Inside208

State Budget Battle Goes Into Overtime

Posted on October 1, 2019 by Dene Westbrook

As expected, following the Legislature’s movement of budget bills that the Administration had not signed off on, Governor Whitmer responded aggressively to the legislative spending proposal by issuing 147 separate line items vetoes within the 16 departmental budget bills she signed.  Signing the bills allowed her to avoid a state government shutdown, while the nearly $950 million in spending cuts across all but two of the budgets served notice to legislative leaders of the need to return to the negotiating table.  Following the release of the vetoes, the State Administrative Board met today, on the first day of the new fiscal year, and utilized an obscure legal procedure that allowed the Governor to shift nearly $625 million additional dollars to different lines/programs from those newly appropriated, original line items within 13 different department budgets.

The following budget programs/line items may be of interest to League members:

  • Revenue sharing – Constitutional payments are dictated by sales tax growth which is expected to increase by about 1.7% over current year ($14.2 million) – Statutory revenue sharing payments received an increase of 2.3% for $5.8 million matching the House’s recommendation from earlier this spring and only slightly less than the Governor’s original 3% increase proposal.
    • Additionally, all statutory revenue sharing payments have been rolled into the base appropriation – no more “one-time” or supplemental grants
  • The $1 million new line item for local assessor training grants resulting from last fall’s assessing reform legislation was vetoed by the Governor
  • More than $27 million of local payments in lieu of taxes for Commercial Forest, Purchased Lands, and Swamp & Tax Reverted Lands was vetoed by the Governor
  • Numerous Treasury Local Government Program lines totaling nearly $5 million were shifted and rolled up into one line as a result of State Ad Board actions.
  • MEDC/MSHDA –
    • The Governor shifted $500,000 for blight removal grants ($250,000 rural blight elimination & $250,000 city of Detroit projects performed by nonprofits) along with four other line items totaling over $9 million and transferred those funds into workforce development programs.
    • The Legislature reduced the Business Attraction & Community Revitalization by $26 million ($105.4 million to $89.4 million) with $10 million of the reduction redirected to the new Rural Jobs and Capital Investment Fund that was created last fall.  The Governor vetoed this $10 million redirection.
    • Community Development Block Grants were funded at $47 million, same as previous year
    • The Legislature increased Pure MI funding to $37.5 million (an additional $1.5 million).  The Governor vetoed the entire line.
  • EGLE –
    • $120 million for water infrastructure was appropriated, matching closely to Gov Whitmer’s original budget proposal for clean water projects
      • $30,0000 for Lead and Copper Rule implementation
      • $40,000,000 for PFAS and emerging contaminants
      • $35,000,000 for Drinking Water Revolving Fund loan forgiveness
      • $7,500,000 for affordability and planning
      • $7,500,000 for private well testing – the Governor shifted these dollars into the Lead and Copper Rule implementation line item through State Ad Board action
    • Surface water grants to watershed councils ($675k), Cooperative lakes monitoring program ($150k), and PFAS and emerging contaminates grants to municipal airports ($15m) were among the EGLE line items vetoed by the Governor.
  • LARA –
    • $80 million in MI Indigent Defense Commission grants were continued for the coming year – slight reductions to reflect one-time costs from first year being removed
    • No line item vetoes in this budget, but a number of lines were shifted through State Ad Board action to allow greater spending flexibility by the Department
  • State Police –
    • The Governor vetoed the entire $13 million Secondary Road Patrol program line item.
    • The $654,000 Local Law Enforcement Agency Training Grants line item and MI International Speedway traffic control support ($600,000) were vetoed by the Governor.
    • Through State Ad Board action, the Governor also shifted more than $2 million from a proposed new Trooper School into the Forensic Science line and another $2 million from the First responder communication network line item into an In-car camera video streaming network line item.
  • MDOT –
    • The Legislature included $400 million in GF ($132 million to fully implement the 2015 package one year early, $175 million for roads, $25 million for the Local Bridge programs, $68 million for special projects include specific bridges that Governor Whitmer visited during summer press events). This does not include an addition $468M in earmarked income tax revenue that is a result of the 2015 package. When combined, $868M in non-user fee revenue was proposed to go to roads.  The Governor vetoed $375 million of this GF addition and then shifted the remaining $25 million into transit programs, with an additional $6 million each for Local Bus Operating and Public Transportation Development Service Initiatives, and $13 million sent to the Transit capital – urban line item.
    • The Legislature included $1 million for demolition of the Carbide dock as part of the Soo Locks project which the Governor shifted through the State Ad Board, along with $600,000 from the Marine passenger service line item over to the Intercity Passenger Services line item for a combined addition to that line of $1.6 million.
    • The Governor also used the State Ad Board to shift nearly $40 million from the Rail freight and rail economic development line over to the Rail passenger service line item.

Numerous other legislative priorities were vetoed or redirected by the Governor today, prompting strong reactions on both sides of the political aisle.  The Governor has called for a Thursday meeting of the four “quadrant” caucus leaders to get back to the budget negotiating table.  It remains to be seen how closely the Governor will tie further budget negotiations to a resumption of long term road funding discussions.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

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