON HOW TO SPEND 74 BILLION OF YOUR TAX DOLLARS.

OUR LEAD STORY: WHAT'S HAPPENING ON THE TAX CUT FRONT?

ON THE "OTR" PANEL: JORDYN HERMANI, DAVID BOUCHER AND CHAD LIVENGOOD.

>> Announcer: MICHIGAN PUBLIC STATIONS HAVE CONTRIBUTED TO THE PRODUCTION COSTS OF "OFF THE RECORD" WITH TIM SKUBICK.

NOW, THIS EDITION OF "OFF THE RECORD" WITH TIM SKUBICK."

>> WELCOME TO STUDIO C FOR ANOTHER EDITION OF "OFF THE RECORD."

AS WE MOVE DOWN THE ROAD WITH THE LEGISLATURE BEING ALL OVER THE LOT WHEN IT COMES TO TAX CUTS, AND OUR GREAT PANEL WILL BE DISCUSSING THIS STORY AS WE TAKE A LOOK AT WHAT HAPPENED THIS WEEK AS HOUSE REPUBLICANS, THEY GOT A PLAN.

THE REPUBLICAN SENATE AND HOUSE AGREE THAT THE INCOME TAX RATE SHOULD BE CUT TO 3.9% BUT THE HOUSE PLAN DOES NOT INCLUDE A CORPORATE BUSINESS TAX CUT WHICH THE SENATE REPUBLICANS WANT.

MEANWHILE, THE DEMOCRATIC GOVERNOR, GRETCHEN WITMER, HAS NOT ENDORSED THE INCOME TAX ROLLBACK AND HAS NOT TALKED ABOUT A BUSINESS TAX CUT EITHER.

THE HOUSE REPUBLICANS ALSO DIFFER WITH THE GOVERNOR ON HER TAX BREAKS FOR SENIORS.

SHE HAS PROPOSED A RETIREMENT TAX CUT THAT IS TARGETED JUST AT PUBLIC EMPLOYEE RETIREES.

THE REPUBLICANS PROPOSE COMBINED TAX RELIEF ON REGULAR AND RETIREMENT INCOME FOR EVERYBODY OVER THE AGE OF 62.

THAT WOULD MEAN A SINGLE SENIOR WOULD NOT PAY TAXES ON THE FIRST $40,000 OF INCOME AND FOR SENIOR COUPLES, THEY WOULDN'T PAY TAXES ON THE FIRST $80 THOUSAND.

THE REPUBLICAN SPONSOR SAYS THESE ACROSS THE BOARD TAX CUTS ARE NEEDED FOR EVERYBODY.

>> GIVEN THE INFLATION THAT'S GOING ON IN OUR COUNTRY RIGHT NOW, ALL MICHIGAN FAMILIES, WORKERS AND SENIORS NEED RELIEF, NOT JUST SOME.

>> BUT THIS LOCAL DEMOCRAT THINKS IT IS UNFAIR THE WEALTHY WOULD GET A BREAK ALONG WITH EVERYBODY ELSE.

>> HOW MUCH OF THAT IS FOR FAMILIES EARNING OVER, LET'S SAY, $250,000?

I THINK THAT'S THE KITCHEN TABLE TYPE OF TALK THAT PEOPLE WOULD LIKE TO KNOW THE ANSWER TO.

>> YOUR BILL ACTUALLY DOESN'T GIVE A SINGLE PENNY TO MILLIONAIRES OR BILLIONAIRES.

WHAT THIS DOES IS IT LETS THEM KEEP THEIR OWN MONEY.

>> ON ANOTHER FRONT, INSTEAD OF GIVING MORE MONEY TO RETIREES, THE HOUSE REPUBLICANS WANT TO POUR $1.5 BILLION TO LOWER THE DEBT ON LOCAL GOVERNMENT RETIREMENT ACCOUNTS.

SO RETIREES CAN GET A CHECK IN THE MAIL.

>> WE'RE GIVING TAX RELIEF TO OUR SENIORS DOES THEM NO GOOD IF THEIR PENSION THEY EARN RUNS OUT OF MONEY.

>> SO NOW THERE ARE THREE DIFFERENT TAX CUT PROPOSALS IN THE HOPPER.

EVERYBODY WILL HAVE TO SIT IN A ROOM AND DECIDE HOW TO DO THIS.

YEAH, HOW TO DO THIS, JORDYN.

WERE YOU SURPRISED AT THE EXTENT OF THE TAX CUTS THAT THE REPUBLICANS POPPED ON EVERYBODY YESTERDAY?

>> SURPRISED NOT NECESSARILY.

IT DID CONTAIN SOME SIMILAR ASPECTS TO THE SENATE PLAN, THOUGH DID DIFFER SLIGHTLY IN THAT IT DIDN'T OFFER ANY TYPE OF CORPORATE TAX CUTS.

AND ALSO DIDN'T OFFER ANY $500 CHILD TAX CREDIT PER CHILD UNDER THE AGE OF 19.

BUT STILL, I MEAN, THE GOVERNOR EARLIER CALLED SENATE REPUBLICANS' PLAN NOT DOABLE, NOT SUSTAINABLE, SO I MEAN, I IMAGINE SHE'LL HAVE THE SAME THING TO SAY ABOUT THIS TAX PLAN HERE BECAUSE AGAIN, IT DOESN'T DO WHAT I IMAGINE DEMOCRATS ACROSS THE BOARD ARE HOPING IT WOULD DO, WHICH IS RETURN THAT MONEY TO LOWER INCOME INDIVIDUALS, DEMOCRATS, DURING THAT PANEL.

WE'RE SAYING THAT THE LOWEST 20% OF EARNERS WOULD ONLY KEEP SOMETHING LIKE $12 UNDER THIS PLAN WHILE THE HIGHEST 1% WOULD KEEP CLOSE TO $5,000.

I KNOW REPRESENTATIVE MATT HALL, WHO'S CHAIR OF THE TAX POLICY COMMITTEE, DEFINITELY DISAGREED WITH THAT.

HE SAID THE LOWEST 20% WOULD KEEP SOMETHING LIKE 140, SO THERE'S A LOT OF NUMBERS BEING THROWN AROUND HERE, BUT IT'S DEFINITELY THAT THE LOWER INCOME INDIVIDUALS ARE PROBABLY NOT GOING TO SEE AS MUCH AS THE DEMOCRATS WOULD LIKE TO SEE.

>> SO DAVID, IS THIS HOUSE REPUBLICAN PLAN DOA?

>> YEAH.

ABSOLUTELY.

EVERYBODY KNOWS IT.

SO IS THE SENATE PLAN AND SO IS THE GOVERNOR'S PLAN.

EVERYBODY COMES OUT WITH A PLAN.

IT'S ESSENTIALLY A PRESS RELEASE.

SOME POOR STAFFER SPENDS AN ABSOLUTE TON OF TIME ON THIS POLICY, AND THEN THE PRINCIPALS, THE HEADS OF THESE IMPORTANT SENATE AND HOUSE COMMITTEES AND PEOPLE FROM THE GOVERNOR'S ADMINISTRATION GO IN A PRIVATE ROOM AND COME OUT WITH A THOUSAND PAGES AND EVERYBODY VOTES ON IT.

RIGHT?

THAT'S HOW THE PROCESS TENDS TO HAPPEN.

THE KEY HERE IS FIGURING OUT WHICH ASPECTS FROM THE GOVERNOR'S PLAN AND THE LEGISLATURE'S PLAN WILL MAKE IT INTO SOME FINAL PROPOSAL.

>> INTERESTING PART OF THE HOUSE REPUBLICAN PLAN IS THAT THEY BASICALLY STIFFED THE CORPORATE WORLD.

>> YEAH.

THEY'RE SAYING THAT THE MAJOR CORPORATIONS IN THE STATE DON'T NEED A TAX BREAK, THAT THEY'RE NOT FACING THE KIND OF PRESSURES, DAILY PRESSURES, THAT WORKERS, FAMILIES AND SENIORS AND REPRESENTATIVE MATT HALL'S THEME WAS WORKERS, FAMILIES AND SENIORS, OVER AND OVER AND OVER.

SO I THINK THERE'S ACTUALLY SOME ROOM FOR COMPROMISE THAT DOESN'T INCLUDE A RATE CUT, BUT TAKES MAYBE ONE OF THE GOODIES FROM EACH OF THE PLANS, YOU GET THE GOVERNOR'S ROUND INCOME TAX CREDIT, IT HELPS THE LOW-INCOME FAMILIES.

YOU GET THE HOUSE REPUBLICANS' EXEMPTION UP TO 40,000 FOR INDIVIDUALS, 80,000 FOR SENIOR CITIZEN COUPLES.

THAT WOULD EXEMPT MOST PENSION INCOME.

NOT EVERYBODY HAS A 60,000 DOLLAR A YEAR PENSION FROM CHRYSLER CORPORATION ANYMORE.

THE TYPICAL PENSION FROM A POLICE OFFICER IN FERNDALE IS AROUND 25, $30,000 A YEAR.

SO YOU TAKE -- YOU COULD PROBABLY, YOU KNOW -- YOU COULD GET THAT EXEMPTED WITHOUT DOING THIS COMPLICATED TAX -- RETIREMENT TAX CUT THAT THE GOVERNOR'S PLAN.

THE GOVERNOR'S PLAN CAN'T BE EXPLAINED IN TWO SENTENCES.

IT REQUIRES A LARGE FLOW CHART.

THEN YOU GO TO THE SENATE REPUBLICAN PLAN, THAT $500 A KID CHILD TAX CREDIT.

IT'S WILDLY POPULAR PROPOSAL FOR FAMILIES.

REMEMBER, TIM, GOVERNOR RICK SCHNEIDER, THE LEGISLATURE GOT RID OF THE $600 PER KID TAX CREDIT, SO YOU COULD FIND A ROAD TO COMPROMISE HERE THAT IS STILL A BILLION DOLLARS OR MORE IN CUTTING TAXES WITHOUT GOING TOWN DOWN THE ROUTE OF CUTTING THE INCOME TAX RATE ITSELF.

>> I THINK YOU'RE RIGHT THERE IS A COMPROMISE THERE, BUT, JORDYN, WHAT WE SEE HERE IS A HUGE PHILOSOPHICAL DIFFERENCE.

THE GOVERNMENT HAS TARGETED TAX RELIEF.

LET'S PICK OUT THE FOLKS IN THE POPULATION THAT NEED IT THE MOST AND HELP THEM OUT.

THE REPUBLICANS SAY, HEY, WE'RE ALL MICHIGANDERS.

WE'RE ALL IN THIS GAME TOGETHER, THE RICH, THE POOR.

EVERYBODY SHOULD SHARE.

IS THERE A MIDDLE LINE ON THAT KIND OF A PHILOSOPHICAL BREAK?

>> I HONESTLY DON'T KNOW.

REPRESENTATIVE HALL DID DO AN ADMIRABLE JOB OF DEFENDING WHAT HE SAID, LIKE, WE POINTED OUT, IS A TAX CUT FOR EVERYBODY, EVERY CITIZEN, EVERY INDIVIDUAL.

HE SAID IT SEVERAL TIMES THROUGHOUT THE HEARING.

YOU HAD SENATOR ALBERT SAYING EVERYBODY SHOULD GET A TAX CREDIT REGARDLESS OF WHO THEY THEY VOTED FOR, TAKING A JAB AT DEMOCRATS THERE.

AND I MEAN, I DON'T HONESTLY KNOW IF THERE IS GOING TO BE SOME MIDDLE GROUND IN THAT REALM AS TO WE SHOULD GIVE MORE TO THE LOWER EARNERS AND MAYBE LESS TO THE HIGHER EARNERS.

>> CHAD, I WANT TO ASK YOU, BECAUSE YOU WERE AT THE NEWS CONFERENCE WITH THE GOVERNOR THE OTHER DAY.

DID SHE OR DID SHE NOT ANSWER THE QUESTION?

IS SHE WILLING TO COMPROMISE ON THE INCOME TAX RATE?

IS SHE WILLING TO PUT THAT ON THE TABLE?

WHAT WAS YOUR IMPRESSION OF WHAT SHE SAID?

WHY YOU'RE SMILING.

>> MY IMPRESSION IS THAT THERE'S A RIGHT OR WRONG ANSWER HERE FOR YOU, TIM, BUT, YES, SHE BASICALLY DID NOT ANSWER YOUR QUESTION, DESPITE MANY EFFORTS TO GET HER TO, BUT SHE DID MAKE IT CLEAR THAT SHE WANTS TO START WITH WHAT SHE CALLS TAX FAIRNESS IN THAT SHE'S LONG BELIEVED IT'S UNFAIR THAT PEOPLE WOULD PLAN FOR RETIREMENTS, PUBLIC PENSIONERS, WHO LONG ENJOYED TAX-FREE PENSIONS IN THIS STATE.

THEY PLANNED FOR THIS AND THEY GOT, WHAT SHE CALLS, THE RUG PULLED OUT FROM UNDER THEM IN THE RICK SCHNEIDER IN THE LEGISLATURE IN 2011.

SHE WANTS TO REVERSE THAT.

REPUBLICANS ARE TRYING TO FIGHT THAT BY SAYING IT'S NOT FAIR TO JUST AWARD A TAX BREAK TO ONE GROUP OF PEOPLE.

AND I MEAN, REPRESENTATIVE THOMAS ALBERT, THE HOUSE CORPORATIONS CHAIRMAN, TOOK IT A STEP FURTHER AND SAID THESE PUBLIC PENSION TAX CUTS ARE FOR THE GOVERNOR'S POLITICAL SUPPORTERS, WITHOUT NAME NAMES, BUT THE MICHIGAN EDUCATION ASSOCIATION.

BIG LABOUR UNIONS AND PUBLIC SECTOR JOBS THAT THE GOVERNOR IS RELYING UPON POLITICALLY.

>> I WANT TO POINT OUT THAT THE GOVERNOR'S PROGRAM IS BOTH FOR PUBLIC AND PRIVATE EMPLOYEES.

I GOT THAT WRONG IN THE PIECE, AND I WANT TO MAKE THAT CORRECTION.

BUT DAVID, LET'S SWITCH TO SOMETHING THAT'S VERY INTERESTING TO UNDERSTAND.

WE HAD A GROUP OF NON-POLITICIANS GET IN THE ROOM THE OTHER DAY AND VOTE THEMSELVES A PAY RAISE.

THIS IS THE REDISTRICTING COMMISSION.

HOW DO YOU THINK THAT'S PLAYING BACK HOME?

>> I'M SURE THAT THE REDISTRICTING COMMISSION, WHICH IS A GROUP OF CIVIC-MINDED INDIVIDUALS, WHO RAISED THEIR HANDS TO PARTICIPATE IN A UNIQUE PROCESS, QUITE UNDERSTAND THE BLOWBACK OF VOTING TO GIVE THEMSELVES A PAY RAISE.

I DON'T THINK THAT THEY UNDERSTAND THAT ANY PUBLIC OFFICIAL IN ANY OUTLET VOTING GIVE THEMSELVES A PAY RAISE, ESPECIALLY WHILE THIS DEBATE ABOUT WHETHER OR NOT THE LEGISLATURE SHOULD SEND BILLIONS OF DOLLARS BACK TO MICHIGAN RESIDENTS, I DON'T THINK THEY UNDERSTAND HOW THAT'S GOING TO HAPPEN.

ESPECIALLY AS MANY HAVE NOTED, THE COMMISSION IS RUNNING AT A DEFICIT.

IT'S, YOU KNOW, FACING ABOUT A HALF DOZEN LAWSUITS.

LOTS OF PEOPLE DON'T THINK THEY DID A GOOD JOB.

YOU CAN ARGUE WHETHER OR NOT THAT'S THE CASE.

SOME POLLS SAID THEY DID.

BUT VOTING TO GIVE YOURSELF A 7% RAISE AMID ALL OF THAT, ESPECIALLY WHEN THE JOB IS ALMOST DONE, IF IT'S NOT DONE ALREADY, IS AN INTERESTING DECISION.

>> JORDYN, WHAT WAS YOUR TAKE WHEN YOU READ THAT?

>> I WAS CURIOUS ABOUT WHETHER OR NOT OPTICS WERE CONSIDERED PRIOR TO MAKING THAT MOVE.

FROM AN OUTSIDE PERSPECTIVE, I'M NOT A GENERAL REDISTRICTING REPORTER BUT I DO FOLLOW ALONG.

I HAVE COVERED THEM.

AND I MEAN, THE AVERAGE PERSON SEES THIS AS, YOU KNOW, WHAT ARE YOU DOING?

YOUR WORK IS ALMOST DONE.

THIS IS UNNECESSARY, EVEN THOUGH THEY'RE CITING INFLATION TO DO THIS.

IT JUST -- IT FEELS LIKE IT GIVES MORE FIRE TO THE CROWD WHO SAYS THAT THIS REDISTRICTING COMMISSION HAS JUST GOTTEN IT WRONG FROM THE START.

>> CHAD, THEY DO HAVE A WAY TO PAY FOR THE RAISE.

THEY FIRED THEIR ATTORNEY AT THE SAVINGS OF $100,000.

THERE YOU GO.

THE RAISE IS ALREADY COVERED.

THEY DON'T HAVING TO THE LEGISLATURE AND ASK FOR THAT MONEY.

>> THERE'S PROBABLY A CASE TO HAVE FIRED THOSE ATTORNEYS A LONG TIME AGO.

THIS IS KIND OF AUDACIOUS, BUT ALSO WHO'S GOING TO HOLD THEM ACCOUNTABLE?

THIS IS A HAND-DRAWN FROM THE BAG GROUP OF CITIZENS WHO GOT ONTO THIS COMMISSION, GOT THESE -- IT IS A PAID JOB.

THEY DID PUT MANY HOURS INTO IT.

WE CAN ARGUE ABOUT WHETHER THEY SCREWED IT UP OR VIOLATED THE CONSTITUTION OR FEDERAL VOTING ACTS AND SUCH, BUT THAT WILL BE DECIDED BY A JUDGE PROBABLY SHORTLY, BUT IT'S INTERESTING, I MEAN, THE LEGISLATURE HAS GONE BASICALLY TWO DECADES OF AUSTERITY WHEN IT COMES TO ITS OWN PAY.

NO ONE WILL DARE VOTE THEMSELVES A PAY RAISE.

AND A GROUP OF AVERAGE CITIZENS COME IN, THEY DO A JOB FOR A YEAR, AND THEN THEY SAY, HEY, WE GOT TO ADJUST TO INFLATION.

SO WE'RE GIVING OURSELVES A 7% BOOST IN PAY, JUST LIKE ANYBODY ELSE IN ANY OTHER ORGANIZATION IS CONSIDERING.

SO MAYBE THE LEGISLATURE COULD TAKE SOME LESSONS FROM THIS PANEL ON HOW TO JUST GO AND DO IT.

>> THIS STORY UNDERSCORES WHY THE MICHIGAN LEGISLATURE DECIDED, AFTER YEARS OF SETTING THEIR PAY AND GETTING BEAT OVER THE HEAD EVERY TIME THEY DID, TO GIVE IT OFF TO SOMEBODY ELSE, BECAUSE WE DON'T WANT THE ONUS ON OUR POLITICAL TABLE FOR VOTING OURSELVES A PAY RAISE.

OBVIOUSLY THIS COMMISSION DIDN'T READ ANY OF THAT HISTORY.

THEY DID WHAT THEY DID AND LET'S SEE IF IT SURVIVES.

TALKING ABOUT SURVIVES, LET'S CALL IN THE STATE BUDGET DIRECTOR WHO'S UP TO HIS EYEBALLS IN NUMBER.

Mr. HARKINS, YOU'VE BEEN WANTING TO DO THE SHOW FOR HOW LONG?

>> FOR YEARS, TIM.

I'VE WATCHED FOR YEARS.

IT'S LIKE I'M A LONG TIME LISTENER, FIRST TIME CALLER, I GUESS.

>> WELL, I'LL SEND YOU THE BILL.

LET'S START OFF THIS QUOTE FROM THE RANKING DEMOCRAT ON THE HOUSE APPROPRIATIONS COMMITTEE, YOUR FRIEND, Mr. TATE.

IRRESPONSIBLE AND RECKLESS.

WILL YOU USE THAT LANGUAGE TO DESCRIBE THE REPUBLICAN PLAN?

>> NO, TIM.

FIRST I NEED TO GET MY ARMS AROUND WHAT THE REPUBLICAN PLAN IS.

I THINK, AS YOU POINT OUT, WE JUST SAW IT YESTERDAY AND SO WE'VE GOT TO TAKE A LOOK AT WHAT THIS PLAN IS.

IT CERTAINLY LOOKS LIKE IT'S AN EXPENSIVE PLAN IN TERMS OF A TAX CUT COUPLED WITH SOME OF THE OTHER SPENDING THAT THE HOUSE HAS UNVEILED YESTERDAY, BUT I NEED TO GET MY ARMS AROUND WHAT THIS PROPOSAL REALLY LOOKS LIKE BEFORE WE CAN LABEL IT ANYWAY.

>> SO THE REPRESENTATIVE WAS PREMATURE IN DENOUNCING THE REPUBLICAN PLAN?

>> WELL, I WOULDN'T SAY THAT.

THE REPRESENTATIVE CAN SAY WHAT HE WOULD LIKE ABOUT THAT PLAN, BUT I THINK HE MAY ALSO HAVE HAD MORE INFORMATION IN ADVANCE, RIGHT?

I THINK WE WERE MADE AWARE OF THIS PLAN YESTERDAY AND SO THAT'S WHERE I'M GOING TO TRY TO BEGIN NOW TO SPEND TIME AND COMPARE WHAT THE HOUSE IS LOOKING LIKE AND WHAT THE SENATE HAS ALREADY PROPOSED AND WE'LL COMPARE THAT TO WHAT THE GOVERNOR'S PUT ON THE TABLE A FEW WEEKS AGO.

>> JORDYN, I STRUCK OUT.

LET'S SEE HOW YOU CAN DO.

>> SO IN TALKING WITH THE APPROPRIATIONS CHAIR, REP ALBERT, HE WAS SAYING THAT THE PENSION AND DEBT-RELATED SPENDING, THE ONE-TIME SPENDING OF 1.5 BILLION IS SOMETHING THE HOUSE HE WANTED TO DO FOR A WHILE AND NOW THAT WE HAVE SUCH A SURPLUS OF FUNDING, THERE'S NO TIME LIKE THE PRESENT.

SO FROM YOUR PERSPECTIVE, WHAT IS MORE DIFFICULT, DEALING WITH A SURPLUS LIKE THIS OR WHEN WE HAVE A MAJOR SHORTFALL IN TERMS OF FUNDING IN THE GREAT RECESSION OF '08 AND 'O9?

WHERE WOULD YOU RATHER BE AS A DIRECTOR?

>> I WOULD RATHER BE IN THE SEAT TODAY.

I'VE HAD THE GOOD PLEASURE OF BEING AROUND THIS TOWN FOR BOTH SOME PRETTY SIGNIFICANT DEFICITS AND SOME NOW PRETTY SIGNIFICANT SURPLUSES TO CONSIDER.

AND I THINK THEY BOTH HAVE DIFFERENT CHALLENGES.

FOR EXAMPLE, WHEN EVERYONE IN THE STATE THINKS THAT THERE ARE MULTIPLE BILLIONS AVAILABLE, THEN YOU HAVE A LOT OF PEOPLE WHO HAVE A LOT OF IDEAS ON HOW TO SPEND THOSE MULTIPLE BILLIONS.

PUTTING THEM NEXT TO EACH OTHER AND COMPARING THEM IS DIFFICULT.

BUT THE SAME IS TRUE WHEN YOU TALK ABOUT REDUCTIONS.

WHEN YOU HAVE TO MAKE CUTS, THERE ARE INDIVIDUAL PEOPLE IMPACTED BY THOSE THINGS.

AND THOSE ARE TOUGH DECISIONS IN EITHER WAY.

>> JORDYN, FOLLOW-UP?

>> WHEN BOTH REPRESENTATIVE HALL AND REPRESENTATIVE ALBERT WERE PRESS ON THE FACT OF HOW ARE WE GOING TO CONTINUE TO PAY FOR THIS, THEY WERE SAYING WE WOULD BE ABLE TO MAKE CUTS IN THE BUDGET.

ARE YOU GUYS ALREADY LOOKING AHEAD IN CONSIDERING THIS?

HAD THIS BEEN BROUGHT TO THE TABLES HOW ARE WE GOING TO PAY FOR THIS MOVING FORWARD?

DO YOU SEE THEIR IDEA OF, WHILE WE CAN MAKE CUTS IN THE BUDGET AND SORT OF HAND WAVING IT AS AN HONESTLY SUSTAINABLE AND PRACTICAL IDEA?

>> SO I THINK, JORDYN, THE ANSWER IS WE LOOK AT HOW WE PUT A BUDGET TOGETHER, RIGHT.

WE LOOK, AND YOU ALL KNOW, WE DO A REVENUE CONFERENCE TWICE A YEAR TO TRY TO FIGURE OUT WHAT THE REVENUES LOOK LIKE.

WE'VE DONE THAT RECENTLY IN JANUARY.

WE DID THAT IN MAY.

WE SEE MODEST GROWTH FOR OUR STATE REVENUES OVER THE NEXT SEVERAL YEARS.

WE'VE GOT ABOUT 3% EXPECTED IN TERMS OF GROWTH.

SO WHAT THE GOVERNOR PUT TOGETHER WAS A PROPOSAL RELATED TO CHANGES IN THE EITC AND ELIMINATING THE RETIREMENT TAX AND WE DID THAT IN A WAY THAT PHASED IN OVER TIME AND MATCHED THOSE SORT OF REVENUE GROWTHS.

SO THAT WE DID PUT TOGETHER A BUDGET THAT REFLECTED WHAT WE THINK ARE COMING IN TERMS OF STATE REVENUES.

I CAN'T REALLY SPEAK TO HOW THE HOUSE REPUBLICANS THINK THEY'LL ADDRESS A BILLION-EIGHT IN TERMS OF CHANGES TO THAT REVENUE.

CERTAINLY IT APPEARS THAT IT WOULD EXCEED THE AMOUNT THAT WE EXPECT IN TERMS OF REVENUE GROWTH.

I EXPECT IT WOULD COME WITH CUTS IN THE BUDGET.

THAT'S DIFFERENT AS THE LEGISLATURE UNVEILS ITS TAX COMPONENTS.

WHAT THE GOVERNMENT PUT FORWARD ARE TAX CHANGES ALONGSIDE A BUDGET RECOMMENDATION.

WE HAVEN'T YET SEEN THE LEGISLATURE'S BUDGET RECOMMENDATIONS.

SO WE CAN TALK ABOUT TAX POLICY IN A VACUUM, BUT UNTIL WE SEE WHAT THE IMPLICATIONS ARE FROM THE LEGISLATURE'S BUDGETS, WE'RE NOT REALLY ABLE TO EVALUATE THE WHOLE PICTURE.

>> CHAD?

>> DIRECTOR HARKINS, WHAT IS THE COST OF THE GOVERNOR'S PLAN TO -- PROPOSAL TO RESTORE THE EARNED INCOME TAX CREDIT TO 20% OF THE FEDERAL CREDIT AND WHAT IS THE COST OVER THE FINAL FOURTH YEAR OF RETIREMENT TAX CUT?

>> SURE, CHAD.

THE EITC IS A ONE-TIME INCREASE AND IT WILL BE AN ONGOING INCREASE.

SO THAT'S FROM 6 TO 20%.

THAT COST IN FISCAL '23, WE HAVE PEGGED AT $260 MILLION.

THAT, AGAIN, IS AN ONGOING COST.

IN TERMS OF THE RETIREMENT TAX COMPONENT, THERE'S A RAMP-UP OVER TIME AND ONCE IT'S FULLY IMPLEMENTED, IT'S ABOUT A $500 MILLION A YEAR IMPACT TO THE BUDGET.

>> CHAD, FOLLOW-UP?

>> WHY SHOULD THERE BE STIFFER TREATMENT FOR PRIVATE PENSIONS?

BECAUSE THE WAY THAT RAMP-UP WORKS IS EVERY YEAR PUBLIC AND PRIVATE PENSIONS ARE CAPPED AT A CERTAIN AMOUNT AND THEN AT THE END OF THE FOURTH YEAR, THERE'S STILL A CAP IN PLACE FOR PRIVATE PENSIONS BUT THERE'S NOT A CAP IN PLACE FOR PUBLIC PENSIONS.

WHY THE DISTINCTION THERE?

>> CHAD, IT'S A GOOD QUESTION, AND IT'S A GOOD THING, I THINK, TO BEGIN TO TRY TO EXPLAIN HERE.

YOU DID POINT OUT EARLIER, IT TAKES MORE THAN MAYBE A SENTENCE TO DO SO BUT IT IS TAX POLICY SO IT PROBABLY OUGHT TO TAKE A LITTLE BIT OF AN EXPLANATION.

BUT TIME IS RIGHT THAT THIS PLAN THAT THE GOVERNOR'S UNVEILED IS FOR BOTH PUBLIC PENSIONS AS WELL AS PEOPLE ARE PRIVATE PENSION AND IS PRIVATE INVESTMENT, SO ONCE IT'S PHASED IN FULLY, BASED ON, I THINK, 2022 NUMBERS, FOR PRIVATE PENSIONS OR FOR IRA WITHDRAWALS OR FOR FOLKS WITH 401Ks, WE'RE TALKING ABOUT INDIVIDUALS WHO COULD -- IT WOULD EQUATE TO ABOUT 57, $56,000 FOR INDIVIDUALS OR $114,000 FOR COUPLES.

SO BASED ON WHAT OFF THE TOP OF MY HEAD THINK IS ABOUT 95% OF MICHIGAN RETIREES, SO THAT'S A SIGNIFICANT PORTION OF THE STATE'S POPULATION.

>> Mr. BOUCHER?

>> SURE.

CAN YOU DISCUSS WHAT IT WOULD TAKE FOR THE ADMINISTRATION TO SUPPORT ANY SORT OF CUT TO THE INCOME TAX RATE?

>> WELL, I THINK THAT'S AGAIN A QUESTION ABOUT WHAT THE REST OF THE BUDGET'S GOING TO HAVE TO LOOK LIKE TO DO THAT.

AN INCOME TAX RATE CUT, YOU KNOW, COMES WITH CHANGES TOUR BUDGETS AND WE'RE GOING NEED TO HAVE THAT WHOLE CONVERSATION IN ORDER TO BE ABLE TO EVALUATE THAT.

WE DON'T WANT TO DO TAX POLICY IN A VACUUM.

>> SO YOU'RE SAYING YOU HAVEN'T DISCUSSED ANY SORT OF CHANGES TO THE INCOME TAX RATE?

LIKE, THAT CONVERSATION HASN'T HAPPENED IN THE WITMER ADMINISTRATION?

>> I WOULD SAY CONVERSATIONS ACROSS THE BOARD OF TAXES HAVE OCCURRED BECAUSE IT'S A THOUGHTFUL ADMINISTRATION.

WE HAVE TO CONSIDER ALL SORTS OF THINGS AND WHEN WE KNOW THAT OUR FRIENDS ACROSS THE STREET IN THE LEGISLATURE ARE INTERESTED IN THESE SORT OF THINGS, WE CERTAINLY BEGIN THOSE CONVERSATIONS, BUT RIGHT NOW THE GOVERNOR'S FOCUS, AS WE DISCUSSED EARLIER, IS ON TARGETED TAX RELIEF FOR OUR SENIORS AND FOR OUR WORKING FAMILIES.

>> CAN WE RULE OUT THE TAKING OFF OF THE TABLE OF AN INCOME TAX ROLLBACK?

YOU ARE WILLING TO DISCUSS THAT WITH THE "R"s, RIGHT?

>> TIM, I'M WILLING TO DISCUSS ANYTHING THAT THE GOVERNOR WANTS TO DISCUSS AND AS YOU POINTED OUT EARLIER, I NEED TO HAVE A CONVERSATION WITH THE GOVERNOR TO FIGURE OUT WHERE WE NEED TO LAND.

INSTEAD WE NEED TO FOCUS ON THE MICHIGAN WE WANT TO SEE IN THE FUTURE.

WE WANT TO INVEST IN OUR ROADS.

DO WE WANT TO INVEST IN OUR SCHOOLS?

DO WE WANT TO INVEST IN OUR PEOPLE?

HOW DO WE BUST BEST DO THAT?

THAT'S THE CONVERSATION WE OUGHT TO BE HAVING AND THAT'S THE CONVERSATION WE CAN BE HAVING WITH THE LEGISLATURE.

AS YOU POINTED OUT EARLIER, TIM, THERE'S A LOT OF PLACES OF COMPROMISE.

AND THERE'S A LOT OF PLACES OF COMMONALITY.

AND I THINK THAT THAT'S THE PIECE THAT WE NEED TO NOW FOCUS ON NOW THAT THERE ARE SOME DIFFERENT TAX PROPOSALS ON THE TABLE.

WE NEED TO FIGURE OUT HOW WE CONTINUE TO MOVE MICHIGAN FORWARD AND WHAT THE BEST STRUCTURE IS TO DO THAT.

>> IF SHE ASKED YOU, Mr. BUDGET DIRECTOR, WHAT SHOULD I DO, YOU WOULD SAY, LET'S ROLL BACK THE INCOME TAX?

>> I DIDN'T SAY THAT, TIM.

WHAT I THINK WE SHOULD DO IS WE SHOULD FIRST FOCUS ON OUR SENIORS AND OUR WORKING FAMILIES.

THAT'S WHERE WE SHOULD START.

>> WHY ARE YOU GUYS -- EXPLAIN TO ME WHY YOU GUYS JUST CAN'T ANSWER THAT QUESTION.

I AM BEFUDDLED BY THAT.

>> WHY WE CAN'T ANSWER THAT QUESTION?

>> YEAH.

YEAH.

>> I THINK I DID ANSWER THAT QUESTION.

>> I DIDN'T HEAR AN ANSWER IN THERE.

I HEARD A LITTLE FOG BUT I DIDN'T HEAR A YES OR NO.

>> WHAT THE GOVERNOR HAS CONTINUED TO SAY, I THINK, THROUGHOUT HER ENTIRE ADMINISTRATION, IS THAT SHE'S WILLING TO TALK WITH ANYBODY WHO'S GOT GOOD IDEAS AND TO ENTERTAIN ANY IDEAS AND TO SEE WHERE WE CAN GO FORWARD.

WHAT WE'VE BEEN ABLE TO DO IN THE LAST SEVERAL MONTHS IS FIND INCREDIBLE PLACES OF COMMONALITY.

WE'VE DONE IT IN SUPPLEMENTAL BUDGETS.

WE'VE DONE IT RELATED TO SOME SIGNIFICANT CHANGES IN OUR ECONOMIC DEVELOPMENT SPHERE.

AND SO I DON'T SEE ANY REASON WHY WE WON'T BE ABLE TO SEE COMMONALITY AS WE GO FORWARD RELATED TO OUR TAX STRUCTURES, BUT IT'S GOING TO TAKE TIME.

AND IT'S GOING TO TAKE TIME FOR US TO SIT DOWN WITH THE LEADERS OF THE LEGISLATURE AND THE GOVERNOR TO FIGURE OUT HOW WE CAN GO FORWARD.

>> WE ARE GOING TO DO AN OVERTIME SEGMENT BECAUSE WE'RE JUST KIND OF SCRATCHING THE SURFACE HERE.

JORDYN, GO AHEAD, PLEASE.

>> WELL, WHILE WE'RE ON THE TOPIC OF THE BUDGET AND OF THE FACT THAT YESTERDAY AS WELL, THE REPUBLICANS DID PUT FORTH A ONE-TIME SPENDING PROPOSAL INTO DEBT AND PENSION FUNDS, WHY WAS THAT NOT MORE OF A PRIORITY FOR THE ADMINISTRATION WITH THE AMOUNT OF FUNDS THAT WE DO HAVE AVAILABLE OR WAS THAT?

IS THAT?

>> IT IS.

AND I THINK WHAT YOU SEE IS THERE ARE A LOT OF PORTIONS OF THE BUDGET THAT HAVE BECOME ALMOST COMMONPLACE NOW AS WE DO DRIVE DOWN DEBT.

ONE OF THOSE PLACES, FOR EXAMPLE, AND IT'S HAD A LOT OF FOCUS IS RELATED TO OUR SCHOOL EMPLOYEE DEBT, THE MITTSER'S DEBT.

THIS BUDGET PLUS A BILLION-EIGHT TO CONTINUE PAYING DOWN THAT DEBT ALONG THE REQUIRED PAYMENT ARC AND THAT'S A SIGNIFICANT PAYMENT.

AND IT'S A SIGNIFICANT PAYMENT THAT WE WERE MAKING BECAUSE ALONG WITH THE LEGISLATURE, THAT'S THE PAYMENT SCHEDULE THAT WE'VE AGREED UPON AND IT'S WHAT WE KNOW AND WE BEGIN TO PLAN FOR.

SO THIS BUDGET INCLUDES A SIGNIFICANT AMOUNT OF DEBT RETIREMENT.

IT'S JUST BEING DONE IN A WAY THAT IS -- IT'S ON PLAN.

AND IT'S PART OF THE SCHEDULE WE'VE ALL AGREED TO.

>> DAVID, IF YOU'VE GOT A QUICK ONE, WE CAN SQUEEZE IT IN.

GO AHEAD.

>> YEAH.

EVERY BUDGET CYCLE WE SEE A PRESENTATION FROM THE GOVERN NO HOT REPUBLICANS, HOUSE DEMOCRATS AND THEY BRING OUT A THOUSAND PAGES, LAWMAKERS HAVE ABOUT EIGHT MINUTES, GIVE OR TAKE, TO READ THIS, AND THEN THEY VOTE ON IT.

WHY IS THAT THE BEST WAY TO SET BUDGET POLICY, ESPECIALLY WHEN IT COMES TO USING $74 BILLION IN THE PUBLIC'S MONEY?

>> THIS IS A GREAT QUESTION AND IT'S ONE I CAN'T ENTIRELY ANSWER WITHOUT OUR FRIENDS IN THE LEGISLATURE.

BUT PART OF WHAT WE'RE DOING -- THESE LAST FEW YEARS HAVE BEEN CERTAINLY DIFFERENT.

I THINK WHAT WE'VE SEEN OVER TIME PRIOR TO THE PANDEMIC WHEN CERTAINLY SOME FOLKS WEREN'T IN THE OFFICE AND CERTAINLY PEOPLE STILL AREN'T IN THE OFFICE NOW.

WHAT WE SAW BEFORE WERE PROCESSES WHERE THE LEGISLATURE DOES PROVIDE A RESPONSE TO THE ADMINISTRATION AND THEN WE GO THROUGH A PROCESS WHERE WE TRY TO RECONCILE SOME OF THOSE THINGS AND WE PUT THEM BACK INTO SUBCOMMITTEES OR INTO COMMITTEES WHERE THE PUBLIC IS ABLE TO SEE THE DECISIONS THAT ARE BEING MADE AND CERTAINLY, THE ADMINISTRATION IS IN FAVOUR OF THAT LEVEL OF TRANSPARENCY.

WE WANT TO SEE -- WE WANT RESPONSES TO THE GOVERNOR'S BUDGET.

>> Mr. HARKINS, GET A DRINK OF WATER.

WE'LL TAKE SOME CREDITS AND WE'LL BE BACK WITH MORE AND OVERTIME.

GO TO WKAR.ORG FOR MORE OF OUR CONVERSATION WITH THE NEW BUDGET DIRECTOR AND OUR GREAT PANEL.

SEE YOU ON THE OTHER SIDE.

[ ♪♪ ] >> Announcer: FOR MORE "OFF THE RECORD," VISIT WKAR.ORG.

MICHIGAN PUBLIC TELEVISION STATIONS HAVE CONTRIBUTED TO THE PRODUCTION COSTS OF "OFF THE RECORD"WITH TIM SKUBICK.