Gov. Whitmer reveals $67B Michigan budget plan: Here's what's in it
LANSING – Gov. Gretchen Whitmer targeted education and help for unemployed people in a $67.1-billion state budget unveiled Thursday that she said is aimed at ensuring the state recovers quickly from the economic shock of the coronavirus pandemic.
Improving bridges, roads and other state infrastructure is also a major focus of the budget plan, which proposes no tax increases.
In terms of priorities, Whitmer said her 2022 spending plan cannot be separated from a $5.6-billion supplemental spending plan for 2021 that she requested in January as a major coronavirus recovery package. It proposes $225 million aimed at small businesses, more than $90 million to step up vaccinations, and billions for food assistance and schools. It has not yet been approved by the GOP-controlled Legislature.
Thursday's budget is "built on the recovery proposal that I have already laid out," Whitmer said.
It's the third budget proposed by Whitmer, a Democrat who took office in 2019, and it is heavily dependent on billons in federal stimulus funds that have helped Michigan amass a significant one-time surplus. Overall, spending would increase 7%, from $62.8 billion this year, despite the fact many sources of state tax revenue are down.
“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 in a news release.
“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 proposed budget draws $11.4 billion from the general fund, which is the state's main checking account, and $14.7 billion from the School Aid Fund for the 2022 fiscal year that begins Oct. 1. It also draws on surpluses to propose more additional spending in the current fiscal year — about $703 million from the general fund and $300 million from the School Aid Fund.
It calls for $70 million in payments to Michigan cities with income taxes that are experiencing significant losses because of closed businesses and/or employees from outside their boundaries who are now working from home. Payments are capped at $25 million to any one city.
Whitmer said the budget is "fiscally responsible." It proposes injecting $175 million into the state Rainy Day Fund, formally known as the Budget Stabilization Fund. That would restore the fund's balance to more than $1 billion after the state made withdrawals in the early stages of the pandemic that began in March.
The plan presented to lawmakers by Budget Director Dave Massaron faces an uncertain future.
GOP lawmakers are resisting approval of Whitmer's sweeping 2021 supplemental request and some want to tie release of federal funds to further steps to fully reopen the economy.
Despite differences, Sen. Jim Stamas, R-Midland, chairman of the Senate Appropriations Committee, said lawmakers and the governor share many of the same budget goals.
“The Senate priorities will continue to be to support struggling families and family-owned businesses, to ensure our students get the education that they need and increased COVID testing and vaccine distribution, and help rebuild our economy while living within the means of our state," Stamas said.
Vaccines, health and COVID-19 recovery
Whitmer and Massaron said the immediate actions related to the governor's COVID-19 plan are contained in the $5.6-billion supplemental budget request she sent to lawmakers Jan. 20.
"The future of our revenue, our economy and this budget process is in large part determined upon the speed in which we act on those supplementals,” Massaron said.
Whitmer has said further supplemental spending plans are expected to help step up vaccinations as more vaccine becomes available.
House Appropriations Committee Chairman Thomas Albert, R-Lowell, countered Whitmer's $5.6-billion supplemental request with a $3.5-billion proposal from the House. He said lawmakers would not distribute all available federal relief aid requested but wait for proof that additional money was needed.
"We have thousands of people who don’t know if their job is going to be permanently erased, and we want to provide support and certainty for those that are in need of help right now,” Albert said.
“That being said, we’ve been pretty clear on the House side that as for moving forward, we’re going to make sure we have strong oversight to how things will be spent.”
Michigan has been at the forefront of tracking and addressing a disproportionate impact the coronavirus has had on people of color in Michigan, particularly early on in the pandemic. The budget proposes $1.6 million for the Race, Equity, Diversity and Inclusion Office to promote racial equity and inclusion in services administered by the Department of Health and Human Services.
The budget also calls for $6.7 million for the Sickle Cell Disease Initiative to help sufferers from this disease, most of whom are Black, according to budget documents.
The budget recommends maintaining the $2-per-hour wage increase for direct care workers, including adult home workers and skilled nursing care workers, that was approved as a temporary measure earlier in the pandemic.
"They deserve to be recognized for their service and compensated for their hard work today and in the future," according to the budget plan.
Schools and jobs training
Proposed K-12 spending would total $15.9 billion.
Whitmer proposes a $162-per-student, or 2%, increase in base aid for most traditional districts in the fiscal year that starts in October. Better-funded districts would get $82 more per student, or roughly 1%.
Her budget also calls for $570 million to address learning loss and K-12 enrollment declines, some of which are related to halts in in-person teaching because of the coronavirus pandemic.
In August, Whitmer and lawmakers agreed on a plan that gave local districts the power to determine how best to educate students during the pandemic. However, an emergency health order in November temporarily banned in-person classes for high schools and colleges. The mandate was lifted in December, but it prompted considerable pushback from Whitmer critics who say the governor has not done enough to ensure students can be in classrooms.
The budget includes hundreds of millions to help schools safely educate students in person; Whitmer has set a goal of all districts offering in-person class by March 1.
Michigan colleges and universities would also receive 2% bumps in their basic funding under the budget plan.
But universities complained their increase would come from one-time money, rather than being added to their base funding, which they said does not provide security against inflation. Massaron said the use of one-time funding reflects the fact the state has available money now but faces a tight projected budget in 2023.
Whitmer would add $60 million to significantly expand Futures for Frontliners, which covers community college tuition for essential workers to include those who lost their jobs when her administration reinstated business restrictions to curb surging infections in the late fall.
She proposes quadrupling spending on Michigan Reconnect with a $120-million addition of one-time funds. The program, which launched last week with bipartisan support, helps adults 25 and older without a college degree obtain an associate’s degree or postsecondary certificate at a community college or private training school.
The budget also calls for a $15-million one-time increase in Going Pro, a program launched under former Gov. Rick Snyder that works with employers to help employees earn industry-recognized credentials.
More:Whitmer budget to include $300M to repair, replace crumbling Michigan bridges
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Roads and infrastructure
On infrastructure, as first reported by the Free Press on Tuesday, Whitmer plans $3.1 billion in capital spending on state roads. That's down slightly from the record nearly $3.6 billion planned for this year, but well above levels in past years. State capital spending on roads was just under $2 billion in 2020.
The budget also proposes $300 million from the general fund for local governments to replace or repair up to 129 local bridges that are in serious or critical condition. The $3.5 billion in bond money the State Transportation Commission approved, at Whitmer's request, in 2020, which is being accessed at about $800 million per year, can't be spent on local roads. The $300 million is part of a "bundling" program that gives locals engineering and administrative help from the state.
Whitmer campaigned in 2018 on a pledge to "fix the damn roads." In 2019, the Legislature rejected her proposal for a 45-cent-per-gallon increase in the state gas tax.
The budget also proposes $15 million for the Dam Safety Emergency Fund, $40 million to combat issues related to high water levels, $290 million in infrastructure grants for the MI Clean Water Plan, and $20 million to protect state systems from cyber threats.
Criminal justice
The budget proposes more than $92.4 million to support criminal justice reforms, including the implementation of automatic expungement and raising the age of criminal responsibility to 18, as first reported in Thursday's Free Press.
Whitmer's budget includes a $31.4 million increase for the Michigan Indigent Defense Commission to bring its total funding to $149 million. The commission develops and implements standards for the public defense system, and provides grants to local public defender offices and courts to pay for defense counsel education, use of experts, and how lawyers are appointed to indigent defendants.
It dedicates $29.1 million for raising the age of criminal responsibility from 17 to 18, which takes effect in October. The funding would support additional costs counties will incur when 17-year-olds are shifted from the adult legal system to the juvenile system.
Whitmer's budget includes $10.2 million for de-escalation training for law enforcement. This training would be aimed at helping officers respond to domestic violence as well as recognize mental health crises to divert individuals with behavioral health needs from the criminal justice system.
Child care
"Families across the state are now, more than ever, headed by two working parents or by a single working parent," Whitmer said in the written budget presentation. "This makes access to quality child care more important than ever."
The budget proposes $370 million in state and federal money to help Michigan parents pay for child care and to support child care providers, as first reported in the Free Press on Thursday.
State officials estimate the plan would make about 150,000 more Michigan families eligible for subsidized care.
More:Whitmer's budget plans for child care a good first step to support women in workforce | Opinion
More:Whitmer's budget proposal to include $92.4M toward criminal justice reforms
It would move eligibility from 150% of the poverty level ($39,300 for a family of four) to 200% of the poverty level ($52,400 for a family of four) through 2022, then set the threshold more permanently at 160% of the poverty level. The budget also proposes covering parents' out-of-pocket co-pays through 2022, raising the state's subsidy for the hourly rate for providers by 10%, paying providers based on enrollment to offset COVID-19-related fluctuations in attendance, and offering one-time grants to child care providers.
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Reaction to the budget
Brian Peters, CEO of the Michigan Health & Hospital Association: "We are thankful for the additional funding that has supported testing, personal protective equipment, vaccinations and more over the past year and encourage considerations to address other pandemic consequences, such as funding to improve behavioral health. The prompt allocation of state and federal funds allows front-line caregivers to operate at the highest level."
Charlie Owens, state director of the National Federation of Independent Business: “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. Federal and state efforts to assist small business are not practical nor sustainable over the long run. Removing the obstacles for small business will boost our economy sooner and longer than any government program or plan.”
Lisa Wozniak, executive director for the Michigan League of Conservation Voters: "At a time when public health is a top priority for Michiganders, Gov. Gretchen Whitmer is taking a proactive approach in her budget for 2022 with major investments in our infrastructure. The COVID pandemic has underscored the importance of having clean, safe and affordable water to drink. That means investing in our infrastructure and taking action to reduce pollution and contamination that make health threats like COVID-19 worse."
Daniel Hurley, CEO, Michigan Association of State Universities: "We are ... concerned that the 2% increase is one-time funding and not built into the state’s base budget. This approach is unprecedented, as tentative state investment will not allow the universities to adequately plan for their own operations. These vital state assets need sufficient, predictable, and sustained state funding
Paula Herbart, president of the Michigan Education Association: “Gov. Whitmer has once again shown her commitment to public education by proposing the largest investment in public schools in Michigan history. Increased per-pupil support is badly needed after decades of inadequately funding public education in our state. We applaud both the effort to narrow the per-pupil foundation allowance gap and advocacy for increased weighted funding for students with greater needs, such as at-risk, special education, English language learners and geographically isolated districts."
Rep. Thomas Albert, R-Lowell, chairman of the House Appropriations Committee: "Her plan does not do enough to get kids back into classrooms for in-person instruction. There will be common themes between the governor’s recommendation and our developing proposal — and there will also be sharp differences. We must remember that state tax revenues are declining sharply — our finances are propped up by artificial and temporary federal COVID relief. It’s not sustainable."
Free Press staff writers Angie Jackson and Nancy Kaffer and the Associated Press contributed to this report.
Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.