For all the ballyhoo on the pension tax, there wasn’t a substantial change in how the state treats pension income. Tempers flared to the point where Senate Minority Leader Gretchen Whitmer proclaimed, “You can lie to yourself, but don't lie to me. Don't lie to the people of our state.”

The discussion in the Senate over the proposed tax plan centered around the most politically toxic piece of the package: the exemptions placed on pension income in Michigan.

Both sides argued that it was a matter of fairness: One side said that it was unfair to give preferential treatment to this kind of income; the other that it was unfair to raise taxes that change the rules on pensioners after they’ve retired. Both sides are right and the pension tax that they passed partially addressed these concerns.

In fact, outside of changing the current system to receive more tax revenue from pensioners, the proposals do not fundamentally change Michigan tax policy. Currently, pension income of up to $90,240 is exempt. Government-employee pensions, which rarely go above that level, are fully exempt.

The bill makes no changes on the incomes of residents who are currently older than 65. For those five years younger, it would lower the exemptions by a little more than half. For all others, it would apply an exemption of up to $40,000 for seniors, which applies to all types of income, not just pension income.

These provisions keep many current retirees from having their rules changed midstream. They also take out some of the tax bias toward pension systems over independent retirement accounts. These were not momentous shifts in the way the state taxes pensions. It was more of a change in the margins of the state’s tax policy instead of a radical departure.

The fundamental change is the revenue expected.

The state expects $224.9 million more in pension income in the next fiscal year than in the previous one, and $343.4 million afterward, according to the Senate Fiscal Agency. This is was a game of margins, not one of principles.

In relation to the rest of the states on this issue, Michigan is still in the middle of the pack. The state has an income tax that covers retirement income, thus ranking below nine states that do not. Michigan does not exempt pension income, so it also ranks below an additional five states that do exempt pension income.

Conversely, Michigan does not fully tax pension income, so it ranks above five states that do.

Michigan is one of the 31 states making decisions about how much preference it would like to extend to this source of income.

Ultimately, this change in policy is unneeded because there is still money to be saved in state government. But it leaves Michigan in the middle of the pack amongst the states regarding the treatment of pension income in the tax code.

Furthermore, the new changes also address some of the arguments on both sides about fairness.

For the second time in two years, the Michigan Legislature is trying to crack down on parking ticket scofflaws. The Senate passed a bill Thursday that would put a hold on driver’s license renewals if the motorist had three unpaid parking tickets. Currently, it takes six unpaid parking tickets to have an operator license put on hold. It costs $45 to have the hold removed.

The Senate passed Senate Bill 130 on a mostly party-line vote of 26-12, with most Republicans voting to impose the new three unpaid ticket standard and most Democrats voting against.

Senators Roger Kahn of Saginaw, Mike Nofs of Battle Creek and Tory Rocca of Sterling Heights were the only Republicans voting against changing the standard to three unpaid tickets.

The only Democrats to vote in favor of dropping the standard from six to three tickets were John Gleason of Flushing, Hoon-Yung Hopgood of Taylor, and Virgil Smith of Detroit.

"This is part of a pattern in which political elites inexorably tighten the screws on families and private businesses, but cut breaks for other arms of the government establishment and for government employees,” said Jack McHugh, the legislative analyst for the Mackinac Center for Public Policy, in an e-mail.

Senator Dave Hildebrand, R-Lowell, sponsored the bill and didn’t respond to an e-mail or phone message seeking comment.

The bill analysis states that the city of Grand Rapids is owed more than $3 million in past-due parking fines and the city of Detroit has about $30 million in unpaid parking fines. The bill now moves to the House of Representatives. Driver’s licenses are renewed every four years in Michigan.

According to the Michigan Secretary of State, there were 5,803 holds put on driver licenses from March 2009 to March 2010.

Last year, the House passed House Bill 4726 which would have also reduced from six to three the number of unpaid parking tickets required to have a hold put on renewals. However, the Senate rejected it by a 23-14 vote.