Oct. 1 marked the start of the new fiscal year in Michigan. As this important day passed, I couldn't help but think about how things have changed in our state in such a short time. The state budget has been balanced based on real dollars months before the constitutional deadline, unnecessary spending and a $1.5 billion deficit has been eliminated, and we are focused on getting our state back on track.
State government budgeting used to be based on budget gimmicks and short-term fixes instead of long-term solutions. I'm proud that today the focus is on efficient and effective government and doing what's best for the hard-working taxpayers in Michigan. We are now in the era of fiscal responsibility and it has already helped to turn our state around. Just this week, the Tax Foundation increased Michigan's tax climate index six places to 12th in the nation. It was just a few years ago that our state was ranked near the bottom, and now we have one of the best business climates in the nation.
Being fiscally responsible put us in the position to give money back to Michigan's hard-working taxpayers in the form of tax relief. On Oct. 1 the tax relief plans passed a few months ago also went into effect, putting more money back into the pockets of taxpayers where it belongs. Public Acts 223 and 224 lowered the income tax rate from 4.35 to 4.25 percent and increased the personal tax exemption from $3.700 to $3,950 per person. The personal exemption will further increase to $4,000 on Jan. 1, 2014.
Tough but responsible reforms are what put our state on solid financial ground and these efforts are once again making Michigan a great place to do business and live. There is still more work to do in our efforts to revitalize our economy, but I'm proud of the progress we've made. I am ready to continue working to streamline government and cut red tape. Continuing to work hard will keep us from returning to the days when the budget was being finished as the fiscal year began and long-term solutions were not the focus. The simple truth is that hard-working taxpayers deserve better. I'm working to deliver those results.