GOP lawmakers, Whitmer officials optimistic about finishing budget plan
Michigan's Republican-led Legislature and Gov. Gretchen Whitmer's administration are deep in negotiations over the 2022 budget as well as figuring out how to spend an estimated $8 billion more than expected from federal stimulus money and a state surplus.
Budget leaders expressed confidence that the fiscal year spending plan would be finished by the end of the month and avoid the closing of state government, despite a recent email sent out to state agencies warning them to prepare for a shutdown.
Much of the extra $8 billion is likely to be put into a separate supplemental budget in a bid to avoid an over-reliance on the one-time money for long-term programs in the annual budget.
"My biggest concern, and what I’m looking most closely at, is that we don’t increase spending to levels that aren’t sustainable," said Rep. Thomas Albert, the Lowell Republican who chairs the House Appropriations Committee. "I don’t want to get in a situation where we're having to make cuts next year.”
At the end of June, the Legislature and Whitmer passed a record $17.1 billion K-12 education budget ahead of the start of the schools' fiscal year, but held off on any agreements for the rest of the annual budget.
Whitmer proposed a $67.1 billion budget in February, a jump from last year's $62.8 billion spending plan. The increase is in part a reflection of the billions of dollars more that have been added thanks to federal COVID-19 relief dollars funneled into the state.
Forecasters in June 2020 anticipated a $3 billion budget hole due to the pandemic, but tax revenue amounted to more than expected. As of February, the state expected a $3.7 billion surplus.
The base budget was built on those more optimistic estimates but forecasters have since estimated there is another $1.5 billion in surplus.
Earlier this month, state budget Director Dave Massaron sent a note to department and agency directors to create contingency plans in the event a budget agreement isn't reached by Sept. 30, which is the end of the fiscal year. The plans should include determining which functions within departments could be "temporarily discontinued" in the event of a shutdown, Massaron wrote.
The letter was sent out to prepare for contingencies and "is not an indication of losing hope on reaching a budget agreement," said Kurt Weiss, a spokesman for the state budget office.
"Progress is being made, and we know there is a shared desire to get the budget done prior to Oct. 1," Weiss said.
Leaders have begun working with reports from the appropriations subcommittees, which propose budgets for each of the state's individual departments. There is "steady progress" on the budget, said Abby Mitch, a spokeswoman for Senate Majority Leader Mike Shirkey, R-Clarklake.
"We anticipate delivering a timely, quality budget that maximizes the funds available while not creating legacy costs for future taxpayers," she said.
With the surplus cash, Sen. Curtis Hertel, D-East Lansing, is hoping to spend more money on road and water infrastructure, the state's mental health system, talent investment and strategic stockpiles for the next pandemic.
"This is an opportunity that we have to invest in the future of Michigan," said Hertel, minority vice chairman for the Senate Appropriations Committee. "It’s a unique opportunity that the Legislature hasn’t had in a long time, that the state hasn’t had.”
Rep. Joe Tate, the Detroit Democrat who serves as minority vice chair for the House Appropriations Committee, shared Hertel's prioritization of infrastructure needs, pointing toward persistent flooding in the Detroit area.
Additionally, he said, "we’re still continuing to feel the impacts of the pandemic. It’s certainly not over, so making sure that we have resources dedicated to us for the residents of Michigan.”
Earlier versions of the budget from the GOP-led House included several instances of boilerplate language that tied school aid funding to in-person learning and other funding to conditions that banned the state from developing vaccine mandates for employees or as a condition of providing services.
Whether those items will be included in the final spending plan has "yet to be determined," Albert said.
The governor's recent reluctance toward issuing further state health orders is reassuring, Albert said, and likely a consequence of state and national headwinds toward further pandemic restrictions.
"We came in really strongly at the beginning of the year and then Gov. Whitmer started to come our way a bit," Albert said. "And we worked together better through June."
But, he said, "if she were to revert back to some of those heavy handed measures we saw in the past, we’re going to change our posture as well."