Michigan Capitol | Susan J. Demas
Updated, 9:40 a.m., 9/24/20
Michigan leaders are close to nailing down a $62.8 billion state budget plan for Fiscal Year 2021, as legislators released details Wednesday and started to approve bills.
After staring down a May fiscal forecast for billions in lost revenue due to the COVID-19 pandemic, most lawmakers sounded an optimistic tone. Thanks to an infusion of federal funding and the state’s brighter economic picture, only $250 million will be cut under the budget deal reached by Gov. Gretchen Whitmer’s administration and GOP legislative leaders.
State Rep. Aaron Miller (R-Sturgis) noted in a House floor speech that “we were put on defense this year by a virus we can’t see.” He recalled the May budget forecast when “everything was on the chopping block. Everything looked dire.”
No cuts to funding for K-12 public schools and local governments are included in the budget, which was part of an agreement between Whitmer and Republicans in the Legislature.
The new fiscal year begins on Oct. 1 and the general election is Nov. 3 — two key dates hanging over leaders’ heads. The Legislature has to send a budget plan to Whitmer for approval before Sept. 30 to avoid a partial government shutdown. And there’s less than six weeks before the election. With the entire House on the ballot, many legislators are eager to get back on the campaign trail.
Before Wednesday, Whitmer and the Legislature had gone more than a week after announcing a budget deal without releasing any details — unprecedented in recent state history.
“There’s certainly been a challenging time through this process for this year, but I’m extremely pleased with what we have come up with,” said Senate Appropriations Chair Jim Stamas (R-Midland) during a Wednesday conference committee hearing.
Miller said budget negotiations have been a “wonderful process” — words rarely spoken in a starkly divided Legislature on hot-button issues — praising Democrats and Whitmer’s Budget Office.
State Rep. Jon Hoadley (D-Kalamazoo) noted that “nothing has been ordinary about 2020.” He said that Michiganders have been dealing with the pandemic and it’s “important we stepped up as legislators” by hammering out a budget deal.
The School Aid Fund (SAF) budget, Senate Bill 927, was approved Wednesday morning in conference committee, a panel of six lawmakers, three from each chamber, responsible for agreeing to budget details.
Shortly afterward, the Michigan Senate approved the report 36-1. The House concurred in the afternoon with a 103-2 vote.
The budget includes a one-time $65 increase per-pupil for 2021, discontinuing a $175 per-pupil reduction in overall state aid made in 2020 during the COVID-19 pandemic.
The general omnibus bill, House Bill 5396, which funds Michigan’s state departments, moved out of conference committee in the afternoon. It passed in the House 101-4. The Senate concurred 37-0. Both bills will next go to Whitmer’s desk. She said she will sign them.
“When we started the budget process in early February, nobody had an idea of how challenging the coming months would be, no knowledge of the devastating impacts that COVID-19 would have, including the impact to our state budget,” said Whitmer. “But Michigan is strong, and by working collaboratively with our partners in the Legislature we now have a budget I will soon be signing, a budget that funds shared priorities that will move Michigan forward.”*
What’s in the FY 2021 budget
Budget details were finally disclosed in nonpartisan fiscal analyses released Wednesday. The state’s two main discretionary spending accounts clock in at $14.4 billion for the School Aid Fund and $9.3 billion for the General Fund (GF).
SB 927, sponsored by Stamas, includes $5 million for a new teacher retention stipend incentive, which Miller said can help blunt the teacher shortage in some areas of the state. There’s also $66 million for school districts with growing student populations and $5.6 million for student mental health support services.
State Rep. Sheryl Kennedy (D-Davidson) noted on the House floor “that support is more important than ever.” She said she “fully supports” the bill, adding, “Good job, everyone!”
There’s also $2 million for grants to help special education students with online learning. The deal includes $1 million that reimburses schools that forgive student lunch debt.
The Chaldean Community Funding gets $500,000 for various educational programs.
Funding to public universities and community colleges would be restored to pre-coronavirus levels, discontinuing funding cuts made during the current year, said Kathryn Summers, associate director of the Senate Fiscal Agency’s K-12 and Economics Unit.
For HB 5396, sponsored by House Appropriations Chair Shane Hernandez (R-Port Huron), about $2.06 billion will be allocated to the state’s correctional system, $5.1 billion will go to funding transportation, $738 million will go to funding state police, $511 million will go to the Department of Environment, Great Lakes and Energy (EGLE) and about $28.5 billion will go to the Michigan Department of Health and Human Services (DHHS).
The budget includes Whitmer’s “Healthy Moms and Healthy Babies” program she proposed in her State of the State address, increasing funding for maternal and infant health and support systems by $23.5 million. That includes lengthening Medicaid coverage for new moms and babies to 12 months.
Hoadley praised the measure. “I’m someone who believes we need more health care, not less and this bill does that,” he said.
There’s $15 million for the Pure Michigan travel program, which was chopped during the current FY 2020 budget. And there’s $28.7 million for Going Pro, a worker training program, and $30 million for the Michigan Reconnect program for those 25 or older who don’t have a college degree.
Road funding — which was the speed bump for the FY 2020 budget fight — got a $600 million General Fund bump, as was agreed to in 2015.
The general omnibus allocates $4 million in funding, for a total of $13.9 million, to the Michigan Department of Corrections (DOC) to train 700 new corrections officers. There’s $3.5 million to train 120 new state troopers.
However, Rep. Tenisha Yancey (D-Harper Woods)* said she had “concerns” about the budget process and claimed “we were left out of the negotiating process.” She took particular issue with the closure of a Detroit prison and called out Whitmer for being part of negotiations, showing a “lack of respect for Black voters who helped elect her.”
Deal after pain in ‘19 and ‘20
The FY 2021 budget deal comes after COVID-19 caused unemployment to spike and tax revenues to shrink in the spring. However, the economy is beginning to recover, in part due to federal COVID-19 relief funds that have come to the state.
At a rare August Consensus Revenue Estimating Conference (CREC), state fiscal leaders said they remained cautiously optimistic about economic improvements from the spring.
Fiscal experts in May had estimated that the state’s budget deficit would be $6.3 billion over the next two fiscal years because of the COVID-19 pandemic’s toll.
The budget for the current 2020 fiscal year stands at $58 billion, not counting additional federal relief funds received during the COVID-19 pandemic.
The congenial agreement on the FY 2021 budget and speedy pace to implement is an abrupt change from last year’s process, when Whitmer and GOP leaders in the Legislature had a series of standoffs in crafting the FY 2020 budget.
Last September, the Legislature passed a budget package just in time to avoid a government shutdown that was not negotiated with the governor. Whitmer signed it, but used her line-item veto power to cut about $1 billion from it. She then moved around $625 million through the State Administrative Board for her priorities, which Republican leaders slammed.
Following the rocky process, Whitmer and legislative leaders eventually agreed to restore funding for some programs in budget supplementals over the winter. She also signed a bill requiring a budget proposal submitted to the governor by July 1. However, that requirement was nixed in another bill passed in 2020 due to the pandemic.
In sharp contrast to last year’s long fight, Miller described this year’s bipartisan budget process as “fun sometimes and when it wasn’t, it’s been rewarding.”
Correction: This story has been updated with Tenisha Yancey’s correct hometown.
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