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Update: Revenue stalemate in House

*The state House remained deadlocked this morning on revenue measures intended to plug the $1.7 billion hole in the state budget, including the school aid fund.* House Speaker Andy Dillon had warned members to "bring their sleeping bags."

The measure currently up for a vote would increase the state income tax from the current 3.9% to 4.6%, where it stood before the passage of the Proposal A school funding realignment in 1994. The increase would cost someone with $50,000 in taxable income (after deductions and exemptions) an extra $350 in state income tax each year, and it would raise approximately $1billion for the state general fund and the school aid fund.

Linked to that measure is one which would give voters the option, in November, of choosing a 1% increase in the sales tax to replace the income tax increase. Earlier Friday, a separate proposal to ask voters for a sales tax increase this January, and a proposal to ask voters to approve a graduated income tax in Michigan (currently outlawed by the state constitution) both failed to garner support.

The stalemate continues because House Republican members have been reluctant to support a tax increase, insisting that budget cuts and "reforms" be tried first. While Democrats theoretically have enough votes to pass a tax bill, vulnerable Democrats, and a Democratic leadership worried about their newly-minted majority, want some Republican votes in favor of a tax increase as cover. Moreover, a tax plan that attracts no Republican support in the House would probably not get the handful of Republican votes needed to give it a chance at passage in the Senate. (Senate Majority Leader Mike Bishop, R-Rochester, has said he will allow a tax plan from the House to come up for a vote and allow his members to vote as they see fit. The implicit deal is that the tax plan could get just enough Republican votes in the Senate to generate a tie, allowing Democratic Lt. Gov. John Cherry to break the tie in his role as President of the Senate. This would allow the Republican leadership to disclaim responsibility for a tax increase, while still addressing the deficit.)

According to news reports, the House leadership may shift gears and bring some government "reforms" to a vote in the House - possibly including "teacher health care and retirement changes":http://www.miparentsforschools.org/node/83 - as a way of enticing Republicans to then support the tax measure.

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