When Gretchen Whitmer was elected governor in 2018, it was largely on the back of her promise to “fix the damn roads.”
That promise got waylaid last year by the one-in-a-century coronavirus pandemic and the budgetary hits the state took trying to combat the virus.
On Thursday, Whitmer’s office released her third executive budget, and it includes money to, among other things, deal with the state’s crumbling roads, bridges and water infrastructure.
Her office said the budget also is centered on “equitably growing the state’s economy” by expanding skills training and childcare for families and helping small businesses recover from the pandemic.
State Budget Director David Massaron outlined the recommendations Thursday to a joint session of the House and Senate Appropriations Committees.
The budget recommendation provides investments that will “foster the success of Michigan students and teachers, improve the state’s infrastructure, address the public health crisis, protect our Great Lakes, and provide help and opportunity for families and businesses,” Massaron told lawmakers.
The budget recommdnation follows a recent supplemental budget request for the current fiscal year that was sent to the Legislature on January 20, which would provide $5.6 billion in new funding for Michigan’s recovery from the pandemic.
That supplemental request still requires action by the Legislature to ensure the full benefits of Gov. Whitmer’s Michigan COVID Recovery Plan are realized. It is a plan that is instrumental to the Governor’s broader economic vision to help businesses and families across the state recover as quickly as possible.
“To build Michigan’s economy back better, we must stay laser-focused on getting Michigan back to work and getting our kids back in school safely,” Whitmer said. “The budget plan I released today along with the MI COVID Recovery plan I announced last month makes the investments we need to jumpstart our economy and build a better Michigan for everyone. I am committed to working across the aisle with the legislature to ensure that we don’t waste a dime of the federal aid we have received thus far, so we can help Michigan families and small businesses get back on their feet. Let’s get to work and let’s get it done.”
The state’s leading small business advocate, the National Federation of Independent Business (NFIB), wasn’t impressed, ranking the governor’s budget proposal behind budgets already released by both the House and Senate.
“While we are appreciative of any effort to help small businesses struggling from the pandemic, the governor’s proposal, after unrelated projects are subtracted, leaves only $107 million for actual direct assistance to small business,” said NFIB Michigan State Director Charlie Owens. “If the governor is serious about ‘helping small businesses recover from the pandemic’ and ‘economic reengagement that drives everything’, then the most important move the she could make is to relax the shutdowns and restrictions and open Michigan’s economy.”
Massaron said the plan “provides needed investments” in roads and bridges, the state’s economy and schools.
“I believe this is a plan that reflects the shared values that all Michiganders support, and I look forward to working with the legislature over the next few months to ensure we finalize a budget that works for Michigan,” Massaron said.
The budget recommendation totals $67.1 billion, including a general fund total of $11.4 billion and a school aid fund total of $14.7 billion. It provides a significant amount of one-time funding made possible by the increase in federal aid and the effective job Michigan has done in managing the pandemic. The recommendation is built with an eye toward the future to ensure that the fiscal year 2023 budget is balanced as well.
The budget recommendation calls for investments in the state’s infrastructure, including:
- $300 million for local bridge bundling to repair or replace approximately 120 local bridges in serious and critical condition.
- $290 million in infrastructure grants for the MI Clean Water Plan to address sewer overflows and mitigate public health risks by removing sewage discharge to surface water and ground water and eliminate failing septic systems.
- $40 million to fund high water level and resilient infrastructure and planning grants to local governments for projects that address issues like coastal erosion, flooding, transportation networks, urban heat, and storm water management.
- $15 million for the Dam Safety Emergency Fund for emergency response when dam owners are unwilling or unable to mitigate hazards caused by dam malfunction.
- $20 million to protect the state from cyber threats from hostile entities looking to attack the state’s information technology systems.
“Many of Michigan’s local bridges are past their life expectancy and local communities need assistance in replacing these aging assets,” said Lance Binoniemi, vice president of Government Affairs at Michigan Infrastructure and Transportation Association. “In addition, calls for increased funding for underground infrastructure across Michigan will help towards maintaining and replacing our aging water and sewer systems. Many communities do not have funding to maintain those systems which can result in disastrous failures and expensive repairs.”
The budget recommendation calls for the largest investment in K-12 schools in history, including, among other things:
- $203 million to increase base per-pupil funding to $8,275 for districts at the minimum ($164 per-pupil increase) and $8,611 for districts at the maximum ($82 per-pupil increase), reducing the gap between the highest and lowest funded districts to $336 per pupil.
- An increase of 2% totaling $14.1 million for economically disadvantaged students, English language learners, special education students, and students in rural and isolated districts.
- $250 million in one-time supplemental funding to implement research-based best practices to support student academic recovery, physical and mental health, and post-secondary readiness and transition.
- $200 million one-time for declining enrollment to stabilize budgets for districts experiencing losses in fiscal year 2022.
- Funding for the Education Emergency Relief Fund intended to help mitigate the impact of COVID-19 on students for use in public schools ($38.9 million) and nonpublic schools ($86.8 million).
- $2.9 million to address the educator shortage and provide more supports for current teachers as well as incentives to recruit former and future educators.
“The cost and availability of high-quality childcare is a barrier to many working families and a real concern for employers across Michigan,” said Sean Welsh, PNC regional president and Talent 2025 Board co-chair. “The governor’s childcare priorities will allow more families to qualify for childcare assistance, help childcare providers keep their doors open, and allow more Michiganders to return to or remain in the workforce.”
The budget recommendation calls for funding centered on economic recovery and opportunity, including:
- $370 million for the expansion of childcare options providing additional supports for Michigan families by temporarily increasing the income eligibility threshold from 150% to 200% and temporarily waiving out-of-pocket copays through fiscal year 2022, with a 10 percent increase in hourly rates for child-care providers.
- $120 million one-time for the Reconnect program to provide a tuition-free pathway to an in-demand industry certificate or associate degree for Michigan adults age 25 and older.
- $60 million one-time for the Futures for Frontliners program to fully fund the first cohort of essential workers and expand the program to include those newly unemployed from November 2020 to January 2021 in our hardest hit business sectors.
- $1 million one-time for Focus: HOPE to support workforce development, youth development, and community empowerment and advocacy programs.
The budget recommendation calls for funding centered on the health of Michigan families, including:
- $360 million for a direct care wage increase to permanently maintain the $2/hour wage increase for direct care workers.
- $38 million for a one-time nursing home COVID supplemental payment to address lost revenue from reduced bed occupancy during the pandemic.
- $19 million for the MiChoice program expansion to provide alternatives to nursing home care by increasing slots for Medicaid Home and Community Based Waiver services (increase of 1,000 slots).
- $2.1 million for the Race, Equity, Diversity and Inclusion Office to promote racial equity and inclusion in DHHS-administered services.
“AARP research shows that the overwhelming majority of Michigan residents prefer to age in place in their own homes and communities,” said Lisa Dedden Cooper, manager of advocacy at AARP Michigan. “Also, rebalancing Michigan’s long term care system — allowing a greater share of the people who need services to remain in their own homes — can also save taxpayer dollars. Medicaid dollars can support nearly three older adults in home and community based services for every one person in a nursing home.”
Clean energy and the environment
The budget recommendation calls for funding centered on the environment, including:
- $20 million for contaminated site cleanup to support rapid response to contaminated sites that pose an immediate threat.
- $5 million for the State Facility Green Revolving Fund which is a catalyst for energy efficiency and renewable energy projects at state facilities, helping reduce the state’s carbon footprint.
- $5 million for the Michigan Saves Green Bank to leverage private investment in clean energy improvements by incentivizing lenders to provide more favorable rates and terms for renewable energy improvements, promoting $150 million in private capital for clean energy improvements across the state.
The budget recommendation also proposes a $175 million deposit to the Budget Stabilization Fund to replace half of the withdrawal in 2020 needed for the pandemic response. In addition, a Venture Michigan II Fund payoff is recommended to purchase the remaining tax vouchers issued by the state. By clearing the remaining debt associated with this program, it is projected that $150 million in general fund will be saved over the course of the next two fiscal years, an 88 percent return on investment.