Michigan Governor Rich Snyder on Thursday unveiled a plan that includes $1.8 billion in budget cuts and seeks to replace the state's business tax with a flat 6 percent corporate income tax.

The Republican governor's plan also calls for taxing income from public and private pensions. Michigan is one of only three U.S. states which exempts most or all pension income from state taxation, according to his office.

This is a comprehensive plan to lay a new, sound foundation for Michigan's reinvention and put an end to the significant budget deficits that state has experienced for the past decade, Snyder said in a statement.

Facing a $1.4 billion revenue shortfall heading into fiscal 2012, which begins October 1, Snyder proposed eliminating $92.1 million in state revenue sharing for cities and towns, while reducing state payments to counties by $51.8 million.

School districts would also see funding drop by about $452 million, according to budget documents.

Snyder is also hoping to squeeze $180 million in savings from yet-to-be negotiated employee concessions.

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