Michigan Supreme Court approves public pension tax

The Michigan Supreme Court says a new law taxing public pensions does not violate the state Constitution. 

The advisory opinion released today is a major victory for Governor Rick Snyder, who signed the sweeping tax changes earlier this year. Employee unions were opposed to the new law.

State officials expect the law will generate as much as $330 million dollars in revenue in 2013.

The court did say a portion of the law doesn't pass muster. The court ruled the tax could not be administered as a graduated income tax, which is illegal under the state constitution. And that means Governor Rick Snyder will have to go back and find more revenue or more cuts to make sure the state budget remains balanced.

However, the Supreme Court says that does not stop the rest of the tax overhaul from taking effect.

The court divided along party lines, with the four Republican justices making up the majority.  

The decision means the new tax on pensions will take effect January first largely as it was designed by Governor Rick Snyder and the Legislature. However, they will have to come up with a plan to make up some of the money they were counting on to balance the budget.