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Michigan Republicans push budget without road deal, a likely no-go for Whitmer

Shirkey

Update: 

Republican leaders controlling the Michigan House and Senate have agreed on a budget, they announced Friday ‒ one that doesn’t include a negotiated deal on road funding with the state’s Democratic governor. The announcement raises the stakes for a possible state government shutdown in less than a month.

Gov. Gretchen Whitmer has promised she will veto any budget that does not include a mechanism for raising $2.5 billion in new funding for the state’s crumbling infrastructure. She said last week that plans offered by GOP leaders Mike Shirkey in the Senate and Lee Chatfield in the House were not “viable.” 

However, the state needs a budget passed by the legislature and approved by the governor before the next fiscal year begins Oct. 1 or the government will shut down for the first time in a decade. 

The Republican leaders’ move to begin budget hearings indicates they may plan to test whether Whitmer will follow through on her veto promise in a time of divided state government after eight years of GOP rule in Lansing. 

“Discussions on roads with my governor and legislative leaders can continue, but the Senate will not tie the fate of the budget to a deal on roads,” Shirkey, the Senate Majority Leader, said in a statement. “We can no longer keep our schools and municipalities waiting while my governor rejects road proposals.”

Whitmer spokespeople said in a statement Friday that the Republicans' choice to move forward with the budget process constitutes "games" that "are leading the state toward a Trump-style shutdown." 

"The governor remains committed to working with anyone who wants to work with her on real solutions to get the budget done," the statement said.

The budget Shirkey and Chatfield agreed upon will include more general fund revenue dedicated to roads, schools, public safety and clean water efforts, Shirkey said in the statement. While the statement did not go into detail, the Republican leaders in the recent past have differed on whether they are willing to consider raising new revenue (taxes) to meet the state’s fiscal challenges. Shirkey has allowed that some new revenue is likely necessary, while Chatfield has sought to squeeze dollars from other corners of the state budget before any consideration of raising taxes or fees.  

Rep. Shane Hernandez, Republican chair of the House Appropriations Committee, said in a separate statement that additional revenue to fund roads and schools will not come from tax increases. A source close to the process said the legislature is likely to come up with an infrastructure funding plan separately from the budget. 

"The Legislature is taking action to give Michigan students, families and workers the budget they deserve before it's too late," said Gideon D'Assandro, spokesman for Chatfield. "Governor Whitmer is the only one talking about a government shutdown right now as she continues to hold the budget hostage over her extreme gas tax agenda."

Whitmer proposed a 45-cent-per-gallon increase in the state’s gasoline tax during her budget presentation in March, which would be constitutionally required to go to roads and would raise an additional $2.5 billion annually deemed necessary to bring the state’s crumbling infrastructure up to par. It would make Michigan’s fuel tax the highest in the nation. 

Republicans have adamantly opposed it. The three leaders have met privately over the summer to hash out differences, but Whitmer said Shirkey and Chatfield have failed to present a counterproposal that raises “anywhere in the range” of $2.5 billion. The GOP leaders respond that they’ve presented four solutions to fund roads and Whitmer has refused them all.

“We would welcome input from the administration should my governor choose to present budget options that are not dependent upon her 45 cent tax increase,” Shirkey said.  

Neither Whitmer, Shirkey or Chatfield will disclose what the GOP proposals have been, though last week Shirkey suggested Whitmer reconsider a West Michigan Policy Forum proposal of issuing a 30-year, $10 billion bond to fund the teacher pension system. Backers of the proposal argue it would free up as much as $900 million annually to replace lost sales tax revenue (which would go to schools and local government) under a House proposal that would eliminate the state’s 6 percent sales tax on gasoline. 

Democrats have opposed that plan. Whitmer said last week they’re “fiscally bad ideas and taking money out of education to fill potholes is not a real solution.” A group of six House Democrats also released a statement Friday opposing the teacher pension bond idea; Rep. Julie Brixie, D-Meridian Township, said it was a “fiscally reckless gamble” that’s “fraught with financial peril.”

Meanwhile, House Democratic Leader Christine Greig said last week that Whitmer’s proposal is likely dead. Because Republican leaders have rejected it, it’s time to start looking at other options, she said. 

Greig said one solution may be taxing heavy trucks so they pay an extra cent per mile driven, which she estimated would raise an additional $400 million for roads. She also said closing “corporate tax loopholes” could raise up to $500 million. Those proposals combined with a smaller gas tax increase could close the gap for necessary road repair funding, she said. 

“We have a pathway to lower the 45 cents” tax proposal, Greig said. “But the important thing is we have to raise $2.5 billion in new revenue to fix the roads.” 

Greig, like Whitmer, said she opposes advancing a budget without a bipartisan road funding plan. “To suggest that we move a budget that does not deal with our roads — because (Republicans) let the clock run out on their watch — is absurd,” she said in a statement last week. 

The first joint committee hearings are scheduled to take place Thursday afternoon and will cover budgets for the Michigan State Police; Department of Natural Resources; Department of Environment, Great Lakes and Energy; community colleges; higher education and school aid.

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