Lawmakers OK $54.9B budget for 2017

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan legislators worked late Wednesday to approve a $54.9 billion budget for 2017 and send Flint another $114 million this year to address the city’s ongoing water contamination crisis.

The budget deal, headed to the desk of Gov. Rick Snyder for his signature, proposes an overall spending increase next year but was scaled back in recent weeks after officials lowered state revenue projections due to sluggish sales and business tax collections.

“Really it was reductions in growth,” said House Appropriations Chairman Al Pscholka, R-Stevensville. “…We funded our priorities. We’ve got Flint included, and we’re going to get that out the door.”

The plan includes $5 million for a new Flint-inspired commission to begin addressing underground infrastructure needs across the state, down from the $165 million Snyder requested in his executive budget.

Pugsley Correctional Facility in Grand Traverse County would close under the budget deal, saving the state an estimated $27 million next year.

Michigan universities would receive an extra $39.8 million in 2017, down from $60 million proposed by the governor. Aggregate university funding will remain below 2011 levels.

Flint funding preserved

Flint-specific funding was preserved during budget negotiations. In addition to the $114 million in supplemental funding for the current year, the state would spend another $38 million on the water crisis in the upcoming fiscal year, which begins Oct. 1.

“It remained a priority,” Senate Appropriations Chairman Dave Hildenbrand, R-Lowell, said of the Flint funding. “…There may have been some shifting in where exactly the dollars went in the different agencies, but for the most part it reflects the amount and size of the investment the governor recommended.”

Legislators have now approved $236 million in Flint aid since October, and Hildenbrand said he is “very open” to future funding requests for the city, where residents continue to rely on filtered and bottled water due to lead contamination of the municipal drinking water supply.

The current-year Flint funding includes $25 million for underground pipe replacement, $12.8 million for customer water bill reimbursements and $8.7 million for the lead exposure crisis, including $3 million for a study on any link between the municipal water and spikes in deadly Legionnaires’ disease cases.

The 2017 budget also includes money that could be used to defend the state in lawsuits filed by Flint residents, including $5 million for litigation involving the governor in his “official capacity and for securing outside legal advice on major statewide issues not unique to a single agency.”

That litigation funding is up from $1 million in the current budget but less than the $4 million appropriated in fiscal year 2015, according to Caleb Buhs, spokesman for the Department of Technology, Management and Budget.

“Costs related to Flint litigation is a factor in the increased request, but it is largely restoring the funding to previous levels,” Buhs said.

Budget oppositions

Since Snyder took office in 2012, Michigan’s Republican-led Legislature has made it a point to send him budgets by early June, a streak legislators extended.

“This is six for six,” Pscholka as the House voted on the general government budget. “We are getting our work done ahead of time so our locals can make their decisions. I think it’s very important.”

Several House Democrats opposed the budget, however, saying it did not go far enough to restore 2012 cuts made by Snyder and the Legislature in the face of a projected budget deficit.

“Six years ago, you created a budget and a taxing framework that disinvested in communities, that disinvested in higher education and disinvested in people,” said Rep. Sam Singh, D-East Lansing. “My hope was that by the sixth budget you would come back here and actually fix it.”

Sen. Patrick Colbeck, R-Canton Township, also opposed the budget, noting the $54.9 billion proposal was $1.3 billion larger than the $53.6 billion version approved last year.

“It all comes down to priorities,” Colbeck said. “This budget makes special interests our priorities. I’ve been in the Senate for six years — when are we going to make the taxpayers our priority?”

The Senate, in a narrow 20-17 vote, approved an education budget bill that would increase School Aid spending by roughly $261 million, with a per-pupil funding bump of between $60 and $120 for K-12 schools, depending on the district.

The plan includes an extra $72 million for Detroit Public Schools, contingent upon approval of a separate debt-relief plan to help the district avoid potential bankruptcy.

The education budget includes $2.5 million to help private schools cover the cost of various state mandates, including fire and tornado drills, a controversial proposal scaled down from the $5 million appropriation approved by the Senate.

The spending plan includes continued funding for the M-STEP statewide student assessment, which the House had proposed replacing, and includes $5 million that the School Reform Office could use to hire building-level CEOs in struggling buildings.

State funding for community college operations would increase by $4.4 million under the budget agreement, down from the $7.5 million proposed by the governor and the $10.6 million approved by the House.

The final deal would restore travel and per-diem stipends for State Board of Education members. House Republicans had stripped those stipends in response to a controversial draft guidance memo suggesting schools allow transgender students to use bathrooms consistent with their gender identity.

The budget deal includes $4.5 million to reimburse school districts that voluntarily test their drinking water for lead, another Flint-inspired provision. The state would provide a maximum of $950 per building.

The Department of Military and Veterans Affairs budget includes $1.8 million for a new vendor contract at the Grand Rapids Home for Veterans, a partially privatized state facility under scrutiny after a scathing audit highlighted understaffing and other problems.

The state police budget includes $7 million to train 65 new troopers next year under the revised plan, down from $9.5 million for 85 troopers originally proposed by the governor.

Repealing votes

Earlier Wednesday, legislators took final votes to repeal an “inadvertent” tax credit extended to auto insurers in 2012, a budget-balancing move projected to save the state $80 million a year once fully implemented.

Auto insurers first qualified for the credit under a 2012 law that transferred operations of an assistance program for uninsured but injured drivers from the secretary of state to the quasi-governmental Michigan Automobile Insurance Placement Facility.

The Senate also voted to repeal a Health Insurance Claims Assessment that supports Medicaid services. Revenue from the 2012 tax came in well below projections, causing headaches for state budget makers.

The complicated replacement plan would see the state devote income tax revenue to ensure a full federal match on Medicaid dollars, and then backfill the general fund using revenue from use tax on Medicaid health maintenance organizations.

joosting@detroitnews.com