Michigan Gov. Gretchen Whitmer to call for repeal of state’s pension tax

Gov. Gretchen Whitmer is expected to call for the rollback of Michigan’s tax on pensions in her State of the State address Wednesday, the Free Press has learned.

Whitmer will tell an estimated 500,000 affected Michigan seniors that repeal of the law is expected to save them about $1,000 a year each, on average, and further stimulate the economy, according to a background document and a source familiar with the planned speech.

“That’s hundreds for prescriptions, rent, utilities, car payments, or gifts for grandkids,” says a state back-ground document prepared in advance of the speech.

The move would be phased in over the next three years, but would fulfill a promise from Whitmer’s 2018 Democratic gubernatorial campaign.

In her first budget, in 2019, Whitmer included a plan to repeal the pension tax, but she tied it to an expansion of the corporate income tax that was unpopular with Republican lawmakers. The measure was never passed.

The Treasury Department said in 2019 that repealing the pension tax would cost the state $320 million, of which $248 million would come from the general fund.

The Free Press reported on Jan. 14 that the state has in the region of $5.8 billion in anticipated surplus state revenues and about $15 billion in still unspent federal stimulus and infrastructure funds that it can spend over the next several years. 

State Budget Director Christopher Harkins said the vast majority of that money is “one-time” revenue that would likely be spent on items such as capital improvements.

Since Whitmer was elected governor, both Republican and Democratic lawmakers have introduced legislation to repeal the pension tax, but no bill has made its way to Whitmer’s desk.