Nov. 7 update: No deal: Senate GOP rejects possible budget compromise
LANSING — Less than a month after Gov. Gretchen Whitmer stood on stage to honor the Michigan Education Corps with her “outstanding national service” award, the first-term Democrat vetoed all $3 million in state funding for the reading and math intervention program.
The program, which this year sent 150 Americorps members into school districts across Michigan to work with struggling students in preschool through eighth grade, was an unexpected casualty in an ongoing budget battle between Whitmer and the Republican-led Legislature.
While the governor has made clear she is willing to reverse many of her $947 million in line-item vetoes as part of a potential deal, the cuts are forcing tough decisions for local governments, nonprofits and service entities that have already lost state funding — or will soon if state leaders do not resolve the dispute.
“We were shocked, to be frank,” said Holly Windram of Hope Network, a Grand Rapids-based Christian nonprofit that manages the Michigan Education Corps. “We just received this award. We were getting recognized by her office, and then she vetoed all of our funding.”
With the Legislature set to meet no more than a dozen more times this year, vetoes have already prompted the Wayne County Sheriff’s Office to pull road patrol officers off the streets and forced small school districts to deny teacher supply requests. Upcoming payment deadlines the state is poised to miss threaten to impact public safety, health and local government programs across Michigan.
There's still time to make a deal, though, and with both legislative chambers, appropriations commmitees and the Whitmer-controlled Administrative Board all scheduled to meet Thursday, some state officials were optimistic a breakthrough could come this week.
Whitmer met with House Speaker Lee Chatfield on Wednesday and had "extremely positive conversations about a supplemental (spending bill) and the items contained in it," spokeswoman Tiffany Brown told Bridge Magazine. "Discussions are ongoing."
A budget deal seemed possible Thursday, but GOP Senate leaders rejected a compromise because they want Whitmer to cede some of the governor's powers to shift money within budgets.
Hope Network was especially surprised by the Michigan Education Corps veto given the Whitmer administration’s concern over a new third-grade “read or flunk” law that may force districts to hold back more than 5,000 students this year if their test scores do not improve.
“We believe it’s a vital intervention for the read-by-third-grade law,” said Mike Pickard, director of elementary education and federal programs for Kentwood Public Schools near Grand Rapids, which utilizes Michigan Education Corps reading aides in all 10 of its elementary schools.
State funding accounts for roughly 60 percent of the program budget, and payments would have traditionally began in October. But the veto forced Hope Network to tap its own reserves to promise 84 participating schools in Detroit, Flint and other parts of the state that the program will continue through at least the end of the current school year.
Beyond that, “we would have to significantly reduce our services,” Windram said, predicting local districts planning for next year will begin exploring alternatives by January, casting doubt on the long-term viability of a program that currently serves 3,000 students. “So there is definitely urgency.”
Public safety, schools at risk
More than a month after Whitmer used a veto spree in an attempt to push the GOP-led Legislature back to the negotiating table, local officials say the ongoing budget impasse is having a real-world impact on Michigan residents who Democrats and Republicans alike were elected to represent.
“We’re dealing with pain right now,” and taxpayers are “undoubtedly the victim,” said Wayne County Undersheriff Dan Pfannes, whose office was counting on $1.25 million in secondary road patrol grants and a $1.6 million reimbursement for housing jailed felons next year under programs Whitmer vetoed.
“It’s not a partisan issue. It’s not a governor-versus-Legislature issue. It’s, what is the right thing to do? And the right thing to do is to restore this funding.”
The state would typically send secondary road patrol grant funding to sheriff’s offices by late December or early January, but Wayne County has already absorbed the pending loss by moving six officers and two sergeants out of its road patrol unit and into vacant jail positions.
“Those officers existed because of that funding, and that funding went away,” Pfannes said of the secondary road patrol program, which would have provided sheriff’s offices across the state with a collective $13 million in state grants. Other sheriffs have warned of potential layoffs.
Whitmer also chopped $14.8 million for a program that reimburses counties for jailing felons who would otherwise end up in more costly state prisons. That would hit local governments in mid-November, when the state is supposed to deliver the first of 12 monthly payments.
“We can’t refuse to take them,” Pfannes said of the felons diverted to county jails. “They’re being sent to our facilities, and we can’t ignore a court order. If the state doesn’t reimburse us, there’s nothing we can do to offset that.”
The Oakland County Sheriff’s Office received $1.6 million in jail reimbursements last year and $634,435 for secondary road patrol deputies.
“If that money does not come through, it’ll have a huge impact,” said Undersheriff Mike McCabe. “The message [to Lansing] is please come to an agreement and get this settled so we can get back to doing our jobs.”
Tiny isolated school districts, whose leaders have accused state officials of acting like “middle-schoolers,” have already missed out on an Oct. 20 payment after Whitmer vetoed $7 million in funding the state typically provides to help them keep their doors open to serve local students.
For Whitefish Township Community Schools in the Upper Peninsula community of Paradise, the first missed payment was a roughly $20,000 loss for the district, which decided to delay annual classroom technology upgrades, freeze teacher supply budgets and deny requests for holiday-themed classroom decorations, said Superintendent Tom McKee.
That means teachers will likely “dig into their own pockets” to pay for supplies, he said. The indecision by our Legislature is being felt by one of the most underfunded professions in our nation. But I haven’t heard one of our teachers complain. That’s not what they do.”
All told, Whitefish Township Community Schools was in line for $216,000 in extra state funding to serve students in remote and isolated regions over the year. That’s about 16 percent of the district’s operating budget.
If the Lansing dispute is not resolved by the end of 2019, the district will have “missed out on about the salary of a beginning teacher,” McKee said. “We are going to get to January, but by then our fund balance will be depleted, and everything is on the table at that time.”
Charter schools across the state received their first aide payments of the state fiscal year at the same time — minus a collective $35 million that would have given them the kind of per-pupil funding increase the governor approved for traditional public schools.
That means officials in Detroit and Flint — where city and suburban charter schools educate more than half of all students — have had to scrap plans for new investments the funding bump would have allowed, said Dan Quissenberry of the Michigan Association of Public School Academies.
“Even if your school is in a small town in northern Michigan, it’s a big deal,” he said, noting some charters serve a high percentage of at-risk students. “This is hitting the most desperate kids in the way that we can serve them.”
Huge impacts on small budgets
Whitmer and GOP leaders remain at odds over a rare budget power the governor used to transfer an additional $625 million within departments and reshape spending plans the Legislature had finalized after negotiations with the administration broke down.
With the legislative year nearing a close, the process fight has stalled action on proposed supplemental spending bills that could be used to reverse various funding cuts. The Senate is set to meet just 12 more times in 2019. The House will meet just 10 more days because of a fall break that coincides with firearm deer hunting season and Thanksgiving.
Many of the vetoes will soon impact local governments and services in rural communities. State aid payments for rural hospitals to operate and hire obstetricians would typically go out in December, but Whitmer vetoed a combined $24.6 million in funding for the programs.
Like many rural areas, Crawford County in northern Michigan builds its own operating budget around “payments in lieu of taxes” the state provides as a reimbursement for state-owned lands or controlled lands, swamps and forest reserves that generate no revenue for the local government.
The “swamp tax” would amount to $339,000 in state funding for Crawford County over the next year, according to Paul Campo, the county’s controller. But the first of 11 expected payments from the state is no longer set to go out in December.
“Both parties are playing politics, and it’s hurting the people they’re supposed to be representing,” Campo said. “Many of these things, the swamp tax and secondary road patrols, those are long-standing agreements Lansing had with counties, and now in our view they’re turning their back on their agreements.”
All told, Crawford County is poised to lose $547,405 in state funding — 9 percent of its total general fund budget — if the budget vetoes are made permanent.
“Call it strategic planning by faith, but we haven’t taken any action yet,” Campo said, noting the county’s budget year starts Jan. 1.
By that point, the Crawford County board will likely consider cuts to services the local government is not legally mandated to provide, including secondary road patrols and animal control, he said.
In nearby Roscommon County, officials are also hoping for a quick resolution to the ongoing stalemate. Like Crawford, Roscommon relies on state payments in lieu of taxes.
The state owns two large parks on Higgins Lake, which is land the local government cannot collect property taxes on. Payments from the state amount to 5 percent of the county’s budget, said Controller Jodi Valentino.
“Next fiscal year,” which begins Jan. 1, “we’d be looking at definitely closing a non-essential department,” Valentino said, pointing out her own office is not statutorily mandated and could be on the cut list, along with economic development and housing agencies.
“I’d really love to see everybody just work together to ensure the funding,” she added.
Budget fight bogged down by process
Republicans have hammered Whitmer for her vetoes but are primarily fighting her power to use the state administrative board for budget transfers, a legal tactic first used by GOP former Gov. John Engler that lawmakers now argue undermines their constitutional authority to appropriate state funds.
Senate Majority Mike Shirkey of Clarklake and Chatfield of Levering want to rein in Whitmer’s administrative board power and have so far refused to send her any supplemental spending bills.
The governor on Monday signaled she would sign “boilerplate” language preventing transfers on any negotiated spending bills, but Republican leaders want her to sign off on a change to state law they contend is needed to make such language legal.
“I’m continuing to hear from thousands of Michiganders from… every corner of the state on how some of the governor’s cuts are impacting their programs and what will happen in the future if this is not addressed,” Chatfield told reporters.
“That is why we are proposing this compromise. That is why we are willing to come off what our first goal was in eliminating the Administrative Board.”
But Whitmer has made clear she is not willing to sign away any long-term budget powers for her or future governors. Instead, she’s offered to honor any boilerplate language that would prohibit transfers in negotiated budgets and to issue a signing message affirming that deal.
“We could settle this whole thing right now if these guys would shake hands with the governor on a negotiated budget agreement – like every other governor and legislature in Michigan history,” Whitmer communications director Zack Pohl said on Twitter after the GOP's Tuesday offer.
The trickle down impact of the vetoes will “depend on how long” the budget impasse goes on for, Senate Minority Leader Jim Ananich, D-Flint, said after a Tuesday meeting with the governor and legislative leaders from both sides of the aisle.
“If what [Republicans] keep saying is true — that the budget is done — then there will be a lot of programs that people are used to and have seen doing some good things in the community that won’t be around anymore,” he said. “Our job is to find solutions and be willing to compromise… and we haven’t done that yet.”