Hits and Misses in Snyder Budget

On Wednesday, February 11, 2015, Michigan Governor Rick Snyder announced his budget priorities for FY 2015-2016.

The Governor presented a total budget of $54 billion, and announced projected revenues of $9.7 billion to the state’s general fund, and $12.3 billion in the School Aid Fund (SAF) for a total of $22 billion.

HITS

Job Training Investment

The Snyder budget recommendation includes an increase for training programs designed to encourage and train students about careers in skilled trades. The Governor proposes over $17 million for programs encouraging career and technical education training and middle college programs, and an overall $83 million investment in prioritizing skilled trades.

This is welcome news for many northern Michigan businesses who are struggling and competing across the state to find a skilled workforce. The main challenge for northern Michigan will be ensuring that these funds are available to northern Michigan schools, community colleges, and programs.

Pure Michigan Funding Increase

The Pure Michigan campaign has helped to raise Michigan’s image and profile across the nation and globe, and only since Snyder has taken office has the campaign been funded at levels that allow it to expand and reach more people. Pure Michigan has one of the best return on investments of any program the state has to offer, and Snyder’s request for a $1 million increase – to $30 million total – is a welcome sign that he will continue to prioritize and support northern Michigan’s tourism economy.

Supporting Early Childhood Education

Snyder proposes maintaining a budget of $240 million for the Great Start Readiness Program (GSRP), and has also proposed an investment of $25 million for a program designed to increase third grade reading proficiency. This is an Alliance priority to “retain funding for GSRP and early childhood programs.”

MISSES

Rural Hospital Funding

One area of concern for northern Michigan comes in the form of funding cuts to certain health care programs, including critical programs for small and rural hospitals. Snyder’s proposed budget would eliminate:

  • $36 million small and rural hospital access pool
  • $11.2 million for the OB stabilization fund

Snyder’s Executive Order 2015-5 also cuts $6 million from the current year from the small and rural hospital access pool. These funds mean millions of dollars to northern Michigan hospitals, and help our rural hospitals subsidize the cost of critical services, such a prenatal and delivery. Without local or regional access to these services, northern Michigan residents would be required to travel hundreds of miles to receive basic services and check ups. This is a critical component of our region’s business infrastructure as it serves as a disincentive for businesses and talent looking to stay or relocate in northern Michigan.

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Health Insurance Claims Assessment Adjustments

The Snyder budget recommendation proposes to raise an additional $180.1 million in revenue to support Michigan’s Medicaid program by increasing the Health Insurance Claims Assessment (HICA) rate from .75% to 1.3%. The HICA is a tax on a percentage of paid health claims made by eligible third-party administrators, health insurance carriers and self-insured entities. Currently, Michigan business owners

The budget recommendation also proposes removing the HICA/Use Tax revenue cap, an important safeguard to ensure that revenues match need and to help prohibit the state from over-collecting.

Liquor License Fee Increase

Snyder has proposed a 50% fee increase for certain liquor license fees for which the funding would go to replace the Michigan Liquor Control Commission’s (MLCC) outdated electronic licensing database.

Legislators have already begun questioning the need for increased revenues for MLCC, especially after reports indicated that the Commission had returned over $169 million to the general fund in recent years. The Alliance will keep a close eye on this proposal as it could have far reaching consequences for the food and beverage industry in northern Michigan.

K-12 School Per Pupil Funding Equity

The Chamber Alliance will be following the School Aid budget with a particular emphasis on school equity and closing the gap between the minimum foundation allowance and the base foundation allowance. The Alliance is generally supportive of the $75 per pupil increase proposed by Gov. Snyder, but will be pushing him and the legislature to also fund an equity payment to school districts receiving the minimum foundation allowance to continue to close the $848 gap.

  • Foundation increase of $108 million to $11.9 billion for K-12 – or $75 per pupil.
    • The Minimum Foundation would be $7,326 pp and the Base Foundation, $8,174.
    • The equity gap between the Minimum and Base would remain at $848 pp.
  • Support of the P-20 education concept – prenatal to age 20.
  • Fund community colleges completely from the School Aid Fund.
  • Third grade reading proficiency initiative – $25 million.
  • Rehabilitation program for distressed schools – $75 million.
  • Increased At-Risk funding – $100 million.
  • Technology infrastructure – $25 million.
  • Financial and academic Best Practices – $30 million – or $20 pp.
  • New Skilled Trades funding – $35 million.
  • MPSERS cap maintenance payments – $893.5 million.
  • School consolidation up-front expenses – $2 million.
  • Increase college advisors – $2.2 million.

As the budget process moves forward, you can continue to find updates at the Northern Michigan Business Blog: www.nmichiganbusiness.com

 

 

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