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How Are Senate, House, Gov’s Budgets Different?

May 9, 2017

Courtesy MIRS News

With the Senate kicking out its Fiscal Year (FY) 2018 plan, both chambers are expected to take the next couple days to non-concur in each other’s spending plans. That will send matters to 16 individual House-Senate conference committees, where the final budgets will emerge.

The next big step will be May 17 when the Consensus Revenue Estimating Conference (CREC) will finalize how much money the Governor and legislators have to play with in FY ’18.

Starting Thursday, May 18, the “target” negotiations are tentatively scheduled to start, during which Gov. Rick Snyder, Senate Majority Leader Arlan Meekhof (R-West Olive) and House Speaker Tom Leonard (R-DeWitt) will begin hammering out a final budget deal.

So what needs to be worked out?

1. Closing MSPERS — The big conversation is whether Meekhof and Leonard can talk Snyder into closing the teachers’ pension fund — the Michigan Public School Employees Retirement System or MPSERS — and use the $542 million the Senate scraped together to tackle the up-front costs, which could be significant.

The Governor has been all about addressing long-term debt, but this could be a hard one to swallow, especially considering lawmakers whacked away many of his proposed spending increases.

2. Rainy Day Fund — Snyder is close to building back the state’s Budget Stabilization Fund (BSF) or the Rainy Day Fund to $1 billion, but needs $266.5 million more to get there. Hard to see a $1 billion BSF and MPSERS elimination in the same budget.

3. Flint, Infrastructure Money Up In The Air — The Senate declined to stick $25 million into fixing Flint’s lead water pipes or putting $20 million into a Michigan Infrastructure Fund, which is what Snyder wanted to do. The House was fine with using $15 million for Flint and $10 million for the infrastructure fund.

The final dollar amounts may be more determined by how much the state is obligated to pay in legal settlements. Overall, the Governor put $48.8 million in his budget in various Flint-related line items.

4. Looking Under Every Prison Bed For Another $40M — The Senate gave prison officials the not-so-fun task of going on a scavenger hunt for an extra $40 million in its $2 billion to cut. Ready? Go!

The exercise may be Sen. John Proos’ (R-St. Joseph) attempt to pressure the Department of Corrections (DOC) to close another prison or two, since inmate numbers are down, but the DOC isn’t impressed.

5. Mental, Physical Health Integration — The Governor didn’t touch the sore subject of using an integrating model for mental and physical health, but the House and Senate did in their own ways.

The Senate set a Sept. 30, 2020, goal by which the state should use the same insurance company used to deliver physical services for Medicaid recipients for those receiving mental health care. The Senate’s budget orders up a pilot program from DHHS in the interim to study how such a transaction could work.

The House creates three more trial programs in which the community mental health boards would still provide behavioral health support and services.

6. Tapping Into the UIA’s Penalty & Interest Fund — You could argue the state got fat off the misfortune of others on this, but there’s no question there’s between $140-$150 million in the Unemployment Insurance Agency’s (UIA) penalty and interest fund. The House used $40.9 million from this pot of money to replace General Fund spending. The Senate used $5 million. Yeah, it doesn’t look good — the state being wrapped up in legal issues for wrongfully accusing the unemployed for fraud — but a $150 million fund is really tempting.

7. Is It Time To Blend MPSERS Into The Per-Pupil? — The Senate opted against setting aside $100 million to cover MPSERS payments, and folding that money into raising the per-pupil foundation allowance from the $50-to $100-more per pupil to $88-and $176-more per pupil. The House wants to do a flat $100 per-pupil increase per pupil.

8. Health Services Staffing, Pay Increases – Under the Governor’s proposal another 95 adult health care workers were hired, foster care rates were increased $1.20, mental health workers would get 50 cents more an hour and 72 more workers would be hired for the state’s psychiatric hospital.

The House halved all of these planned increases while the Senate reduces and delays the adult services increase and delays the 50-cent increase for direct care workers until April 1.

Between adjustment changes and hard reductions to the Governor’s suggested increases, the House spends $120 million (General Fund) less than what Snyder proposed in the DHHS budget. The Senate spends $112 million less.

9. Clean Michigan Initiative — The state’s biggest brownfield cleanup fund, the Clean Michigan Initiative (CMI) is running out of money next year and the Governor wanted to use $14.9 million from the pot of money that’s use to clean up underground gas tanks to cover the costs. The House and Senate both said no. Does that mean General Fund money is used to cover the $15 million? Is there another fund? Or are environmental cleanup efforts going to stall in 2018?

10. At-Risk Funding — The special pot of money for those districts with a lot of students receiving free or reduced lunch is given an extra $150 million by the Governor, $129.1 million from the House and $100 million from the Senate. How this “at-risk” money is distributed differs depending on whose plan you’re looking at.

Neither the House nor the Senate went along with the Governor’s plans to cut the allocation to cyber schools to 80 percent, give high schools an extra $22 million, declining enrollment or $7 million for schools with declining enrollment.

Instead, the Senate and House brought back the $55 million the Governor cut for private and home-schooled students who are attending special classes at a public school through the “shared-time program.”

11. Lead & Copper Rule — A new $2.6 million, 17-person Lead and Copper Rule team the Governor wanted in the post-Flint water crisis world wasn’t included in either the House or Senate budget. On a related issue, the House was OK spending $1 million to better train Flint water treatment workers. The Senate was not.

Neither chamber wanted to steer nearly $15 million from a fund used to clean up old gas stations for the depleted Clean Michigan Initiative.

12. Higher Education Increase: 2.5% 2% or 1.9%? — Snyder liked the idea of a 2.5 percent ($36.6 million) increase in higher education because it gets the schools back to the state funding level they saw in 2011, the year prior to Snyder’s 15 percent cut. Neither chamber was willing to go that far — the Senate held at a 2 percent increase while the House went to 1.9 percent.

The Senate did find a 1 percent increase for community colleges. The House and the Governor were fine leaving the better-than-expected personal property tax (PPT) replacement revenue as the colleges’ replacement revenue.

13. State Police — If this were a poker hand, the Senate saw the Governor and the House’s 100 additional troopers in the Michigan State Police budget and raised them 50 more. Will the Governor and House call or is the Senate just bluffing? Either way, the MSP will see bigger ranks in 2018.

14. Revenue Sharing — The Governor didn’t recommend any additional statutory revenue sharing, basically saying the higher-than-expected money from the PPT replacement was good enough. The House found another $12.5 million in one-time money the locals can split up among themselves, which the Senate called for an additional 1 percent for cities, villages and townships, which is another $2.5 million.

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