MIRS’ Budget Flashpoints: 10 Budget Topics That Could Bring Disagreement

The following article appeared in the Michigan Information & Research Services, Inc. (MIRS) publication on February 6, 2014. MIRS is a Lansing insider publication that provides comprehensive news and analysis of state government delivered in written reports detailing the activities of the House, Senate, Judicial and Executive branches of Michigan state government.

The following are 10 possible points of difference between the Governor and lawmakers, according to conversations with legislators today: 

1. Overall Spending 
Snyder and conservative members of the Legislature have seen things differently before. And it could come again in the overall price tag attached to the budget. 

Snyder’s team has referred to his plan as “responsible.” And it does invest $120 million into the state’s rainy day fund. 

But some conservative lawmakers worry that spending has increased across the wide majority of departments. And the amount of one-time spending would hit $983 million. 

Increased spending could be received as the new baseline going forward, according to some Republicans, and they may want to see a larger effort to pay down the state’s debt and invest in savings. 

2. Transportation Funding 
Many Republicans said today that they’re not satisfied with the level of new investment the Governor’s budget brings for the state’s roads. 

Last year, Snyder called for $1.2 billion in an additional ongoing investment in transportation. But in his budget, he proposed using $254 million in General Fund dollars on transportation. 

“Given the available money it’s appropriate, but given the need it is not,” explained Sen. JohnPAPPAGEORGE (R-Troy) today. 

But with a surplus, other lawmakers think more should be done. 

Sen. Patrick COLBECK (R-Canton) said he’d like to see more money going into roads.  

He said there’s a lot of money going into things besides roads as a way “to empty the wallet, if you will, before you get to the point where you need to pay for the roads.” 

This spring, some lawmakers noted, potholes will be popping up across the state as legislators work on the budget. And already, the drumbeat for improvements on the state’s transportation network is growing. 

But if you increase funding for roads, from where do you take the money? 

3. Homestead Property Tax Credit 
The tax relief option Snyder proposed is the most obvious difference from what many GOP lawmakers want. 

Many of them are pushing for an income tax cut in light of the state’s surplus. But Snyder wants to increase the reach of the homestead property tax credit. 

Snyder has already won at least one supporter for his tax credit idea. That’s Rep. John OLUMBA (I-Detroit). 

“The most widespread tax credit that can help the state of Michigan, the middle class folks, as well as people who are poor as well as people who are even on the higher end, who own property, who are renting property, who are selling property, is the property tax credit,” Olumba said today. 

4. Funding Levels For Michigan Schools 
Republicans and Democrats in the Legislature are laying the groundwork for another intense debate over education funding. And the rhetoric is flowing. 

But with the state’s surplus, some members of the both parties say they want to see more money for the state’s schools. It’s something constituents say they want, lawmakers acknowledge. 

Is Snyder’s plan to increase K-12 funding by 3 percent enough? We’ll wait and see. 

But lawmakers are also talking about differences in per-pupil allotments among schools and the specific education projects receiving funding. Without those specific programs, that money could go into the foundation allowance. 

5. Money To Protect Detroit’s Pensions 
Is it a bailout? Would it be perceived as a bailout? 

Whatever the answer, Snyder is proposing $17.5 million annually for 20 years from tobacco settlement reserves to resolve ongoing issues in the bankruptcy of Detroit and help minimize impacts to pensioners. 

But there’s no guarantee that lawmakers want to go along. Some are concerned the move could set a dangerous precedent for the state. 

6. Medicaid Costs 
Many Republicans voted against the bill to expand and reform Medicaid in 2013. 

Now, federal spending connected to that expansion is newly nestled inside the budget for FY 2015. As one lawmaker noted today, the Department of Community Health’s overall budget is up by $440 million — the largest increase of any budget area. 

But the program is in state law, and overall, it’s required to bring savings for the state. 

If you voted against Medicaid expansion, how to do you approach spending for the program? 

7. Public Safety Efforts 
Snyder is adding $13.5 million to the budget to graduate 100 new Michigan State Police troopers from trooper school. 

It’s a big investment, but multiple lawmakers noted today that they might want to see an investment to specifically help local governments hire more public safety officers. 

8. Revenue Sharing Formula 
Snyder unveiled a plan for a new population-based funding formula with four opportunities for additional funding for cities, townships and villages on Wednesday. 

He also proposed boosts in funding for local government. 

Is it enough? And will lawmakers have their own ideas for distributing the dollars? 

9. Smarter Balanced Assessments 
The budget presents a way for lawmakers to have a say over what’s going on with the state’s implementation of Common Core State Standards and the new Smarter Balanced assessments. 

Last year, that meant lawmakers putting a freeze on Common Core’s implementation. 

This time around, they can decide whether to fund the connected Smarter Balanced. 

Hearings have already begun on the assessment issue, and State Superintendent Mike FLANAGANhas called getting funding for Smarter Balanced a top priority. 

10. Michigan Strategic Fund Programs 
Lawmakers frequently shined a light on the Michigan Strategic Fund’s (MSF) operations in 2013. 

The MSF’s funding is basically held level under Snyder’s plan. 

But Snyder wants to spend $2 million more for Pure Michigan, to spend $2 million for “arts and culture” efforts and to continue $25 million for the film incentive program. If some conservatives have their way, some of those dollars would end up on the cutting room floor.

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The Northern Michigan Chamber Alliance will continue to track the state budget process and update our members frequently. 

For an overview of Governor Rick Snyder’s budget as it pertains to northern Michigan business, click here.