LANSING – Gov. Gretchen Whitmer unveiled a $61.9 billion budget proposal Thursday that would provide more help to vulnerable mothers, childcare, contamination cleanup, special education and low-income students.
Local roads, though, wouldn’t receive a big boost, a notable gap after Whitmer launched a $3.5 billion bonding plan last month that will only pay for repairs to state highways.
School leaders are cheering the plan, but leaders of municipalities and universities say they are short-changed by the budget.
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“These are the dinner table issues that I’m always going to stay focused on as governor,” Whitmer told reporters Thursday afternoon. While “this is not the end of the story... these represent major steps forward on the fundamentals that improve people’s lives in this state.”
The budget is 3.9 percent higher than last year, but state Budget Director Chris Kolb said the general fund — the $11 billion of the budget that is up to policymakers’ discretion — has been “basically flat for the last 20 years.”
While some had hoped an influx of taxes from marijuana sales and online sales taxes would provide the state a windfall, Kolb said Medicaid caseloads and lawsuit settlements like those related to the Flint water crisis and juvenile sex abuse in the Department of Corrections mean the “budget confronts a perfect storm when looking at these cost pressures.”
Republicans said they need to review the plans in more detail.
“I didn’t hear any tax proposals in this, so we’ll take a look at all these programs on a case-by-case basis and work on it over the next few months,” said Rep. Shane Hernandez, R-Port Huron, chair of the House Appropriations Committee.
Under a new law passed late last year, the Legislature must send the budget to Whitmer by July 1 and she must approve it by the end of September. It may well change as it works its way through the Legislature.
Here’s a look at the winners and losers of Whitmer’s initial proposal:
Michigan has the 13th highest rate of infant mortality in the nation, Kolb said, and black women are three times more likely than the national average to die from pregnancy-related causes. Women in Detroit are twice as likely as others in the state to die due to pregnancy complications.
Whitmer wants to spend $37.5 million to expand Medicaid family planning benefits to women who make up to 200 percent of the federal poverty level, (for example, up to $52,400 for a family of four) and extend postpartum coverage from 60 days to a full year after birth.
The governor also wants to spend $10 million to expand paid parental leave to the state’s 48,000 to up to 12 weeks. The leave is now unpaid.
“This mirrors what Congress and the Trump administration has done for federal employees,” Whitmer said. “It’s my hope that we can build a model that can expand to ensure new parents across the state have this kind of a benefit in the private sector as well.”
Winner: Health care
Whitmer also wants to expand programs for opiate addiction, lead remediation and rural and mental health. She seeks:
- $12.3 million to fund response teams, treatment programs and housing loan programs for people with opioid addiction. Drug overdose deaths in the state fell 3.8 percent to 2,599 in 2018 after years of increases, fueled primarily by opiates.
- $10 million to encourage private lending for lead cleanup. Some 3.6 percent of children statewide have elevated lead levels in their blood, due primarily to living in older homes, a rate that increased briefly in 2016 after decades of decline.
- $86.5 million for residencies in rural and underserved hospitals. One in four rural hospitals are at risk of closing in Michigan, the ninth-highest rate in the nation, Bridge has reported.
- $30 million in improvements for the state’s psychiatric hospitals. Michigan for years has had an acute shortage of state psychiatric hospital beds and a lack of overall care.
- Robert Gordon, director of the Michigan Department of Health and Human Services, told Bridge that the budget emphasizes “prevention as a tool that will allow people to lead healthier, happier lives and also to save taxpayers money.”
Loser: Local roads
One week after Whitmer announced her plan to bond for highway improvements, her budget anticipates a modest bump in spending for roads: $205 million more, $132 million of which was already planned under a 2015 road funding law.
The state also expects another $48.8 million in federal funding and $24.5 million from fuel taxes or auto registration fees.
That won’t go far, though, and Republicans said they fear Whitmer’s bonding program could raise the cost of local road repair projects if construction companies are spread thin on highway work and raise prices.
“How do we help our locals?” said Hernandez, the House Appropriations Committee chairman.
“How does this budget address those concerns of our locals that are struggling on smaller projects, on getting competitive bids and their prices inflating, and does this $3.5 billion make it that much worse?”
Road construction costs could initially rise, but should level off, said Kolb. He told lawmakers that prices did not spike when spending soared under the 2009 federal stimulus package from former President Barack Obama.
Whitmer on Thursday again challenged the Republican-led Legislature to present a long-term funding solution after taking no action on her 45-cent fuel tax increase proposal last year.
“They didn’t like mine; that’s fine,” Whitmer told reporters. “But they need to counter with something, and until they do I’ve got to do everything I can in my position with every tool at my disposal to fix the damage.”
Lawmakers will likely look at ways to provide additional funding to local road agencies, Senate Appropriations Chair Jim Stamas, R-Midland, told reporters.
“As we go out and talk to our residents, they've seen the orange barrels on the highway for a long time,” he said. “They're looking to see their local roads be the improvement. So I think that's where the focus has to be.”
Winner: Environmental cleanups
Whitmer said her budget “prioritizes cleaning up our drinking water and counteracting the effects of climate change so we can build a stronger, more sustainable future for our kids.”
- $40 million in grants to help communities fund infrastructure projects to prepare for climate change
- $40 million to improve air and water quality in schools and treat lead and asbestos
- $10.6 million to reimburse farmers for conservation practices
- $5 million for renewable energy projects
- $20 million for rapid environmental contamination cleanups
“We don’t have to think any further than 696 in Madison Heights and green ooze,” Kolb said, referencing the brightly-colored contamination found at the Electro-Plating Services site in Oakland County that he said may have been able to benefit from the fund.
Loser: Local governments
Whitmer proposed a 2.5 percent increase in statutory revenue sharing for cities and counties, totaling $267.6 million and $232.2 million respectively, and a 1.9 percent increase in constitutional revenue sharing.
While that money is “appreciated,” said Michigan Municipal League Executive Director Dan Gilmartin in a statement, “it is still about $50 million less than it was nine years ago, when Gov. Rick Snyder took office.”
It’s also $700 million less than what local governments could be getting under a revenue sharing formula passed in the late 1990s that “is repeatedly ignored,” Gilmartin said.
“This budget and our overall state and local revenue picture continues to need work so that we can stem the population losses Michigan is experiencing when compared to other states,” Gilmartin said.
Winner: Low-income K-12 students
Whitmer’s education proposal would spend another $290 million to increase per-pupil funding to a minimum of $8,336; provide universal preschool in high-poverty districts, and invest another $125 million programs to support special education, at-risk students and English language learning.
The proposal earned early bipartisan support.
“I think this is a good education budget, because we are putting the money where it counts, where we're going to see results,” said Rep. Aaron Miller, R-Sturgis, chairs the appropriations subcommittees for the Department of Education and the School Aid Fund.
Rep. Jon Hoadley, Democratic vice chair for appropriations, joked lawmakers should pass it next week: “Let’s just do it.”
Whitmer also re-upped her request for $35 million for the Michigan Reconnect program, first announced during the 2019 State of the State address, that would fund adults seeking industry certifications or credentials and proposed $27.9 million to reinstate funding for Going Pro, a skilled trades job training grant program she vetoed from last year’s budget.
The budget doesn’t include the Michigan Opportunity Scholarship, a plan introduced alongside the Reconnect program to fund two years of college for graduating Michigan high schoolers.
Legislation to create the program has been introduced in both chambers but has not progressed.
Loser: Higher education
Whitmer wants to spend $10 million to allow the refinancing of student loan debts at lower interest rates.
In Michigan, though, student debt has climbed in part because colleges boosted tuition to compensate for declining state aid, as Bridge has reported. Just 10 years ago, state aid comprised one-quarter of university revenue. Now it’s one-fifth.
Whitmer is proposing a 2.5 percent budget increase for higher education. Last year, she proposed a 3 percent bump, but the Legislature approved a 0.5 percent increase.
“In Michigan and nationally, higher education is the balancing wheel for state budgets,” said Dan Hurley, CEO of the Michigan Association of State Universities.
“During tough economic times, higher education is the first to be cut, and in good economic times, funding increases more. But we’re in good economic times and Michigan universities are still waiting, as are families and students.”
Bridge reporters Robin Erb and Ron French contributed to this report.