Showdown: GOP plans budget without roads deal as Whitmer ramps up critique

Senate Majority Leader Mike Shirkey, R-Clarklake, listens to a discussion on Michigan's future at the annual Detroit Regional Chamber of Commerce's  Mackinac Policy Conference Thursday.

Lansing — Michigan’s Republican-led Legislature is planning to finalize a 2020 state budget plan without a long-term road funding deal, a move that may dare Democratic Gov. Gretchen Whitmer to make good on her veto threat.

Talk of a potential government shutdown is a “fabricated crisis by my governor to try to tie in roads to the budget,” Senate Majority Leader Mike Shirkey of Clarklake said Wednesday after Whitmer accused GOP lawmakers of “playing games” and “screwing around” while roads crumble and schools suffer.

Republicans who rejected Whitmer's proposal to raise fuel taxes by 45 cents per gallon have presented her with "multiple options" to boost road funding, Shirkey told reporters, declining to divulge details of alternatives he said the governor summarily dismissed. 

“So all I can do now is say I’m willing to talk, but we have to pivot and also progress on a budget because the Michigan citizens deserve the certainty of a budget being done.”

Whitmer hammered Republicans earlier Wednesday, reiterating that she will not sign a budget that "does not include a real fix" for crumbling roads that she said are hurting the economy and jeopardizing the safety of motorists. 

With 33 days before the end of the fiscal year, Whitmer said she is not wedded to “every aspect” of her budget, which proposed to fix the roads by raising fuel taxes. But she called it the “best” — and only — comprehensive plan on the table.

“I’m ready to negotiate,” Whitmer said in a press conference across the street from the Michigan Capitol, where the Senate was meeting for the second time after a two-month summer recess. “I am working to make sure we have a deal and avoid a shutdown, but it’s time for the Republican-led Legislature to get serious, to get back to work, stop screwing around and to get it done.”

Gov. Gretchen Whitmer discusses the ongoing budget impasse on Aug. 28, 2019.

Increasing tensions in Michigan's newly divided government came to a head Wednesday as Republicans accused Whitmer of holding up budget negotiations by insisting on what they call an unpopular and unrealistic gas tax plan that would give Michigan the highest rate in the nation, a more than 170% increase from the current 26.3 cents per gallon.

House Speaker Lee Chatfield said GOP leaders have presented Whitmer with a “menu of options” that attempt to meet the governor in the middle, but he said those plans will remain confidential.

The Levering Republican said he remains optimistic about negotiations and suggested Whitmer “seems to be the only person eager to talk about a government shutdown.”

"I’m calling on the governor to continue budget negotiations and drop her insistence on a 45-cent gas tax," he said. "We cannot hold the budget hostage because of her desire to tax every driver in the state.”

Asked about working on the budget separate from roads, Chatfield said, "I think we can walk and chew gum at the same time. I think we can have two conversations at once."

Shirkey and Chatfield met with Whitmer on Friday and have continued conversations by phone this week. But they have not publicly released any alternative road funding plan and have cited a pledge to keep negotiations confidential.

Gov: GOP ideas not 'viable'

The ideas GOP leaders have so far shared with her do not amount to a “viable” plan, Whitmer said.

The governor's fuel tax proposal would generate $2.5 billion a year in new revenue, and she downplayed her Tuesday suggestion to Crain’s Detroit that she would be willing to accept a Republican deal with closer to $1.8 billion in new money.

“You get anywhere in the range (of $2.5 billion) and we’ll have a good conversation and we can start the negotiation process,” Whitmer said.

Shirkey told reporters Republicans have presented Whitmer with four separate road funding proposals, each of which he said she has called "unacceptable."

Each of the plans "included material, new revenue," Shirkey said, acknowledging that a gas tax hike of some kind was "part of that contemplation." Beyond new revenue, the GOP alternatives "also include re-prioritization of our current spending and a refinancing of certain state debt obligations."

The Senate leader began the year by pushing to separate road funding talks from state budget negotiations, but he had backed off that delineation and teased the possibility of releasing a GOP roads plan as early as the Mackinac Leadership Conference in late May.

Whitmer made clear on Wednesday she has no interest in a teacher pension debt swap plan that could free up nearly $1 billion a year, one of the only road funding concepts Republicans have discussed publicly.

“It’s taking money out of education to fill potholes," she said. "It’s not a real solution.”

But Shirkey urged the governor to reconsider the teacher pension bonding proposal developed by the conservative West Michigan Policy Forum. 

"We cannot take MPSERS off the table in this negotiation," he said. "It will be only a matter of years before all School Aid growth will be absorbed by increases in the obligation for our current payment stream. There's no reason why we shouldn't try to solve two problems."

Whitmer also dismissed the idea of extending pension debt payments. The East Lansing Democrat has criticized a Republican push to remove the state’s 6% sales tax on fuel, which is used to fund schools and cities. Taxes on gas in other states traditionally have been dedicated to road and bridge repairs.

The governor did not rule out the possibility of expanding the state’s 6% sales tax to include services. Republicans have broached the idea of applying the tax to ride sharing companies like Uber and Lyft, but other sectors of the growing service economy are now exempt.

“It’s too early to say if that is totally off the table or something worth having a conversation about,” Whitmer said. “But all of these little snippets or rumors around town are not a plan, and that’s what I’m calling on Republicans to bring.”

GOP: No school cuts proposed

Education leaders have bemoaned the budget stalemate and summer inaction by the state Legislature. Schools start their new fiscal year on July 1, and many began classes this week.

“We’ve been thrown into a state of uncertainty in trying to plan for the new year,” said Dan Behm, superintendent of Forest Hills Public Schools, said in a Tuesday conference call. “Where we have staffing issues, we’re in a state of limbo.”

Many educators have praised Whitmer’s budget, which proposed a $507 million bump for K-12 schools under a new weighted distribution formula that would provide extra funding for students with more costly educational needs, including at-risk, career tech and economically disadvantaged kids.

Whitmer's plan would phase in the 45-cents-per-gallon fuel tax increase over two years, eventually generating $2.5 million in new revenue. Once fully implemented, it would boost road funding by $1.9 billion over current spending levels and end a $600 million general fund dedication, freeing up that money for schools and other priorities. 

“I don’t want to pay a gas tax either, but I also don’t want a chunk of concrete to come flying through my daughter’s windshield or see her sidelined in distress,” Whitmer said Wednesday. “I don’t want to keep paying to fix the cars, a couple of windshields in a year alone and new wheels.”

The Senate budget ditched Whitmer’s gas tax but proposed $410 million in new classroom spending, while the House approved a budget that would boost school spending $226 million.

Republican lawmakers say their proposed budgets would still result in record spending on public education, although those claims to not account for inflation, and recent increases have largely gone toward teacher retirement costs rather than the classroom.

Chatfield has pushed to remove the sales tax on gasoline but disputed Whitmer’s repeated claim that Republicans are proposing to cut K-12 spending to fix the state’s roads. 

“No plan that’s been presented to the governor has ever cut education funding,” Chatfield said Tuesday on WJR-AM 760.

Removing the sales tax on gasoline and replacing it with an equivalent fuel tax for roads would cost schools and local governments $542 million in sales tax revenue next year and $830 million in 2021.

The House Republican budget proposes protecting K-12 school funding in 2020 by ending a $500 million School Aid Fund earmark for universities and halting a $170 million diversion of revenue from online sales tax revenue approved last year.

The budget spat turned toward theatrics Wednesday, with Whitmer stressing the need for a deal as she stood beside large road construction warning sign reading "33 days until the end of the fiscal year... 0 real solutions from Republicans."

Senate Republicans countered with a Twitter meme showing a gas station named “Gov. Whitmer’s gas tax plan” selling at prices that are “way too high.”