Who would have thought we’d be here?
Eleven months deep into the first pandemic in 100 years and state government is wrestling with how to spend $3.3 billion ($2.4 billion General Fund) in extra money as opposed to how to cut $3.1 billion, which forecasters thought would be the case six months ago.
Gov. Gretchen Whitmer put a $67 billion spending plan for Fiscal Year (FY) 2022 on the Legislature’s plate Thursday that sinks more mostly federal one-time money into child care, K-12 learning recovery and mental health services — areas the governor believe the pandemic is hitting the hardest.
The extra money is allowing Whitmer to give K-12 schools $82 to $164 more per pupil. She’s putting $300 million of General Fund money into some of the rickety bridges she highlighted earlier in her term. Interestingly, these same bridge projects were listed out in the Republicans’ 2019 unnegotiated budget plan that she ended up line-item vetoing.
Universities, community colleges and local governments aren’t being cut again. They’re getting 2% increases.
Instead of taking money out of the Rainy Day Fund, Whitmer’s budget puts $175 million back in, half of what was taken out last July when the state thought the roof was caving in on the budget.
Only $64 million in cuts are being proposed ($19.8 million General Fund) with nearly half of that ($30 million) going go to a favorite Whitmer whipping post, cyber schools. Another $10.5 million is coming from the previously planned Detroit Re-Entry facility closing.
“The budget is a step in the right direction on the issues I ran on and the stakes of the moment we face today,” Whitmer said. “We’re taking concrete steps to move Michigan forward. I’m confident that we can come out of this crisis stronger than ever before.”
But is Michigan overextending itself by using one-time money to expand programs when early projections are showing a flat FY ’23 budget once the federal money dries up? The biggest sticker shock comes from the $370 million bill attached to expanding access to government-funded child care.
“We have the dollars for it this time, but where will the dollars come from next time when we start making these kinds of commitments?” asked Senate Appropriations Committee Chair Jim Stamas (R-Midland).
Budget Director David Massaron told lawmakers the state is making the “right, targeted investments” to put Michigan in a position to continue the obligations that come with using all of the federal money available for the program.
House Appropriations Committee Chair Tom Albert (R-Lowell) was still skeptical in his written response after the presentation.
“We must remember that state tax revenues are declining sharply — our finances are propped up by artificial and temporary federal COVID relief,” he said. “It’s not sustainable. The state budget won’t be truly healthy until Michiganders can get back to work. Families and job providers have had to tighten their budgets during this pandemic. This is no time to go on a spending spree with taxpayer dollars.”
Once a program is expanded, Republican lawmakers understand that it can be hard to scale it back. For example, the governor wants to make permanent the $2-an-hour increase to frontline health workers. That’s $360 million, of which $127 million is General Fund.
Tied into the budget talks is whether the state should be kicking General Fund money into the Unemployment Insurance Fund for unemployed workers, which businesses have traditionally paid into.
Republicans are proposing a first-of-its-kind $150 million contribution. They argue that without the assistance, businesses will get stuck with higher taxes at a time when many are struggling to stay afloat due to COVID-19 restrictions.
To that, Sen. Curtis Hertel Jr. (D-East Lansing) said, “I have no interest in putting any money into that fund if we’re not actually combining that with a long-term protection for people in the unemployment process. If we’re going to help businesses and companies, we can help people, too.”
His reference is to the governor’s proposal to permanently raise from 20 to 26 weeks the maximum amount of time someone can receive unemployment benefits.
As far as Sen. Aric Nesbitt (R-Lawton) is concerned, if the government has additional one-time money during an economic downturn, “We need to either return it to people who were forced to close down, need to put it into roads and bridges, pay down debt or put it into a savings account for a rainy day.
“The economic forecasts are still bad and, remember, Michigan lost the second-most jobs between December of ’19 and December of ’20,” he said. “You have to understand, we’re in a troubled economic area and we have to be cautious with our budget.”
Another budget flashpoint promises to be tying money to schools that are returning to in-person instruction during COVID-19.
House Republicans created a special $300 million pool in its supplemental budget for schools holding class in-person. The governor’s point is if lawmakers passed her supplemental spending plan, more schools would be a position to hold more in-person classes.
On the school funding side, the governor wants $203 million more for the per-pupil allowance and a separate $200 million for those districts going through declining enrollment.
Other highlights from the budget include:
– $290 million in bonded money to target wastewater infrastructure projects, of which $235 are for sewer overflow projects.
– $80 million to pay off the Venture Michigan II Fund, which will save the state $150 million over the long term.
– $70 million to help cities cover the loss of income dollars from fewer employees coming into their cities.
– $40 million for communities dealing with high water erosion issues, a $15 million dam safety fund and $20 million for contaminated site cleanup.
– $20 million to beef up the state government’s cybersecurity forces at a time when state government is seeing 10 times the number of phishing emails in January than it saw at the same time in January 2020.
– $5 million for new metal detectors and increased security at the state Capitol.
Budget Highlights Racial Equity Program
Democrats, in particular, applauded the governor Thursday for including more than $17 million in her proposal for initiatives designed to help African Americans, in particular.
“I am thrilled to see Governor Whitmer’s continued commitment to addressing racial equity and uprooting systemic and institutionalized racism,” said Sen. Erika Geiss (D-Taylor), executive vice-chair of the Michigan Legislative Black Caucus.
First, she has $6.7 million to help fight sickle cell disease, a condition that disproportionately impacts Black men.
“Sickle cell disease is one of the most common, inherited blood disorders in the world, but it historically has not received the attention and funding it deserves because it disproportionately affects Black people more than any other race,” said Sen. Sylvia Santana (D-Detroit). “For far too long, Black men, women, and children have borne the brunt of the inequities in our health care system, often suffering and dying at higher rates because of a lack of access — or a distressing absence of — necessary funding to address these issues.”
She’s also calling for $2.1 million for a Race, Equity, Diversity and Inclusion Office within the Department of Health and Human Services (DHHS). Finally, another $8.4 million is going to reduce racial and economic health disparities.
Massaron said the Race, Diversity and Inclusion Office would mean bringing in new full-time employees to review policy throughout DHHS. He said Director Elizabeth Hertel will provide more details as she builds out her leadership team.
Sen. Adam Hollier (D-Detroit) applauded the $1 million going into Focus: Hope, a program that helps the Black community in Detroit get connected with jobs. He also applauded the $15 million increase in Going Pro, $32 million in the Great Start Readiness Program and $3 million for the pre-apprenticeship programs.