Lansing — Michigan lawmakers worked through the night into Friday morning on a new state budget that will use an array of spending cuts and funding maneuvers to close a $1 billion tax revenue gap.
The plan will increase the state’s investment in basic per-student support for Michigan schools and will feature $125 million for special projects sought by legislators. However, 10 state departments will get less money than they had the year before, and a variety of state initiatives, such as the arts and culture program, Pure Michigan and the Office of Global Michigan, will see cuts.
Senate Appropriations Chairwoman Sarah Anthony, D-Lansing, described the new budget, which authorized somewhere around $84 billion in spending, as one “full of compromises.”
“This was a very challenging budget negotiation, mainly because of the $1 billion deficit that we had to ensure to address,” Anthony said. “But being able to do so without reducing any benefits for folks who are receiving Medicaid or food assistance is probably the proudest thing … that comes out of this process.”
The Legislature convened throughout the night Thursday into Friday morning, when the state Capitol would normally have been closed for the Fourth of July holiday weekend.
Under state law, the Republican-led House and Democratic-led Senate are supposed to approve a new budget by July 1 each year. The first of the funding bills wasn’t unveiled this week until about 3:13 a.m. Friday morning, two days after the deadline.
More: Michigan lawmakers prepare to vote on a budget plan they haven’t seen
Lawmakers would likely have a few hours to read the bills before the final votes, which were expected later Friday.
On Thursday afternoon, Sen. John Damoose, R-Harbor Springs, said Senate Republicans had no information about what was in the budget blueprint. He labeled the process playing out in the Legislature “nonsense.”
Likewise, Sen. Jim Runestad, R-White Lake Township, said lawmakers had about 30 to 40 minutes between being briefed on the budget and when they had to vote on it.
“We have no idea what’s in these bills,” Runestad said.
In February, Jen Flood, Whitmer’s budget director, said the state was facing a $1.8 billion financial gap. Health care costs had jumped, the Legislature had dedicated more tax dollars to roads, and the federal government, led by Republican President Donald Trump, had forced states to pay for a larger share of costs associated with food assistance for low-income families.
Whitmer initially proposed an $88.1 budget for next fiscal year, which begins Oct. 1. She sought a bevy of new taxes on smokers, gamblers and digital advertising. Michigan House Speaker Matt Hall, R-Richland Township, refused to go along with the tax hikes.
The new budget will be somewhat close to the current budget in overall amount of approximately $84 million.
Hall and Senate Majority Leader Winnie Brinks, D-Grand Rapids, had been working for weeks to create the new funding plan. Hall announced a final deal had been reached Thursday.
The ultimate agreement involved dozens of other bills that were tied to the budget’s approval, including a long-sought measure by some Democrats that would double the cap on the state’s transformational brownfield program, which allows businesses behind large developments to keep income tax and sales withholdings resulting from their projects, from $1.6 billion to $3.2 billion.
The incentive is expected to be used to spur the redevelopment of Detroit’s riverfront Renaissance Center. The Senate approved the brownfield bill in December. The House voted 82-26 in favor of it early Friday.
The Senate also took up early Friday a House-backed proposal to ban former lawmakers from being paid to lobby for two years after leaving office. The bill passed in a vote of 29-7.
How will schools be funded?
Sen. Darrin Camilleri, D-Trenton, acknowledged lawmakers were shifting a larger amount of School Aid Fund money, which would normally go to K-12 schools, toward higher education and community colleges.
The number appeared to rise from about $1.3 billion in the current year to about $2 billion in the fiscal year beginning Oct. 1, setting a new record. Whitmer had proposed using $1.7 billion from the School Aid Fund to support the operations of universities and community colleges.
The moves effectively free up money in the General Fund, where tax dollars are currently tight, for other needs.
“It’s too much,” Camilleri said of the shifts. “But we’re dealing with a divided Legislature with different priorities, and we all needed to fill the budget gap.”
Robert McCann, executive director of the K-12 Alliance of Michigan, blasted the approach lawmakers took.
“Nothing in this budget justifies it once again being done late,” McCann said. “There is little in it focused on supporting Michigan’s schools, even as it raids nearly $2 billion from the School Aid Fund to pay for data centers and corporate tax handouts.”
The K-12 budget went down from $21.3 billion to $19.8 billion, a 7 percent drop in federal funds on paper.
But the plan appears to allow the federal funds not included in the tally to be spent, so it wasn’t clear how much total spending there would actually be under the legislation.
Lawmakers are increasing the base per-pupil foundation allowance for schools by about 2.5% from $10,050 to $10,300. They are also investing $50 million in high-impact tutoring and instituting a long-term plan for a so-called weighted funding formula, which would tie extra support to economically disadvantaged students and students who are learning English.
House Appropriations Chairwoman Ann Bollin, R-Brighton, touted the weighted funding formula, which will be phased in over the next 15 years.
“This is a transformational school budget, where we are making record investments,” Bollin said.
For Michigan’s public universities, overall funding increased by 12% from $2.3 billion to $2.6 billion, with more money for operations and scholarships.
What were the cuts and projects?
Lawmakers’ final plan also cut $8 million in funding for the Pure Michigan tourism campaign, which received $17 million in support in the current year. The Office of Global Michigan got $500,000 less, dropping its total to about $41.4 million. And the arts and culture program got $685,200 less, dropping its total to $8 million.
Among state departments, the Department of Environment, Great Lakes and Energy saw the largest percentage drop in funding of 31%, going from $967 million to $671 million. The decrease was largely due to the reduction of money for a federal sewage and stormwater program.
Lawmakers did provide $125 million for special projects around the state.
There was $3 million for the Schoenherr Road Bridge Reconstruction in Shelby Township, $1.4 million for the Rochester Community House expansion and renovation, $3.7 million for water main replacements in Utica and $2 million for a fire station project in Waterford Township, according to the spending plan.
cmauger@detroitnews.com
