Whitmer ultimatum: No budget signature without 'real' road funding
Lansing — Gov. Gretchen Whitmer is signaling she will not sign any state budget without additional money for a "real" road funding plan, setting up a potential government shutdown showdown this fall with legislative leaders.
“It just doesn’t work, and I’m not going to sign it,” Whitmer said on a MIRS news service podcast published Monday. “So it’ll be a long summer. People need to prepare to work here and stay here until the job is done.”
The East Lansing Democrat has spent weeks traveling the state and pitching her proposal to raise diesel and gas taxes by 45 cents per gallon, which would give Michigan the highest fuel tax in the country and generate about $2.5 billion a year, with $1.9 billion in extra funding going toward crumbling roads.
Republican lawmakers have called Whitmer’s plan a non-starter, but the governor has urged them to present an alternative road funding plan, which they are expected to do.
Michigan is constitutionally required to have a balanced budget in place when the new fiscal year starts Oct. 1. Without one, the state could have its first temporary government shutdown since 2007 and 2009 under former Gov. Jennifer Granholm, a Democrat who dealt with a Democratic-controlled House and GOP-led Senate.
But Whitmer, in the podcast interview, vowed that state government is “not going to shut down, because we’re going to stay here all summer to get this done,” suggesting lawmakers should delay their traditional legislative summer break.
“I am serious about it,” she said. “The people of our state elected me because I believe they want me to fix the damn roads. They want honestly in budgeting, and they want real solutions, not half-measures and shell games. And that’s exactly what I put on the table.”
While the schedule is tentative and subject to change, the Michigan Senate is not expected to meet during a five-week summer break period in July and August. The tentative House schedule includes two session days for July and August.
Republican former Gov. Rick Snyder had repeatedly signed finished budgets by June, ahead of the summer break, but that prospect appears increasingly unlikely during the first era of divided government in eight years.
Speaker: No 'artificial' deadline
House Speaker Lee Chatfield has made clear he is not committed to a summer budget deal, saying he “will not compromise the product based on an artificially set date.”
“We are currently spending a record amount on roads and are serious about further investing the right amount to fix the problem,” Chatfield, R-Levering, said Monday in a statement to The Detroit News.
“But if that doesn’t qualify as a fix, I could put her gas tax hike on the board and watch it fail.”
None of the state's 148 legislators has introduced a bill for a 45-cent gas tax increase.
The House is developing a plan that would devote every dollar paid at the pump to roads, Chatfield said in a recent op-ed, reiterating his desire to exempt fuel purchases from the state sales tax, which is used to fund K-12 schools and local governments.
The pending alternative also would use “existing funds in the budget” and discard a new funding distribution formula proposed by Whitmer, he said.
Senate Majority Leader Mike Shirkey "would also like to see additional money for roads,” said spokeswoman Amber McCann, and “the Senate is also discussing road funding options.”
The Clarklake Republican has indicated he’d like to separate the road funding debate from negotiations over the larger state government budget, an approach Whitmer has warned against.
“If they have an alternative that gets us to $2.5 billion in additional funding, I’m all ears,” Whitmer said. “But until then, let’s get serious about my budget.”
The governor maintains the proposed gas tax revenue is a central part of her proposed $60.2 billion budget for fiscal year 2020 — up from a 2019 budget of $56.8 billion. Her plan would also free up General Fund dollars to fund university operations, which would allow the state to spend more School Aid Fund revenue on K-12 classrooms.
Throwing down gauntlet
In other moves, Whitmer wants to expand the Earned Income Tax Credit to offset the fuel tax impact on the working poor and argues better roads will help motorists avoid expensive vehicle repair bills.
The governor campaigned on a pledge to "fix the damn roads" and is wise to "lay down the gauntlet on this issue," said Jen Eyer, a Democratic strategist and vice president at Vanguard Public Affairs in Lansing.
The gas tax proposal is "not a popular thing, but it actually raises the amount of revenue to fix the problem, and I think she's really boxed (lawmakers) into a corner on this," Eyer said.
But Whitmer could face competing calls to complete an early budget, said longtime Lansing insider Bill Ballenger, who noted that school districts have come to rely on summer funding certainty to craft their own yearly spending plans.
“She’s going to create undue pressure on herself that I don’t think is going to be a plus for her,” said Ballenger, a former lawmaker who served as a Republican.
“I honestly think the Legislature has the most leverage,” he said. “I have never seen a legislator lose an election for refusing to vote for a tax increase.”
Sen. Wayne Schmidt, a Traverse City Republican who chairs a transportation appropriations subcommittee, said Whitmer’s declaration she won’t sign a budget without a long-term road funding deal will not change his approach as he seeks consensus during negotiations.
“We just continue to work on it,” Schmidt said. “There could be additional dollars in there — I don’t know if they’re going to come from her thought about a 45-cent gas tax increase or if we move dollars from somewhere else. I don’t want to put any ultimatums on it.”
Does 2015 road law count?
Some Republicans argue that any road spending targets — such as the governor’s call for $2.5 billion in new money — should include revenue from the 2015 funding law that increased fuel taxes and registration fees.
That plan will generate an additional $1.2 billion annually by 2021 once a $600 million General Fund redirection is complete. But officials anticipate the need is much larger and that road quality will continue to deteriorate.
“Everybody said that was a good first bite at the apple,” Schmidt said of the 2015 law. While Shirkey has said he’s open to new revenue, Senate Republicans also "want to make sure the current program is being properly spent, see what kind of results we’re getting and go from there,” he said.
Whitmer has not said whether she would sign a budget that included fewer road funding dollars than she initially proposed. But when asked about that possibility on Tuesday, the governor's office pointed to a recently published flow chart suggesting lawmakers should “try again” if they propose an alternative that raises less than $2.5 billion.
"The governor has made it clear she’s not signing a budget that doesn’t include a real plan to fix the roads, and she’s made it very clear what a real plan to fix the roads must look like," said spokeswoman Tiffany Brown.