The Governor’s
proposed budget includes General Fund revenue reductions, solutions to the
issue of Medicaid hospital reimbursement funding, changes to fees in various
departments, increased focus on reading skills for Michigan’s youth, the
expansion of the Healthy Kids Dental program to all 83 counties in the state,
and increased funding for colleges and schools including a 2 percent increase
for higher education.
This budget is 1.3
percent larger than the budget for 2014-15 with the total proposed amount
reaching $54 billion. This increase however, will come with a 6 percent hit to
the General Fund bringing the total down to $9.6 billion. The total amount
allotted for state spending will reach over $30 billion with the largest single
share of money coming from federal funding at $22.7 billion. There is some lack
of clarity with the current budget due to the merging of the Department of
Human Services and the Department of Community Health, as details around the
merger and the budget are still hazy. The Governor has said that an executive
budget revision will be issued to realign the budgets when the merge is
effective.
Education funding
will take up nearly 30 percent of the overall budget with the School Aid Fund
reaching $12.7 billion. The largest percentage of the budget, reaching 46
percent, will go to health and human services, while job training and economic
development will receive 10 percent, 7 percent will go to Government services,
public safety will see 5 percent, and the environment will get 2 percent of the
budget. The largest revenue stream for the General Fund will come from personal
income tax which is estimated to receive a $240 million increase in the 2015-16
budget.
Transportation
funding will be $4.4 billion under the current estimate with just over $2
billion of that being accounted for by transportation taxes. This estimate does
not include any revenue from Proposal 15-1, which goes before the people on May
5. If the proposal passes it would raise $1.2 billion more for transportation
funding. The May 5 ballot initiative will allow the Legislature to adjust the
transportation budget based on the success of the proposal before a final
budget is passed.
Governor Rick Snyder
rolled out an executive order and negative supplemental attached to his
proposed budget to tackle the estimated $330 million shortfall in the General
Fund budget. The first supplemental
House Bill 4112 is for departments and agencies, while the second HB 4110 is
for public schools, higher education and community colleges. This loss,
according to administrative officials, is due in a large part to tax credits
that were handed out to companies during the years of the Great Recession and
are still being employed. According to the Governor the credits average $1.8
billion a year and $14, 310 per new job created while it costs $74,661 per job
that is retained.
The fee changes that
are laid out in the budget are expected to raise $26.2 million in increased
fees, $17.35 million from continuing fees scheduled to decrease at their same
rates, and an undisclosed amount by continuing fees that are scheduled for
complete elimination.
These fee changes
include a proposed increase of $1.3 million in revenue from health care
facility inspections and an increase in liquor license fees in the Department
of Licensing and Regulatory Affairs. The Department of Agriculture and Rural
Development has 18 fees that are proposed to change, the most significant
coming with a 300 percent increase to the food license fee, totaling $100. The
Department of Environmental Quality sees 16 fee changes in the proposed budget
with only one increase, the air pollution permit, which would rise to $65 from
$47.95 and bring in an estimated $11.85 million.
Two of the cuts in
the proposed budget stood out: a $12 million reduction to film incentives and a
$5 million cut to the Graduate Medical Education program. Among the other cuts
proposed were a $2 million cut in the Rural and Sole Community Hospital
program, a $1.5 million cut to local public health departments, another $1.5
million from the Health and Wellness Initiatives program, and various cuts to
the State Police budget. The proposed cut to the State Police includes a
reduction in recruit class size saving $2.8 million and the postponement of the
motor carrier office school until October 1, 2016, saving $3.2 million. Smaller
cuts were made to programs in The Department of Natural Resources, special
maintenance at state facilities, the Food and Agricultural Growth Initiative,
and the Strategic Fund.
A major shifting of
funds was also proposed by the Governor including $34.5 million in the
Department of Community Health, $2.9 million in the Department of Corrections,
$2.2 million from the School Aid fund, $7 million for the adoption subsidy,
$7.8 million in the state’s business attraction program, and $17.8 million in
the State Building Authority rent. Many of these shifts occurred due to
reallocation of money with Federal funding.
Reactions to the
Governor’s proposed budget received both praise and criticism on many
individual issues; these reactions followed party lines for the most part. Both
Representative Al Pscholka (R-Stevensville) and Senator Dave Hidenbrand
(R-Lowell), the appropriations chairs, said they would vote for the executive
order being proposed. While Democratic Senators and Representatives including
Vincent Gregory (D-Southfield) and Representative Sam Singh (D-East Lansing)
said they were opposed to the budget. Many Democrats expressed their wish for a
higher focus on education in the budget. Representative Brandon Dillon (D-Grand
Rapids) stated that the legislature should consider a supplemental to increase
K-12 funding.
The Community Health
Budget also received some harsh criticism as hospitals say that the major cuts
they would be facing could increase costs and cause a decline in service
quality. The Michigan Health and Hospital Association said that ending the
current Graduate Medical Education program could cost the state’s hospitals as
much as $163 million. The continuance of the Health Insurance Claims Assessment
could also face harsh backlash from the business community as many had hoped
that the planned sunset would be the end of the program.
Revenue sharing was
another point of divide in the proposal as groups such as the Michigan Township
Association believe that the proposed figures are not high enough and that 100
townships could lose critical funding.
As for the state
government budgets the Executive Office budget figures were to remain the same.
The Judiciary would see a 1.3% cut, the Treasury would see a 1.2% cut, the
Attorney General would see a 2% cut, Military and Veteran Affairs would be cut
1.8%, and the Legislature would receive a 3.4% increase under the proposed
budget. Other department figures include the Department of State seeing a .6%
bump in funding and the Department of Civil Rights receiving a 3.1% decrease.