Budget Update As Spring Recess Begins

Michigan’s House and Senate said “no” recently to two tax increases proposed by Gov. Rick Snyder in his FY 2015-2016 state budget, and also made changes in some other key areas of the budget for business interests in northern Michigan.

The legislature will not meet for two weeks as it takes its customary two spring recess and in district work period, meaning no official budget action will take place during this time. Below is an update on a few the budget areas being tracked by the Northern Michigan Chamber Alliance.

Rural Hospital Funding & HICA Tax Increase

• Earlier in the week, the Alliance reported that the House and Senate had opted to reinstate $36 million in funding for the Small and Rural Hospital Access Pool and over $11 million in funding for the Obstetrics (OB) Stabilization Fund which the governor had altered, and in some cases removed, from his budget.
• The Alliance was also pleased to see that the House and Senate had done this without raising the Health Insurance Claims Assessment (HICA), which would have increased the cost of providing health insurance for job providers, as a way of funding the rural hospital pool.

Liquor License Fees

• The Governor included a 50% increase in the cost of annual liquor license and ancillary liquor licensing fees to raise an additional $6.2 million. The Alliance opposed this measure.
• The House and Senate subcommittee passed versions of the budget do not include the liquor license and ancillary fee increases.
• The Alliance supports the House and Senate version which do not raise license fees on the restaurant and hospitality industries.

K-12 Funding Equity

• The Governor’s proposed budget included a $75 across the board increase in foundation allowance.
• House and Senate subcommittee versions of the budget utilizes the 2x funding formula to bring the schools at the minimum foundation (the majority of northern Michigan schools) allowance more in line with those at the maximum foundation allowance. The House proposal raises the minimum foundation allowance $299 per pupil to $7,551 and raises the maximum foundation allowance $137 to $8,236 using the 2X formula.
• The Alliance supports the House and Senate versions, as closing the K-12 funding equity gap between minimum and maximum foundation allowances is a key Alliance priority.
• An M-Live article provided a more in depth look at the House K-12 budget: http://www.mlive.com/lansing-news/index.ssf/2015/03/draft_of_michigan_house_educat.html#incart_river 

Pure Michigan Funding

• The Governor’s proposal called for a $1 million increase for the Pure Michigan campaign, going from $29 million to $30 million.
• The House version keeps Pure Michigan funding at $29 million.
• The Senate version adds $6 million for a total of $35 million.
• The Alliance prefers the Governor’s or Senate plan as the Pure Michigan campaign is critical for northern Michigan’s tourism industry, and regarded as one of the best return on investments of any State of Michigan program at over 6 to 1.