Michigan budget breakdown: Spending up $1.7B, but roads, higher ed cut
Lansing — Michigan's budget has grown despite complaints about Gov. Gretchen Whitmer's cuts and could expand more if the Democratic governor and Republican legislative leaders settle their spending differences.
The fiscal year 2020 budget signed Sept. 30 by Whitmer — after weeks of failed negotiations with GOP leaders and $947 million in line-item vetoes — increased spending 3% from the 2019 total fiscal year budget. It reflected a projected hike in state revenue from the growing economy and more anticipated federal revenue.
The $58.9 billion spending plan is up $1.7 billion or 3% from last year’s $57.2 billion — which included a $1.3 billion supplemental spending bump in December.
When broken down by departments, spending largely increased across the state’s 23 spending plans — except for seven departments that experienced small cuts. They included the Transportation Department, where voters have expected to see increased spending to fix deteriorating roads and bridges.
Another five department budgets increased at less than the rate of inflation of 1.8%.
Some departmental reductions reflect the priorities of the Republican-led Legislature, but others resulted from the Democratic governor's record 147 line-item vetoes.
The budgets that were cut included the departments of Corrections, Natural Resources, State Police, Agriculture and Rural Development, the state Legislature and, oddly enough, the Department of Transportation. The Transportation Department's $5 billion budget fell $2.4 million or 0.05%.
The decreases are uncommon because most state budgets across the nation increase annually regardless of the party in power, though the hikes may be smaller under a Republican leader, said Matt Grossmann, director for Michigan State University's Institute for Public Policy and Social Research.
"It would be unusual for a Democratic governor to have produced an overall reduction in the size of government relevant to a prior Republican governor," Grossmann said.
Budget talks ground to a halt in early September even though the governor and Legislature decided to delay negotiations over road funding. The GOP's insistence on a one-time extra infusion of $400 million for road and bridge repairs was declared costly and inadequate by Whitmer, who wants a long-run solution such as her proposed 45-cents-a-gallon gas tax increase that would generate an extra $2.5 billion annually.
Whitmer's vetoes were interpreted as leverage to bring Republicans back to the negotiating table, since spending could be increased through supplemental funding bills.
Republicans have introduced 24 supplemental bills totaling more than $260 million, while Democratic Sen. Curtis Hertel of East Lansing, in consultation with Whitmer, has introduced two bills that would add $475 million.
Whitmer and Republicans are in a stalemate over the supplemental spending plans. GOP leaders are insisting the Democratic governor guarantee she will use the potential new money as the Legislature intends and resist transferring money within departments to her preferred priorities.
Without a fiscal year deadline for pressure, they are unlikely to agree about how much of the $947 million in cuts to restore in coming days, Grossmann said.
"I would expect a lot of opportunities for political points scoring before" a deal is reached, Grossmann said.
Transportation: Down 0.05%
The transportation budget has been growing for the past eight years, but absorbed a $2.4 million cut for fiscal year 2020 — about a 0.05% reduction to $5 billion.
The small dip comes even with a $325 million increase in dedicated income tax revenue through a bipartisan 2015 roads funding plan that included a record 7.3-cent gas tax hike in 2017 and vehicle registration fee increases.
The Legislature initially added another $400 million to transportation that it paid for by trimming other departments — moves that GOP lawmakers called "efficiencies" and setting priorities. The Whitmer administration labeled them misguided cuts that compromised corrections operations, cyber security and social service programs.
Whitmer vetoed $375 million of the $400 million and transferred the other $25 million for other transportation uses, including mass transit.
Republicans leaders have said the veto and money transfer will delay additional help for roads, while critics have said the failure to find a long-term funding source of $2 billion annually means roads and bridges will continue to crumble.
The nearly $2 billion Whitmer hoped to raise from her gas tax increase is acknowledged as the funding target needed to fix and maintain Michigan's roads, said Lance Binoniemi of the Michigan Infrastructure and Transportation Association, which represents contractors and advocates for more road funding.
"The longer we wait and the longer we don’t have a long-term road funding solution in place, the more expensive it gets," he said. "The need grows every year."
Pending: Road funding talks have not resumed after stopping in early September.
School aid: Mixed
Funding for K-12 education increased $300 million or 2% from $14.8 billion to $15.1 billion, but certain spending priorities took a hit. Whitmer vetoed more than $128 million from the Department of Education, while the GOP failed to fund some of her educational projects.
The Legislature provided about $21 million for literacy coaches, a Whitmer priority, but required intermediate school districts to match another $10.5 million needed for the 280 coaches. Lawmakers approved no money for Whitmer's proposed $110 million Michigan Reconnect, a skilled trades program providing community college tuition help.
The biggest veto flash point occurred when the Democratic governor cut $35 million for a $240 per-pupil spending increase for charter schools — independent public schools that are sponsored by a public authority. Per-pupil hikes for traditional public schools were kept intact. She also quashed $7 million for small isolated districts.
During an Oct. 9 trip to the Capitol, fourth grade Holly Academy students rallied against the cut, which Whitmer defended as having to make a "tough decision."
The governor also chopped what she called “pork barrel” spending targeted at certain education companies providing online math and literacy programs.
The Legislature's 0.9% hike in higher education spending was called inadequate by state universities, which argued the lack of state aid would result in higher tuition and make college less affordable. Whitmer's subsequent $38 million cut in tuition grants for low-income students attending private Michigan colleges helped turn the higher education funding increase into an overall 1% reduction.
The cut in private college aid is causing a scramble among the poorer families to pay a new unexpected bill.
About 17,000 students in Michigan receive financial help through the Michigan Tuition Grant, the largest numbers stemming from Baker College and Davenport University, said Colby Cesaro, vice president of the Michigan Independent Colleges and Universities.
The effect of the governor's veto was immediate, as independent institutions across Michigan scrambled to get other funding in place or change their rules to give low-income students some grace on tuition payments, Cesaro said. The first grant disbursement was scheduled for November.
The cut is expected to create potential havoc next semester, she said.
"If a student has an outstanding balance on their account, they can’t register for the next semester," Cesaro said. "They’re trying to find a way to adjust their rules so a student can still register.”
Lakisha Pressley of Detroit, a senior at Olivet College, would have received a $2,400 tuition grant this academic year. The first-generation college student studying criminal justice is worried about her ability to graduate in May without the grant money, so she and more than 20 other Olivet students rallied Wednesday at the Capitol against the veto.
"Money doesn't grow on trees for me or my family," Pressley said. "My mom is at home trying to figure out what we're going to do. She told me not to worry about anything, to just focus on school and keep my head in the books."
The vetoed charter school aid increase would delay the expansion of some intervention and support programs that help students improve on subjects with which they struggle and decrease professional development coaching, said Daniel Quisenberry, president for the Michigan Association of Public School Academies.
The 2,300 students at Cesar Chavez Academy in Detroit stand to lose nearly $600,000 in funding, said Juan Martinez, principal of Cesar Chavez High School and director of the charter school district's operations. The district next week will receive its first state payment without the $240 per-pupil increase.
The district is still revising its budget and will operate at a financial disadvantage to traditional public schools — a disparity that Martinez called "wrong and discriminatory."
"Our children are not pork barrel and most of these kids are poor children and they're overwhelmingly children of color," he said.
Pending: GOP lawmakers are seeking to restore $35 million for charter schools, a $10 million school security program, a $15 million summer school literacy program and $7 million for isolated districts. Hertel's bills would replace the school district match for literacy coaches with $10.5 million in state aid and add $110 million for Michigan Reconnect.
Environment: Up 19.6%
The Department of Environment Great Lakes and Energy received one of the biggest increases — a $98.3 million or 19.6% bump to $599.6 million to hire more employees and finance more cleanup efforts.
Republican and Democratic lawmakers increased spending for clean water initiatives, such as an increased response capacity for mitigating chemical contaminants and money to implement the state’s more stringent lead and copper rule.
The higher budget allows the department to "bring back" 117 full-time employees lost during downsizing in recent years to tackle the clean water initiatives, said Jill Greenberg, a department spokeswoman.
Whitmer also used the State Administrative Board to transfer $7.5 million from private well testing to implementation of the state’s tougher lead and copper rules.
The governor vetoed a $15 million grant program for municipal airports to combat per- and poly-fluoroalkyl or PFAS substances. The "limited scope" of the grant would have allowed the state to study PFAS at municipal airports, but not clean it up, Greenberg said.
The grant money should be available to municipal airports as the state works to understand the breadth and depth of PFAS contamination in Michigan, said Rep. Sue Allor, R-Wolverine, the sponsor of the bill seeking to restore the funding.
The $15 million would not go to former military bases, where the problem has received heightened scrutiny, but to smaller municipal airports with identified PFAS, such as Muskegon County Airport.
“It makes you one step ahead of the game,” Allor said of the monitoring grants. “We wouldn’t want to find out that there’s a plume moving or there’s a plume under there and not have the money to know where its moving to.”
Pending: GOP lawmakers have a bill to restore the $15 million in PFAS airport grant.
Health and Human Services: Up 2.7%
The Department of Health and Human Services received a 2.7% increase of about $700 million to $26.2 billion, which is financed with state and federal dollars. But Whitmer officials said the Legislature failed to provide enough funding for a Medicaid work requirement set to take effect in 2020 and other programs.
The governor transferred $21.7 million within the department for the Medicaid work requirement, lead and copper rule initiatives and base program funding. Hertel's bill would restore at least $2 million of that to centers for independent living — community-based groups that advocate for the disabled and their families.
Whitmer’s nearly $234 million in vetoed health and human services spending was among her biggest and most controversial cuts. The chopped programs included more than $1 million in autism programming money, nearly $2 million in opioid programs, $169 million for six kinds of rural hospital services, and aid for senior citizen and dementia programs.
"I have referred constituents to the (Autism) Navigator on a wide variety of issues facing people with autism," said Rep. Julie Calley, R-Portland, who has a child with autism and is sponsoring a bill to restore the program funding. "Connecting them to the right providers, employment opportunities, housing, and more actually results in less public assistance over time."
Pending: Hertel's bill would add $241.5 million more to the department for family preservation programs, Healthy Michigan Plan enrollees, implementation of the state's stricter lead and copper rule, and reverse some other Whitmer funding transfers and veto cuts.
The GOP and Hertel both seek to restore about $1 million for the Autism Navigator and $34.2 million for a rate increase for isolated rural hospitals providing what is called critical access to care. Republican lawmakers want to add $74.6 million overall for five kinds of rural hospital services including the critical access rate hike.
General government: Mixed
General government, which covers several executive and legislative offices including the Attorney General's office, experienced a variety of increases and decreases from office to office in its $5.2 billion budget.
The Secretary of State office budget increased $3.3 million or 1.3% from $247 million to $250.3 million. A sore point for Republican lawmakers was the new Independent Redistricting commission, which will redraw Michigan's political boundaries for Congress and the Legislature effective in 2022.
The Legislature rejected Whitmer’s original proposal for $4.6 million for the voter-adopted commission and approved $3.4 million.
But the biggest chops to the general government budget, under the Department of Labor and Economic Opportunity, was the elimination of the $37.5 million Pure Michigan tourism advertising campaign and the $37.2 million Going Pro program, which sought to increase access to professional trades careers.
Media buys for the $37.5 million Pure Michigan tourism advertising campaign won't run out until the end of December, according to the State Budget Office.
The Going Pro skilled trades and jobs program typically begins approving applications at the end of November and training starts in January. The timeline for training is decided by the employers, who would receive state reimbursement after training is completed.
Pending: Hertel is seeking to add $2 million for the redistricting commission. Neither Hertel nor Republican lawmakers have sought to restore funding for Pure Michigan or Going Pro.
Prisons: Down 0.4%
The $2 billion Department of Corrections budget experienced an $8 million or 0.4% reduction after Whitmer cut $14.8 million in county jail reimbursements.
But the Legislature approved $48 million less than Whitmer's budget recommendation to start with, the department said. Lawmakers shortchanged educational programming at jails and borrowed from work project funds that would replace electronic tethers, a move that Corrections officials said overestimated the money left in the funds and was legally questionable.
Whitmer vetoed the change in the work project funds, which leaves the department short of the money to replace roughly 4,000 electronic tethers and continue its Vocational Village education program.
The Corrections Department argues this would hurt Michigan's recidivism efforts since the job training program has resulted in only 2.2% of its participants returning to prison since its inception in 2016. The department's current tethers are scheduled to go dark in late November or December, when Verizon switches from a 3G to a 4G network.
Metro Detroit will suffer the most from the county jail reimbursement cuts. The Oakland County jail received $1.7 million in state reimbursements last year for "diverted prisoners" who would otherwise be a burden on state prisons. Wayne County averaged $1.6 million annually in reimbursements for the past three years, said county Undersheriff Daniel Pfannes.
Sheriffs across the state are discussing with their chief judges possibly reducing the use of sentences placing diverted felons into county jails, which would result in judges instead sending the felons to state prisons, Pfannes said.
Without the state aid, the county can't accommodate the state prisoners — an arrangement that saves the Department of Corrections space, money and staffing — especially given Wayne County's population management plan, Pfannes said. Having the county absorb the added cost for state prisoners would be an "injustice" to county taxpayers, he said.
Pending: A Whitmer-backed bill would restore $25.1 million to the Department of Corrections, including $4.6 million for tether replacement.
State police: Down 4.8%
Michigan State Police experienced about a $35.9 million or 4.8% decrease to $714.5 million. More than a third of the reduction stemmed from Whitmer’s veto of $13 million for secondary road patrols, a state grant program that finances county deputies to patrol county and local roads outside of a city or village.
About 120 county sheriff's deputies could be laid off throughout the state should the secondary road patrol cuts take effect, said Rep. Mike Mueller, R-Linden, a former Livingston County deputy and sponsor of a bill to restore the funding.
The funding allows for shorter response times and better services by police for residents and visitors in rural areas that lack a tax base to hire road patrols, Mueller said.
In the Upper Peninsula's Chippewa County, the cut means the loss of about $60,000, the equivalent of one road patrol deputy, said county administrator Jim German.
"We have 11 road patrol deputies so you’re looking at a sizable impact to road patrol services," he said. "It will hurt.”
Wayne County is losing $1.25 million in secondary road patrol grants, the largest amount in Michigan, Pfannes said.
The Sheriff's Department already has transferred two sergeants and eight road patrol officers into the jails, he said. A sergeant was demoted as part of the transfer and outlying communities in Wayne County will go without sheriff patrols and aid in the coming months, Pfannes said.
Pending: A Republican bill would restore $13 million for secondary road patrols, while Hertel’s bill would fund $11 million.
Natural Resources: Down 9.5%
The state's Department of Natural Resources was reduced about $45.8 million or 9.5% to $438.6 million mostly because of cuts by the Legislature. Whitmer contributed a $1.3 million reduction through a line-item veto of a lake level assessment and forest grant transfer.
Whitmer initially proposed a $471.1 million budget that was whittled by Legislative cuts that included the elimination of $2.8 million for an analysis of hazardous material pipelines that cross waterways, nearly $1 million for the Michigan Historical Center, and $1 million for a summer employment program for at-risk youth and veterans.
The biggest slash from the governor's recommendation was $21.4 million for public recreation infrastructure and facilities that would have resulted from adopting the governor's proposed 45-cents-a-gallon gas tax hike.
Technology and Treasury: Up 6%
The Department of Technology, Management and Budget received a $100 million increase or 6% to $1.5 billion.
Department officials said the Legislature hurt cyber security efforts in part by approving $53 million less than Whitmer's recommendation and Hertel's bill seeks to restore all of that funding and then some.
The Democratic governor sliced $27 million in the Treasury Department's budget for payments the state usually makes to rural communities where there is tax-exempt state land.
The elimination of the payments in lieu of taxes will cost Northern Michigan's Roscommon County $490,394, representing a 5% loss of the county's general fund budget, said Jodi Valentino, the county's administrator/controller.
The county Board of Commissioners imposed an immediate hiring freeze last week as they work to revise Roscommon's budget, she said. The county still is recovering from the 2008 recession, Valentino said, and "there's no pot of money to pull from" to make up for the lost state dollars.
"Right now, we’re looking at where we can trim non-statutory functions," she said.
Pending: Hertel's bill would add $73.2 million to deal with some of the shortfalls and add $20 million for efforts to encourage residents to be counted in next year's federal census. Republican leaders want to restore about $27 million for tax-exempt land aid.