House budget leader: Pay Flint settlement now instead of over the next 30 years
A House panel is pushing the state to use excess state general fund dollars to pay the Flint Water Crisis settlement upfront rather than take out bonds over the next 30 years to pay residents.
The House Appropriations Committee is poised to report to the House floor Thursday a bill that includes about $595 million to pay for the settlement. The bill is part of a larger supplemental package that would divvy out about $13 billion in largely federal COVID relief funds.
The one-time payment, as opposed to bonding, is expected to save the state about $400 million in interest, said Rep. Thomas Albert, the Lowell Republican who chairs the House Appropriations Committee.
“Paying the settlement is the right thing to do – and we should do it the right way by paying it immediately,” Albert said in a statement. “We have the resources available right now, and there is no reason to let this linger and force it to be part of the budget process year after year after year. Let’s come together and provide this important relief for the people of Flint.”
If the settlement is paid over 30 years, with interest, the state would end up paying about $1 billion overall, according to House Fiscal Agency analysts.
If reported from the committee on Thursday, the spending plan still would need the approval of the full GOP-led House, the Senate and Gov. Gretchen Whitmer.
Whitmer has said she's "glad" to see movement on a supplemental spending plan but noted the U.S. Treasury has yet to provide the needed guidance to expend all of the federal funds issued in March. She did not comment directly on the Flint payment.
A few hours after House Appropriations began reporting its $13 billion supplemental budget, Senate Appropriations reported a $4.4 billion supplemental spending bill to the full Senate. The Senate plan largely focuses on December federal COVID-19 relief dollars and the House plan uses both December and March federal dollars.
Last year, the state agreed to pay about $600 million of a $641 settlement with Flint residents who had sued the state after the city, under state emergency management, switched its water source from a Detroit water system to the Flint River. Officials failed to treat the Flint River water with proper corrosion controls, causing lead to leach from old service lines and into the homes of residents.
The settlement also includes $20 million from the city of Flint, $20 million from the McLaren Regional Medical Center and $1.25 million from Rowe Professional Services Co.
In December, Whitmer signed into law legislation that would create a trust fund to house the settlement money before distribution.
The legislation authorized the state to issue bonds to cover Michigan's $600 million share of the settlement, which will be repaid through an annual $35 million appropriation over the next 30 years.
The House spending bill also includes about $40 million in general fund money to complete payment of an $80 million settlement with about 1,300 people who were incarcerated between October 2010 and March 2020. They'd sued the state on claims they'd been sexually assaulted, harassed, deprived of education and rehabilitation and inappropriately segregated.