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Final Budget Appears At Midnight, Passes Chambers

July 2, 2024

SBAM Vice President of Policy and Engagement, Kelli Saunders, did a deep dive on the budget in last Thursday’s Small Business Briefing. Click HERE for the highlights.

The final version of the state’s $59 billion spending plan for state government made its first public appearance shortly after midnight Thursday in a joint House-Senate committee, and passed through a blurry-eyed Senate four hours later and the House at 5 a.m.

Due to the “lateness of the hour,” not one page of the 209-page House Fiscal Agency analysis was discussed in the conference committee on SB 747, as it swiftly passed the panel on a partly-line 4-2 vote without debate. A 99-page Senate Fiscal Agency analysis was later made available on its website.

A copy of the budget document was not publicly available until after 4 a.m., when the Senate started voting on it. It passed 21-17 with Sen. Ed McBroom (R-Waucedah Twp.) joining the entire Democratic caucus in support. Republicans provided the necessary votes to give it immediate effect. In the House, it passed 56-54.

The FY ‘25 budget is an increase from the FY ’24 omnibus budget, that assigned more than $57.36 billion in appropriations. However, SB 747 does appropriate less from the General Fund than its predecessor, as the FY ‘24 budget spent more than $13.4 million from the state’s General Fund.

The “skinny” budget leaves more than $600 million on the balance sheet, according to the House Democrats’ spokesperson, money that could be used later for the proposed Strategic Outreach and Attraction Reserve (SOAR) 2.0 proposal that House leadership and the Governor’s office pushed unsuccessfully this spring.

Initially, the Governor had hoped to tie a 10-year, $6 billion program that spends money on big economic development projects like a Renaissance Center re-do with transformational housing and transportation projects (See “SOAR Reform May Open Door To RenCen Revamp,” 6/7/24).

Linking the ambitious proposal with the budget proved too challenging, with skeptics on both sides of the aisle ultimately pushing the proposal into the fall or lame duck. Still, the budget includes $500 million in corporate income tax money into SOAR, as required by

HB 4001, but the law doesn’t require any SOAR money spent beyond that.

As a result, many of the economic development expansions the Governor pushed in her budget presentation back in February – more money for Going Pro, the Build Ready Sites Program, the Michigan Marketing Initiatives, Global Talent and Retention — didn’t make it into SB 747.

As has become standard, though, the budget showed for the first time in the process $358 million in “enhancement grants” and other one-time grants for 150 local projects (often referred to as “pork”) that are handed out to lawmakers in the majority (and sometimes in the minority) for their support on the budget or something else.

Democratic leaders thanked their staffs and everyone who worked behind the scenes on putting the spending plan together, but they seemed to struggle to find something specifically to hang their hats on.

Instead, Republicans ripped it for a.) coming out in the middle of the night, b.) no additional General Fund money for roads, c) dialing back the commitment to retiree benefit debt (see related story).

House Minority Vice Chair Sarah L. Lightner (R-Springport) suggested that collaborating on the budget was difficult as Gov. Gretchen Whitmer appears to be navigating a presidential run.

And Rep. Brad Paquette (R-Niles) highlighted the perceived absurdities of some of the never-before-seen line-items that are now suddenly receiving taxpayer dollars.

“Instead of listing all corporate welfare, I’ll just highlight one line item in particular… 1.5 million taxpayer dollars going into a group called 100k ideas,” Paquette said. “Because it doesn’t appear that any of us in the room know what that group is entirely, I’m compelled to interpret that 1.5 million taxpayer dollars ostensibly gets us 15 ideas at 100k a pop. Those ideas must be pretty legendary. So I leave you all with an idea that is completely free. Clean budgets might enable legislators to uphold promises.”

The bill also includes:

– $100 million in one-time General Fund spending for housing, with various specific housing programs and projects listed, like $15 million for homeowner down payment assistance and foreclosure prevention programs in Ingham County, and $5 million to Grand Traverse County’s intermediate school district to set aside housing developments for PreK-12 teachers.

– $60 million in restricted dollars for the “Michigan Innovation Fund” that the Governor promoted earlier this year, which would be dedicated to advancing the state’s “startup and innovation ecosystem,” as long as  HB 5651, HB 5652 and HB 5653, as well as an unnumbered budget bill are passed.

– $15 million for the Pure Michigan campaign, but $14 million of it is from one-time federal COVID relief money. Only $1 million of it is ongoing. Instead, $4 million is going to the Michigan Growth Office to help attract new residents to Michigan.

– The House’s plan of steering a portion of the sales tax to local revenue sharing didn’t make the final deal. Instead, local governments are getting $34.2 million more in statutory revenue sharing, for a total of $333 million. Counties are getting $30 million more, bumping their total to $247 million.

– The plan to switch Michigan’s recreation passport from an “opt in” to an “opt out” didn’t fly, neither did increasing the landfill tipping fees.

– Foster care children care providers will not see a rate increase. A proposed third shift worker child care program didn’t make it, either.

– $10 million is being spent on “water affordability,” such as to help the poor pay off their water debt, improving shutoff notice procedures and pitching into existing water affordability programs.

– Autism behavioral technicians are being given a raise to $66 per hour. For one East Lansing child psychology provider, autism behavior technicians can earn between $19 to $23 hourly.

– The Michigan Independent Retailer Association’s efforts to decrease “food deserts” is being given $3 million.

– Contracted nursing staff within the state’s prisons are getting a raise since it’s hard to find registered nurses (RNs) willing to do the work. They tend to make about 31 percent more than average RNs.

In his opposition statement against SB 747, Sen. Thomas Albert (R-Lowell) – the Republican House Appropriations chair during most of the 2021-22 term – said the budget was a cautionary tale of what happens when the government places a premium on the short-term, while ignoring long-term consequences. He said that when the Legislature’s Democratic majorities inherited a $9 billion surplus of federal money and better-than-expected tax revenue, they did not show restraint or even common sense while developing a budget for the current FY ’24.

“They did not show restraint or even common sense. They did not provide broad and fair tax breaks for all Michiganders,” Albert said.

For the concluding FY ‘24, Senate Minority Leader Aric Nesbitt (R-Lawton) made the accusation that money was spent on corporate handouts, left-wing pet projects and public relations for the Governor’s shadow campaign for U.S. president.

“Now we are asked to vote on a budget that would not even be balanced without the Democratic majority’s scheme that would raise taxes on Michigan workers by $700 million. All working families’ taxes went up at the beginning of this year. The Democratic majority squandered that $9 billion surplus and asked the taxpayers to build them out,” Nesbitt said, referencing how the income tax rate was restored to 4.25 percent from a 4.05 percent rate that lasted for one tax year, following a spring 2023 opinion by the Attorney General.

Meanwhile, Senate Majority Leader Winnie Brinks (D-Grand Rapids) said this year’s budget focuses on “continuation,” while last year’s was honed in on “transformation.”


Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

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