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It’s a budget only a CPA would love

February 14, 2017

Article courtesy of MIRS News Service

Gov. Rick Snyder rolled out a spending plan for Fiscal Year (FY) 2018 that proposed no major spending cuts, no fee increases and no tax cuts. Instead, the $56.3 billion budget is a plan only a certified public accountant would love, which makes sense from this Governor, who puts his CPA credentials before his title, “Governor,” on the budget’s front page.

The budget sinks $260 million into the rainy day fund so Michigan could have $1 billion in savings for the first time since 2000 and lowers assumptions on investment returns, requiring more money into retirement funds.

After all, Snyder openly discusses his dreams of the year 2038, when he projects Michigan would no longer have any unfunded liability hanging over its head if future leaders follow his vision.

“It meets all the requirements,” said new Budget Director Al Pscholka of the budget. “It pays down the debt and sets money aside for a rainy day. Those are all good principles to follow and not unlike what other budgets have been for the last six years.”

Otherwise, Snyder’s seventh budget is like his previous offerings in that Michigan’s stabilized, but not wildly successful economy allows the Republican governor to budget almost on autopilot — offering minimal increases in K-12, universities, state police and some human services programs.

Overshot Department of Treasury projections on the impact of the Personal Property Tax (PPT) repeal mean increases to municipalities and community colleges that won’t necessitate an extra General Fund expenditure.

That’s important considering a $200 million Homestead exemption is coming online and the $10.5 billion General Fund is going to need to swallow $600 million in road funding payments by 2021. And that’s not factoring in any change to Michigan’s Medicaid expansion program, Healthy Michigan, which Snyder didn’t touch, barring news from the federal government.

These suggestions were among those made during Snyder’s FY ’18 budget recommendation to a joint meeting of the House and Senate appropriations committees.

Snyder wants $48.8 million to deal with the lead in Flint’s public water supply, $20 million for various infrastructure repairs and an extra $325 million for the K-12 budget, as part of a $12.3 billion School Aid Fund (SAF) suggestion.

Another highlight is $84.4 million ($37.6 million General Fund) for eight high priority information technology projects, including cyber security protections, mobile applications and upgrades to the state’s www.michigan.gov web page.

As reported on Tuesday, the $56.3 billion FY ’18 budget recommendation is counting on $500 million in one-time money, $260 million of which the governor would like to put into the Rainy Day Fund to get that fund back up to $1 billion for the first time since 2000. Snyder said it would be a nice “milestone,” but not the goal.

Universities are looking at a $36.6 million increase, which works out to an average of 2.8 percent more as long as the universities hold tuition increases to 3.8 percent or $475 per credit hour.

The Michigan State Police is looking at $9.2 million for 100 more troopers.

The plan also calls for $115 million for the construction of a new psychiatric hospital to replace the Caro State Hospital, which opened more than 100 years ago in 1913. It also calls for a redo of the Secretary of State building at the secondary complex, which officials say is in dire need of attention.

In the Department of Health and Human Services budget, the Governor wants 50 cents more per hour for public health workers, a $60-per-child increase in the state’s clothing allowance, $3.6 million for Meals on Wheels-like programs and $6.8 million to draw down the federal money needed to keep the Heat and Eat program going.

Attorney General Bill Schuette would continue to get about $4 million in his base budget to continue his Flint water crisis investigation. It wasn’t clear as of 10 days ago if the administration would make the expenditure a one-time spending item.

Another $3.7 million is being set aside to allow the state’s homeless emergency shelters to better transition homeless citizens to permanent, stable housing.

A prison population that is down nearly 20 percent in 10 years means a Department of Corrections budget that is only .9 percent larger than last year’s $2 billion offering. The $4.4 million increase anticipates the hiring of 177 new corrections officers statewide.

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