Granholm: Bring Promise back with stipulations

The Michigan Promise scholarship could be restored as a $4,000 refundable tax credit if Gov. Jennifer Granholm’s proposal is approved.

But for students who lost the funding last fall during the state’s budget crisis, it could be too little too late.

The proposal was one of several the governor revealed Thursday among her 2011 executive budget recommendations.

Michigan residents would be eligible for the tax credit after completing a degree from an in-state institution and working for at least one year in Michigan after graduation.

“It sounds nice, but it’s hard to think of something five years from now,” Clare freshman Tiffany Wilson said. “But it’s good she’s trying to get it to us somehow.”

Wilson was eligible for the Michigan Promise scholarship before it was taken out of the budget in October. She said it was unfortunate students such as herself will now have to re-qualify for the new version of the program.

The tax credit is designed to keep graduates working in the state and to stimulate the economy. Samantha Garthe does not think the economy is diverse enough for the new tax credit to make the desired impact.

“I’m going into education, and there are no teaching jobs in Michigan,” the Lake Leelanau senior said, explaining that she doubts she will qualify for the credit.

Impacts on business

Granholm also proposed a number of measures to help businesses save money.

She proposed eliminating a 22 percent surcharge on the Michigan Business Tax, cutting it in half in 2011 and eliminating it by 2012.

Changes to the MBT will impact local businesses’ ability to stimulate the economy, said Gigi Zavaglia, owner of Tavola Gigi’s, 437 S. Mission St.

“I would think that anything that lowers the burden small businesses face is more money they can put back into their business and growing their business, and putting it back into the economy,” she said.

Granholm also proposed a decrease in the Michigan sales tax to 5.5 percent from 6 percent.

The decrease would be offset by increasing the number of services that can be taxed across the board, excluding health care and business-to-business activities.

“Sales tax on services will be interesting,” said Mount Pleasant Mayor Jim Holton, who owns Mountain Town Station 506 W. Broadway St., and the Mount Pleasant Brewing Company, 614 W. Pickard St.  “A 5.5 percent tax of services is a tax increase to a lot of people.”

Granholm proposed new taxes would be levied on physicians to help finance Medicaid and a $2.50 tax could fall on airport rental cars to stimulate the Pure Michigan tourism campaign.

According to a budget summary from the governor’s office, all spending reductions, tax restructures and other reforms would rid the state of a $1.5 billion shortfall in the next fiscal year. Granholm’s suggestions will be sent to the legislature.