2015-16 Budget Proposal

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.

posted by PAA Online , Friday, February 13, 2015 1:51 PM
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Hillegonds Welcomes New Challenge As Health Endowment CEO

Former Speaker of the House Paul Hillegonds was unanimously appointed as the first CEO of the Health Endowment Fund on Monday. Due to the Blue Cross Blue Shield of Michigan conversion into a non-profit mutual insurer, the fund will have $1.5 billion over time to benefit the state’s health. Mr. Hillegonds has said that he is ready for the challenge ahead and that his key goal will be to build a staff for the endowment.

Mr. Hillegonds celebrated the effort the board made with their listening tour and stated that the information gathered from around the state will help him to guide the direction of the fund. He emphasized the importance of the board’s grant making ability as a way to increase their influence and stated that teaming up with other funds in this capacity will be important.

Mr. Hillegonds previously served as minority leader, co-speaker, and speaker of the House until leaving in 1996, after 18 years of service. More recently he was the senior Vice President at DTE Energy where he retired from last year. He is currently the chair of the Regional Transit Authority in Southeast Michigan, and a board member of the Kresge Foundation. He plans to remain with both.

posted by PAA Online , 1:51 PM
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PAAdvisory Briefs

Fix Planned To Correct Sales Tax Problem in Roads Plan

Governor Rick Snyder’s administration is looking to the legislature to fix an issue with the road-funding package that has been brought to light by The Citizens Research Council of Michigan. As currently worded, if Proposal 15-1 passes, sales tax would be lifted off gas for motor vehicles only. This leads to a possible issue for retailers who could be forced to determine what the intended purpose of gas purchased in a gas can is. The director of petroleum for the Associated Food and Petroleum Dealers, Ed Weglarz, said that two separate sales taxes for road and non-road gasoline is not plausible and a different solution must be considered.

New Website Set Up For Legislative Staffer Award

A new website for nominating staffers for the Jon Farley Exceptional Legislative Staffer Award has been launched. The award is named after Jon Farley who passed away in 2013 and had worked in the Legislature for more than 10 years. The recipient is meant to possess the positive traits that Mr. Farley exemplified. To nominate someone for the award, a nomination form can be requested at jonfarleyaward@gmail.com or http://jonfarleyaward.org. The winner will be announced at a free reception on March 25 from 5-8p.m. at the Nuthouse in Lansing.

Kosowski Forms Health and Fitness Caucus

Representative Robert Kosowski (D-Westland) announced Monday that he will be forming the Health and Fitness Caucus, a bipartisan bicameral caucus focused on the wellness of Michigan residents. Representative Klint Kesto (R-Commerce Township) and Senator Steve Bieda (D-Warren) have already joined the new group.

Snyder Appoints Law to Judgeship

Governor Snyder named David Law, who served in the House of Representatives from 2005-08 and has been serving as an assistant attorney general since 2009, to the 52-1 District Court in Oakland County. Mr. Law is replacing Judge Dennis Powers and will face election in 2016 in order to serve for the six-year term beginning in 2017. Mr. Powers resigned as the Judicial Tenure Commission brought forward allegations that he had falsified expense records and was absent from work.

7th Congressional Again In Play With Driskell Bid

Two-term State Representative Gretchen Driskell (D-Saline) announced Monday her plans to challenge Congressman Tim Walberg for his 7th Congressional District seat. Ms. Driskell said she announced her candidacy so early due to the large geographical area of the district and her wish to have ample time to learn the needs of the various communities.

posted by PAA Online , 1:50 PM
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