By Rick Pluta, Michigan Public Radio Network
http://stream.publicbroadcasting.net/production/mp3/wkar/local-wkar-994420.mp3
LANSING, MI –
Retired public employees in Michigan who are 67 years old or younger will have to start paying state taxes on their pension income in January. That's according to a ruling Friday by the state Supreme Court. But, as we hear from Michigan Public Radio's Rick Pluta, the state Supreme Court also struck down part of the law.
And that means Governor Rick Snyder and the Legislature will have to go back and find more revenue or more cuts to make sure the state budget remains balanced. The part of the law that was struck down, the court said, denied exemptions to high-earners and that effectively created a graduated state income tax. That's prohibited by the Michigan Constitution.
Even so, the controversial tax overhaul will go into effect in January largely as Republicans in Lansing designed it. Governor Snyder asked the state Supreme Court to make a preemptive ruling to avoid a lengthy court challenge. But the legal fight is probably not over. Public employee unions say they are likely to file a federal court challenge. They would argue the state has violated their contracts with a plan that reduces their income after they've finished their careers in public service.