State Budget Enters the Home Stretch

Posted on May 29, 2018 by Dene Westbrook

Late last week, the Governor and leaders in the House and Senate came to an agreement on spending targets for the upcoming budget year.  Now that these department-level spending targets have been set, conference committees have begun scheduling meetings to finalize their pieces of the overall budget.  With this being a short week due to the Mackinac Policy Conference, expectations are that the individual department conference committees will complete their work by the end of next week, with final budget votes by each chamber the following week.

Statutory Revenue Sharing
While specific details have not been publicly released, we are hopeful that the higher than expected revenue estimates for the coming year will allow the Legislature to restore the supplemental statutory revenue sharing payment ($6.2 million) that the Governor had recommended eliminating.  The League continues to press for maintaining this current spending and protecting statutory revenue sharing from another cut.

Fire Protection Grants
Fire protection grant funding that supports local units that host large state facilities should increase to at least $12 million from the current year’s $10.6 million mark.  The League continues to advocate for a grant level that matches the Governor’s original $15 million recommendation.

New Money for Road Repairs
The higher than expected results of the recent revenue estimating conference have also provided an opportunity for the budget to add new money into the MDOT budget for road repairs. The announced target deal designated an additional $400 million for infrastructure, with approximately $300 million of that amount to be injected into the MDOT budget for distribution to local road agencies.  When combined with the recent gas tax and registration fee increases, and the first true installment of the General Fund transfer from the original road funding plan, that will put about $1 billion in funding into roads this year above what had been spent prior to the new funding plan.

Indigent Defense Commission
Within the Licensing & Regulatory Affairs budget, new grant funding will be established to support local court funding plans to implement the new state standards.  While waiting to see what the funding level within the budget will look like, there is also a companion bill that would make funding formula changes that could impact local cost sharing for those local governments that serve as their court funding units.  House Bill 5985 represents a significant upgrade over the Governor’s original recommendation that would have reduced the state’s responsibility for funding these new mandates.  While the bill is a step in the right direction, we continue to work with the sponsor and the Administration to establish a permanent funding source for these new expenses.  Having dedicated funding will alleviate many of our remaining concerns with how the state will fund this new mandate and the proposed rearrangement of some local court cost collections.

Personal Property Tax Reimbursement – Contact Your State Senator
Along with the budget bills, House Bill 5908, which addresses certain Personal Property Tax reimbursement distributions, was reported from the Senate Appropriations committee. This bill provides for the new funding stream for fire protection grants—replacing the now-defunct driver responsibility fee revenue— and addresses how any remaining PPT reimbursement revenue should be distributed once all local units receive 100 percent of their eligible losses. In 2017, there was $150 million remaining for distribution after all eligible losses were reimbursed at 100 percent. Approximately half went to cities and villages.

The House bill utilizes a 50/50 distribution formula for these remaining dollars, with 50 percent being distributed on a per capita basis, and 50 percent based upon the existing pro-ration methodology.  The League supports this bill, but has requested that the fire grant allocation be increased to move closer to the Governor’s original budget recommendation of $15 million, and that the 50 percent distribution related to the existing pro-ration be modified to pro-rate off of a community’s total 100 percent reimbursement amount to more accurately represent their share of the PPT reimbursement situation. Utilizing the existing methodology as the pro-ration factor perpetuates the inequities identified in the current law distribution method.

These two implementation bills (HB 5985 and HB 5908) are expected to move alongside the budget bills once those are finalized, before the summer recess.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].

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