Lansing — Republican Gov. Rick Snyder’s $56.8 billion budget proposal for fiscal year 2019 is causing “angst” among some GOP lawmakers even as Democrats back his call for what he said would be the largest K-12 school funding increase in 15 years.
The term-limited governor on Wednesday presented his final budget proposal to lawmakers at the Michigan Capitol, where GOP majority leaders are pursuing personal income tax cuts that could complicate annual budget negotiations with Snyder.
“I think we’re having a good, healthy dialogue, and I believe in good faith we should come out on a good answer,” Snyder said, telling lawmakers he is open to tax reform that “strikes a balance” allowing the state to fund important services and make strategic “investments.”
Total spending would increase .6 percent under Snyder’s plan, but spending from the discretionary general fund would remain flat and not keep up with the pace of inflation. Proposed funding increases would largely be offset by other reductions and anticipated savings.
Snyder’s plan would raise the foundation allowance for K-12 schools by $120 to $240 per student, depending on the district, at a cost of $312 million. The lowest-funded districts would see the largest increases under the “2x” formula designed to continue closing funding gaps.
The proposed K-12 increase is twice as large as the version lawmakers approved last year, when they raised per-pupil funding by $60 to $120 per pupil at a cost of $153 million.
“What we need to continue to work on is seeing better outcomes with students in terms of achievement levels,” Snyder said, acknowledging lackluster results on standardized testing.
The governor is also asking the Republican-led Legislature to approve an extra $50 for each high school student who is enrolled in a career or technical training program. Public universities would see a 2 percent funding increase under his plan.
Snyder is proposing $175 million in new money to repair Michigan roads in addition to $150 million in extra income tax revenue that will be redirected for road maintenance under a 2015 law.
“This allows for the acceleration of good work,” Snyder said. “Because that’s important to quality of life and economic development in our state.”
State Rep. Fred Durhal, a Detroit Democrat and minority vice chairman of the House Appropriations Committee, called Snyder’s road funding proposal “impressive” and the K-12 funding increase “amazing.”
“We’ve got to put more dollars in our classrooms, and I think it will help with our urban communities,” Durhal said.
But some of the governor’s proposals will “cause angst” among Republicans, said House Appropriations Chairwoman Laura Cox, R-Livonia. Snyder is again pitching cuts in cyber school funding and shared-time programming that GOP lawmakers reinstated last year.
“It’s a good thing he wants to increase (K-12 school funding), but a lot of the devil is in the details on how he gets there,” she said.
Cox told reporters she was pleased the governor indicated he will at least listen to House and Senate tax relief proposals that would raise the state’s personal exemption and create a new child or senior credit.
Lame-duck governors often “tend to want to spend a lot of money, and our job in the Legislature is to make sure he doesn’t spend a lot of money like a drunken sailor,” Cox said, noting she meant no disrespect by the comparison. “I felt that he was giving us a good-faith nod that he was open to considering reducing that revenue.”
Republican legislators could have “a problem” with Sndyer’s plan to create an annual $5 water fee to fund infrastructure repairs and raise landfill fees to fund toxic waste site remediation, Cox said, calling them “new tax” proposals.
“We have a very conservative caucus,” she said. “Our goal is to be pushing tax relief and then to add another tax on? You have to really have a good sales plan to make that happen, why that’s a good thing and how you get there.”
Lt. Gov. Brian Calley joined Snyder at the presentation, touting the state’s economic gains and noting existing tax relief measures, including Homestead Property Tax Credit expansion taking effect after approval in 2015.
Service Employees International Union members protested outside the hearing room, filling the halls of the Capitol with opposition chants as Snyder presented his plans to lawmakers.
Snyder’s education funding proposal went over well with Democrats, but the minority party could oppose his related push to change the way the state processes income tax refunds by paying out a portion from the School Aid Fund that is used to support K-12 schools.
Personal income tax collections are divided between the general fund and School Aid Fund, but all refunds come out of the general fund, the governor said.
“As time passes, it’s creating more and more instability between the two funds, and my recommendation is, as the money comes in, shouldn’t it go out in the same fashion?”
But Rep. John Hoadley, a Kalamazoo Democrat who sits on the House Appropriations Committee, said the timing of refunds could create funding instability and force mid-year spending cuts on education.
“That could be really disastrous for our schools,” Hoadley said. “Imagine having to lay off your favorite teacher half way through the year. That’s why I think we have to be careful about this. But I’m open to any idea, because I’m the first person to say we should have a fiscally responsible budget.”
Snyder’s budget includes another $25 million to respond to the Flint water crisis by helping fund lead pipe replacement, support services and school nurses.
It calls for $13.7 million in new spending to end privatized prison food service and instead have state employees fill those jobs. It anticipates $18.8 million in savings to close the West Shoreline Correctional Facility in Muskegon, as announced last month.
Snyder is asking for $3.1 million to train and hire 50 new Michigan State Police troopers and another $3 million to support 80 new troopers in an “attrition school.”
The Department of Corrections would receive $9.2 million to train over 350 corrections officers and fill vacancies. The Department of Natural Resources would get $1.5 million to fund 10 new conservation officers.
With fallout from the Larry Nassar abuse scandal still swirling at Michigan State University, Snyder’s budget would devote $600,000 to the Sexual Assault Prevention and Education Initiative. He also proposed a placeholder and teased a separate upcoming announcement, saying “there’s more to be done.”
Snyder’s budget would use $112 million of a one-time $280 million surplus for advance funding in the construction of new veteran homes in Grand Rapids and Detroit, along with continued infrastructure upgrades at the Michigan Capitol. Paying those costs up front will help the state avoid $48 million in interest costs in the future, according to the administration.
“We can use those to avoid using bonds that would put us into more debt,” Snyder said. “…It’s a wise investment of dollars.”
The governor wants to set aside another $20 million to invest in broadband access across the state to improve connectivity in rural areas and smaller communities.
Another $20 million in one-time funding would go toward a new “next generation technology mobility pilot” as the state looks to support development of autonomous vehicles.