Budget plan: More for roads, less for films

Gary Heinlein and Karen Bouffard
Detroit News Lansing Bureau

Lansing — Lawmakers began approving agreements on a 2016 state budget Tuesday that will pour $400 million of general fund money into road repairs but dramatically cut the amount available to lure filmmakers and television producers to Michigan.

The earmark for roads and bridges from the general fund in 2016 would be about $260 million more than lawmakers dedicated this year.

None of the agreements, approved in conference committees Tuesday, will become final until they are approved by the full House and Senate, but the votes in recent years usually have been routine. The goal is to finalize next year's budget in early June.

The film incentive program — funded at $50 million last year — would drop to $25 million, but only $6 million of that would be dedicated to film and TV incentives. That's likely not enough to attract superhero movies like the "Batman v. Superman" flick that was filmed in Michigan last summer.

Legislation approved Tuesday by a House-Senate conference committee would dedicate just over $19 million to the State of Michigan Retirement Systems to resolve debt obligations to out-of-state bondholders for a Pontiac film studio.

Investors in Michigan Motion Pictures Studio — located on the site of a former General Motors office complex — included deceased billionaire Al Taubman and Walbridge Chairman and CEO John Rakolta Jr.

Officials of the studio, which was developed when Michigan had the nation's most generous film incentives in 2010, blamed its hard times on flip-flops in legislative subsidy support for efforts to grow the digital media industry here. A call to the studio late Tuesday went unanswered.

Asked if the move signals the eventual end of tax breaks for productions filmed in Michigan, Sen. Jim Stamas, R-Midland, said, "It certainly would appear that we're on that track." He chaired the conference committee approving the cut.

The overall $56 billion state budget for 2016 avoids a House-proposed $5 million cut in Detroit's revenue sharing and ensures that all cities, counties and townships receive at least as much state money as under the current budget.

It modestly would bolster state funding for public universities while easing proposed restraints on their tuition increases.

"The good news is they're going to be seeing more orange barrels as a result of this budget," said Sen. Goeff Hansen, R-Hart, chairman of a House-Senate conference committee approving the $3.7 billion transportation budget.

"We're going to be repairing more roads," he said. "We're going to be able to do more of our five-year (road repair) plan. We're trying to get ahead, and I think it's a great start."

Lawmakers have leeway to supplement fuel and registration taxes, which constitute the dedicated funding sources for road repairs, because May 15 estimates said state revenues next year will exceed original projections by $365 million.

The state needs $1.2 billion more each year to catch up on repairs of its crumbling infrastructure, lawmakers and Gov. Rick Snyder agree. Legislators are scrambling for more road money because voters May 5 overwhelmingly rejected a complex proposal tied to a 1-percentage-point-increase in the 6 percent sales tax.

But even as a House committee debated its longer-term plan for more road money Tuesday — bills to bolster transportation funding $1 billion by 2019 through budget adjustments and expectations of year-to-year state revenue increases — Hansen rejected it as a permanent solution to the state's chronic road repair shortfall.

"There's going to be a lot of work done over the summer ... to make sure we fix it once and for all," he said of Senate plans to meet summer-long on road funding proposals. "I think there's going to have to be something additional in revenue because I don't think we can find it all out of the budget."

Film incentives cut before

Because revenues fell short of projections earlier this year, film incentives were cut to $38 million from $50 million. Gov. Rick Snyder and the Senate proposed $50 million for 2016, but the situation changed Tuesday.

In recent years, Michigan Motion Picture Studios missed making construction bond payments, according to the state Treasury Department. The state retirement systems made $1.68 million in payments over two years under a guarantee by the the administration of ex-Gov. Jennifer Granholm, the Treasury Department said in December.

In other moves, the W.J. Maxey Boys Training School in Whitmore Lakes would be shuttered under an agreement approved by a GOP-controlled conference committee on human services, over Democrats' objections. Closing the facility would eliminate 69 full-time equivalent staff positions and save $2.5 million in funding during the first year.

Rep. Brian Banks, D-Detroit, proposed an amendment to keep the facility open until a plan is devised to relocate juveniles currently housed at Maxey. The amendment failed along party lines.

"We need to have something in place to state where we are putting these juveniles," said Banks, adding he is concerned that juveniles could be shipped to adult prisons. He said boys housed at Maxey receive special psychiatric and other services not available at other Michigan prisons.

"We are going to make sure we follow these kids … to make sure these kids do not end up in the adult system," said Rep. Mike McCready, R-Bloomfield Hills.

College budgets would rise

The $1.5 billion higher education education budget for the 19 public universities calls for a 1.5 percent increase.

It's below the 2 percent, $28 million increase Snyder proposed. But the final version allows the campuses tuition hikes as high as 3.2 percent to qualify for the added funding, up from a 2.8 percent limit the governor also sought.

"That gives us a little more flexibility," said Mike Boulus, executive director of the Presidents Council, State Universities of Michigan. "I think these numbers work."

Rep. Sam Singh, D-East Lansing, said the plan represents progress "but we're still not anywhere near where we need to be" to adequately fund higher education. He said lawmakers still haven't made up for budget cuts to universities in 2011, Snyder's first year as governor.

Local governments will get just over $1.2 billion in state revenue sharing, essentially the same as in the current budget. The Michigan Municipal League has complained that local governments' budgets are strained because they missed out on more than $6 billion because of lawmakers' budget cuts during Michigan's 10-year recession.

About $197 million will go to Detroit, as proposed by Snyder and the Senate. House Republicans had voted to slash the city's revenue sharing allotment following a state allotment last year of $195 million to ease its bankruptcy.

Lawmakers hope to complete their conference budget decisions Wednesday so they can head to the Detroit Regional Chamber's annual conference on Mackinac Island.


Associated Press contributed.