Funding debates over roads, Pure Michigan tourism punted to 2020
Lansing — Crumbling roads and the Pure Michigan tourism campaign remained unresolved this week as state lawmakers cast their final votes of 2019 and punted the funding issues into the New Year.
While Gov. Gretchen Whitmer and Republican legislative leaders settled a budget stalemate and restored much of the $947 million in veto cuts she made to state departments at the end of September, they punted some of the most divisive topics to 2020.
Those topics include what to do about Michigan's deteriorating transportation infrastructure and how to fund the Pure Michigan initiative. Whitmer vetoed $37.5 million in Pure Michigan funding and an extra $375 million in transportation funding.
Lawmakers left both items out of the $573 million supplemental spending bills they sent Whitmer as part of deal to restore funding she had vetoed.
After the state Senate adjourned Wednesday, Senate Appropriations Chairman Jim Stamas, R-Midland, acknowledged that "key items" remained unresolved.
"I’m hopeful that with the progress that we’ve made today, both in relationships and moving forward on some of the priorities ... that we can pick up in January and move forward with the balance of that," Stamas said of the vetoed funding.
In addition to roads and Pure Michigan, lawmakers also didn't restore a 7% increase in Medicaid outpatient reimbursement rates for Michigan hospitals — worth $95 million — and $37.2 million for a skilled trades program called Going Pro.
But multiple lawmakers pointed to roads and bridges as the main focus when they return to the Legislature in January.
The spending bills lawmakers passed this week were focused on "critical needs," said state Rep. Jon Hoadley, D-Kalamazoo, such as funding for road patrols and rural hospitals. But they left other questions unanswered, like what to do about roads.
"I think there’s a willingness to get it done," said Hoadley, minority vice chair of the House Appropriations Committee who described himself as an optimist.
For years, state lawmakers have debated how to increase funding for Michigan's deteriorating roads and bridges. A 2019 report from Transportation Asset Management Council found that 41% of the 88,000 lane miles of Michigan roads that are eligible for federal aid were in “poor" condition.
Democratic Gov. Gretchen Whitmer used a 2018 campaign slogan of "fix the damn roads" when she ran for governor and proposed increasing the state's gasoline tax more than 170% or 45 cents per gallon after taking office. Her plan would have generated $2.5 billion in new revenue, including a $1.9 billion boost for roads, but Republican lawmakers called it dead on arrival and the House Minority Leader Christine Greig called it "the extreme that won’t happen."
Republicans in the GOP-controlled Legislature have privately proposed a different approach.
House Speaker Lee Chatfield, R-Levering, pushed to remove the 6% sales tax on gasoline to ensure all taxes paid at the pump go toward roads, but didn't suggest a specific way to hold harmless the sales tax funding for schools and local governments.
GOP leaders also expressed interest in a conservative business group's idea of issuing a 30-year pension obligation bond to borrow $10 billion and pump that money into the Michigan Public Schools Employees Retirement System. Using bond money to pay down unfunded pension liabilities would free up an estimated $980 million in school aid annually that could be diverted for road and bridge repairs — an idea Whitmer rejected.
The Legislature's approved transportation budget for 2020 was $5.38 billion, which Republican lawmakers touted as a "record" amount of funding for infrastructure.
But Whitmer, who said the budget didn't do enough for a long-term solution, vetoed $375 million in funding for roads and bridges as part of a broader effort to get Republicans back to the negotiating table.
The state's transportation budget ended up at just over $5 billion, a $2.4 million cut from the previous year. That fact wasn't lost on Sen. Aric Nesbiit, R-Lawton, a member of the Senate GOP leadership team.
He focused on transportation funding when asked this week about unresolved budget issues, noting that Whitmer campaigned on fixing the roads but vetoed additional road and bridge repair dollars.
He pushed back against Whitmer's 45-cent gas tax increase, arguing Michigan's median household income has dropped since 2005.
"Before we go back and ask for a tax increase from the hard-working people of Michigan, we ought to look at our own budgets," Nesbitt said. "Because that’s what the hard-working people of Michigan are doing."
Talks are continuing in the Capitol about how to bridge the gap between lawmakers who oppose tax increases to fund road improvements and those who want a tax increase that would provide a significant revenue boost.
Sen. Curtis Hertel, D-Meridian Township, the minority vice chair of the Senate Appropriations Committee, appeared Thursday on the The WILS Morning Wake-Up with host Dave Akerly. Hertel said he's going to do "everything" he can to push for a road funding deal.
"There are preliminary discussions going on," Hertel told the radio show. "There are ideas being thrown back and forth."
But roads aren't the only unresolved matter. Stamas, who chairs the Senate Appropriations Committee, said he's among the lawmakers who would "love" to restore the funding for Pure Michigan, a promotional campaign that launched in 2008.
Supporters of Pure Michigan argue that it draws tourism dollars, benefiting the state's economy. But Senate Majority Leader Mike Shirkey, R-Clarklake, said this week that he believes the businesses that primarily benefit from the program should fund it.
Senate Minority Leader Jim Ananich, D-Flint, said the spending bills lawmakers passed to restore some of the vetoed dollars this week were "narrow" in nature.
There are other initiatives that lawmakers still want to work on besides road funding and Pure Michigan, Ananich said. He argued he's not sure the $120 million lawmakers originally allocated for drinking water cleanups will be enough.
As for Pure Michigan, Ananich said, "I’d be open to it being part of a compromise. If it helps get a budget deal done in January, then I’m OK with it."
Chatfield said Pure Michigan's funding was "was one of the issues we decided to have a conversation on in January."
January is also when state budget officials will roll out new revenue estimates, which might affect how much of the vetoed money would still be available for spending.
Hoadley, the minority vice chair of the House Appropriations Committees, said he expects state lawmakers to face two new supplemental budget plans as they prepare for the 2021 fiscal year budget.
One plan would fine-tune issues from the 2018-19 budget, while another would focus on the existing budget, he predicted.
As Hoadley put it, "I have a hunch that the supplemental conversation isn’t done."
Staff writer Beth LeBlanc contributed.