April 19, 2024 | This Week in Government: Speaker Tate Prioritizing Budget

House Speaker Joe Tate (D-Detroit) is focused on getting a budget passed. Full stop.

Tate spoke with reporters on the House floor following Wednesday’s session about the coming months now that his caucus is back at full strength. When asked about his priorities other than the budget, the speaker didn’t hesitate.

“The budget,” he said. “We know where we’re at in terms of the timeline. We know that the budget is critical. It’s a priority. At the end of the day, we want to make sure we do it in a thoughtful way and make sure that we deliver something that residents can be proud of.”

With the special elections out of the way, the Democratic Caucus will once again have leverage to move legislation without Republicans. But Reps.-elect Mai Xiong and Peter Herzberg can’t be seated until the election is certified. That may be another few weeks.

The Board of State Canvassers meets April 26, and the Wayne County Board of Canvassers has not announced when they plan to meet, though it must convene before the end of the month.

“We’ve had two vacated seats for several months. We know that we will have those members sworn in here in the next couple of weeks or so,” Tate said. “As quickly as the law will allow it.”

That doesn’t mean the House isn’t going to work on other things apart from the budget, but they won’t be taking precedence, Tate said.

Before spring recess, the Senate passed legislation to significantly change the Strategic Outreach and Attraction Reserve Fund, which Gov. Gretchen Whitmer does not support (See Gongwer Michigan Report, April 11, 2024).

The House will have conversations, Tate said.

“I think for us, we know that what we’ve seen for the past 16 months – economic development has been something that a lot of our members, including myself, have been interested in,” he said. “We’ll take a look at it and see…but for now, we need to make sure we’re delivering a budget.”

The Senate also passed an auto no-fault reform package before the end of last year, and advocates have been clamoring for action on the House side. The House has yet to take up the package or move one of its own.

“That’s something we’re going to continue to look at,” Tate said. “The focus, again, is going to be on the budget.”

Tate has said that for six months but the legislation has been mired in committee with no signs of action anytime soon.

Still, there is plenty of legislation that Tate said was non-controversial the House could work on with 56 votes.

“We weren’t too far, even right before recess, where we had non-controversial legislation that passed committee unanimously that Republicans reused to support,” Tate said. “This allows us room to continue to move legislation.”

House Republicans on Wednesday re-upped proposals they said will better spur economic development in the state, like increasing oversight of key state programs and bringing back right to work.

House Minority Leader Matt Hall (R-Richland Township) was joined by colleagues during a press conference to boast the proposals, many of which the House GOP has repeatedly called for this term.

The yet-to-be-introduced bills, dubbed the Growing Local Economies package, are set to include bills targeted at enhancing oversight of economic development tools, like the Strategic Outreach and Attraction Reserve Fund, the Michigan Economic Development Corporation and its Strategic Fund.

Hall said House Republicans have had a plan in the works for some time and spent the legislative spring break preparing its debut.

“The time away really gave us even more time to go back and read (Governor Gretchen Whitmer‘s) population counsel report, Growing Michigan Together,” Hall said. “The big thing for me is that it clearly states the state is lacking a coordinated economic growth plan. And, unfortunately, after five years of Whitmer, I don’t think we’re going to get that from her.”

The package, which Hall said will consist of at least a dozen bills that will be introduced over the next week, would create a web-based hub for business licensing and registration to streamline the process of starting a business in Michigan, require performance-based funding for the MEDC, return the income tax rate to 4.05% and restore right to work after its repeal in 2023.

“We saw the Democrats repeal Right to Work, the first state in the country to do that legislatively, and that has an impact,” Hall said. “I’ve sat in meetings where I’ve tried to help bring companies to Michigan, and that’s one of the things some of them say … they say, ‘if you’re not a right to work state, we’re not considering you.’”

Whitmer’s administration boasts its economic development record, and legislative Democrats stand by the repeal of right to work, something the party called for since Republicans passed the law in 2012.

Rep. David Martin (R-Davison) said during the press conference that Whitmer and the Legislature’s Democratic leadership have focused their economic strategy around attracting large corporations to the state instead of trying to bolster already existing small and local businesses.

“The governor’s strategy has been all about electric vehicles and big businesses, and that’s just not cutting it for the hardworking people operating the small businesses in our communities,” Martin said. “They need real support, not just flashy initiatives that never trickle down to Main Street.”

The GOP representatives also criticized programs like SOAR and the Michigan Strategic Fund for not being “customer friendly” for smaller businesses looking to receive tax incentives or grants. Rep. Nancy De Boer (R-Holland) said MEDC needs more accountability to the Legislature to ensure that businesses can truly benefit from it.

“We want to find out if the strategy works right, so we have to report on the performance of workforce placement programs to the State Budget Office, as well as the House and Senate Appropriations Committee,” De Boer said. “That step will help give us accountability and ensure that taxpayer dollars are being spent on programs that are proven useful. Specifically, the report will include real data about the number of individuals entering the workforce from job placement programs, how much they are earning in their jobs, and the percentage of individuals who attained degrees or certificates to help them succeed throughout their careers.”

House Speaker Joe Tate (D-Detroit) said it’s “not necessarily the case” that Democrats lack an economic development plan, citing legislation on research and development, affordable housing, and last year’s SOAR funding for a project in the Upper Peninsula.

“We’ve been working and focusing on economic development, working and focusing on the quality of life for Michigan residents,” Tate said.

he proposed Senate budget for the Department of Environment, Great Lakes and Energy keeps open the possibility of an increase in tipping fees but also doesn’t fully bake it into the spending plan, a subcommittee chair said Thursday.

Lawmakers moved SB 768 from the Senate Appropriations Environment, Great Lakes and Energy Subcommittee on Thursday.

The Senate version of the budget is just over $1 billion, more than $250 million from the General Fund, a slight decrease overall but a 2.9% increase in the General Fund. It is about $70 million less than what Governor Gretchen Whitmer recommended for the department.

A key part of the governor’s recommendation was a landfill tipping fee proposal that would increase the fee from 36 cents per ton to $5 per ton, which is in line with the average fee in the Midwest, Whitmer’s administration has said.

The change would generate $80 million for contaminated site cleanup under the governor’s budget proposal.

In the Senate, however, the proposal is reflected as an increased contingency fund.

Sen. Jeff Irwin (D-Ann Arbor), the subcommittee chair, said the budget keeps the conversation alive.

“Should the Legislature come together around that issue … (we are) preparing this budget for that potential reality,” he said. “Keeping the door open for that, but not actually following through. Because I think that is an issue that the Legislature still needs to chew on and consider before we fully include it in the budget.”

The Senate budget includes several new items not recommended by the administration, including $1.7 million General Fund for carbon emissions tracking software and services, $55 million for contaminated site remediation and redevelopment, $5 million for critical mineral recycling research hub, $1.8 million for a dam risk reduction program, $2.5 million for the delineation of critical sand dunes, $20 million for environmental justice contaminated site clean-up, $30 million for a renewable-ready communities program and $25 million for a sediment removal project on the Detroit River.

Additionally, the budget reduced the governor’s ask for Clean Fleets from $20 million to $10 million, for clean fuel and charging infrastructure from $25 million to $15 million, and for drinking water infrastructure from $35 million to $15 million.

The budget provided other funds toward removing lead service lines, however. This included $4.7 million for ongoing support to take advantage of federal funds and another $25 million in one-time dollars. It also included $5 million in a water infrastructure reserve fund for communities, $25 million for the water state revolving fund, and $10 million for a water infrastructure initiative.

Finally, the budget would provide a $384,000 increase toward EGLE conservation officers to provide parity and another $50,000 in ongoing support for those officers’ retirement.

A House subcommittee on Thursday went higher than Gov. Gretchen Whitmer in operations increases for the state’s universities and community colleges but didn’t agree with the proposal to guarantee two years of community college tuition for Michigan graduates.

While the governor’s exact proposal guaranteeing free tuition for full-time community college students was not included, Rep. Samantha Steckloff said changes to the Michigan Achievement Scholarship would provide more funding for students. This funding could help shift part-time community college students to full-time, she said.

The House Appropriations Higher Education and Community Colleges Subcommittee sent HB 5504 and HB 5505 to the full committee on Thursday with Democrats supporting the proposal, Republican Rep. Thomas Kuhn of Troy voting no and Republican Rep. Nancy De Boer of Holland abstaining.

Another key change from the governor’s proposal is for the Tuition Grant Program. The House recommendation increased funding while the governor provided a net decrease. Total funding for the need-based tuition assistance for private college and university students would be $42 million General Fund. The governor proposed $34.9 million in total funding and to begin a phase-out, which the House budget does not do.

For universities, the subcommittee recommended a $54.8 million increase ($48.8 million General Fund) for operations, a 3.3% increase. The governor recommended a 2.5% increase.

Percentage-wide, community colleges also saw a 3.3% increase, or $11.9 million, all from the School Aid Fund.

The House recommendation also went higher than the governor in the postsecondary Scholarship Fund deposit, recommending $36 million. The governor proposed $30 million. The fund is used for the Michigan Achievement Scholarship and also was proposed to be used for the community college guarantee.

The House proposal does not include the community college guarantee. However, changes in the Michigan Achievement Scholarship structure would allow students to receive funding for “full cost of attendance.”

Steckloff, chair of the subcommittee, said particularly for community college students, this is a huge help. Under the change, students could receive additional scholarship funds for things like housing and child care. If those community college students don’t need a second job or have other barriers to attending school full-time with more financial help, they could make that leap to full-time status. Full-time status means students qualify for full funding, she said.

“The majority of our students that go to community colleges are part-time. On average, we’re seeing about 70 to 80%,” Steckloff said. “So, the free community college guarantee only affects a very small population.”

Steckloff said the biggest hurdle for graduating part-time students is funding wraparound services. She also said the proposal is not a rejection of the proposed community college guarantee.

“It’s a change. You know, it’s just a little tweak. But again, I want to make this very clear: it is not a rejection of that idea,” she said. “It is just changing it so I can get more full-time students.”

For the universities, the House proposal also includes a $1 million General Fund increase for the 2022-23 North American Indian Tuition Waiver program costs, nearly double the $507,800 proposed by Whitmer.

The increase brings Bay Mills Community College fully into the program.

The operations increase for the universities would be conditioned on a 4.5%, or $703, tuition restraint. Community colleges are also subject to a 4.5%, or $217, tuition restraint.

Additionally, the Michigan State University Extension and AgBioResearch Program would see a $2.4 million increase under the House recommendation, up from the $1.8 million proposed by the governor. The House concurred with the governor’s recommendations for the Tuition Incentive Program, the Michigan Competitive Scholarships, and the Children Veterans and Officer’s Survivor Tuition Grant Programs.

On the Tuition Grant Program, Steckloff noted the independent colleges and universities have been able to provide free tuition to students by packaging that scholarship with the Achievement Scholarship and other federal aid, like the Pell Grant. She said it’s important to keep that program so the schools can continue to provide that benefit to low-income students.

The House budget also did not move the Michigan Reconnect program from the Department of Labor and Economic Opportunity to the higher education budget, as recommended by the governor.

In both budgets, the House added a $100 placeholder for Infrastructure, Technology, Equipment, Maintenance, and Safety. Community colleges and universities have funding for those items in the current fiscal year, but it was one-time.

Michigan Community College Association President Brandy Johnson overall praised the budget that moved out of the subcommittee. She also said the association will continue to work on the community college guarantee and funding of ITEMS, the infrastructure and maintenance fund that received the placeholder.

“It’s clear from the House higher ed budget recommendation that lawmakers recognize the value Michigan’s community and tribal colleges play in student success and sustained local economic growth,” Johnson said in a statement. “The 3.3% increase in operations funding is a generous recommendation that will help colleges better keep pace with rising costs. We also greatly appreciate the continued investment in student financial aid and emphasis on the true cost of attaining a post-secondary degree that extends beyond tuition.”

Michigan Association of State Universities Chief Executive Officer Dan Hurley was also appreciative of the House subcommittee proposal.

“The budget framework reflects a return of revenue growth rates to pre-stimulus levels, but the increase in operations support to the universities and inclusion of a placeholder for campus maintenance dollars are shared priorities of both the state and campuses,” he said. “Additionally, allowing the Michigan Achievement Scholarship to be applied to the full cost of college attendance – for expenses such as transportation, food, and housing – is an effective way to optimize the impact of the program and simultaneously improve college affordability even further for students enrolled at the state’s public universities.”

Under the proposed operations increases, individual colleges would see a 2.7% to 4.8% increase. North Central would see a 4.8 increase in operations funding, Lansing Community College a 2.8% and Mott Community College a 2.7%. Sixteen of the 28 colleges would see an increase of between 3% and 3.5%.

The universities would see increases ranging from 2.9% to 6%: Central Michigan University, Eastern Michigan University, Ferris State University, Grand Valley State University, Michigan State University, Saginaw Valley State University, the University of Michigan-Ann Arbor, Wayne State University, and Western Michigan University would all see 3.3% increases under the proposal.

As for the remaining universities: Michigan Technological University (3.1%), Northern Michigan University (3.5%), Oakland University (3.2%), UM-Dearborn (3.4%) and UM-Flint (2.9%).

Lake Superior State University saw a 6% increase, but the Bay Mills Indian Tuition Waiver payment is passing through the university.

A new bill would create a private-sector retirement account through the state of Michigan.

The House Labor Committee heard testimony on HB 5461, sponsored by Rep. Mike McFall (D-Hazel Park), which would create the Retirement Savings Program Act to establish a retirement savings program for private-sector employees in the form of an individual retirement account.

The bill would create the Secure Retirement Savings Board within the Department of Treasury. The program would be funded through automatic payroll deductions and open to any private-sector employee, though employers would retain the right to set up an employer-sponsored retirement plan. Employer organizations, which would be required to implement payroll deduction for employees that want to participate, are mobilizing in opposition.

Paula Cunningham, from AARP, said small businesses in Michigan support a public-private retirement savings option.

Data from the AARP suggests that 73% of small business owners in Michigan would support a plug-and-play retirement savings option that would help small businesses offer employees a way to save for retirement.

John Scott, representing Pew Charitable Trusts, said that businesses in states that have adopted such policies, like Oregon, have continued to offer their own retirement benefits.

“We found that a lot of small businesses are lining up to adopt these programs or enrolling in these programs,” Scott said. “In Oregon, 27% of businesses signed up for the program more than three months before they had to.”

Rep. Matt Koleszar (D-Plymouth) suggested that such a retirement account might encourage people to stay in Michigan.

Republicans objected to the requirement for businesses to enroll in the program, but Democrats said there would be an opportunity for employees to opt-out.

Rep. Tom Kunse (R-Clare) said that although there are states adopting this policy, the data suggests that it’s driving employers to make their own plans.

“Your numbers reflect that the businesses are saying, ‘We can do this better on our own. The state plans in 16 states are so onerous and so bad for our employees, we have to get involved,” Kunse said. “This is not a carrot. This is absolutely a stick.”

Johnnie Bellows, who owns Aura Company, a trucking company, testified in support of the legislation.

“Rarely do I have additional time or financial resources to think about adding something as important as retirement. I see a state-facilitated retirement program as an important way for Michigan to invest in small businesses,” Bellows said. “Small businesses are the engine of our economy, directly benefiting everyone by helping in our economy.”

Delaware Republican State Senator Brian Pettyjohn also testified in support of the bill. Delaware has similar legislation.

“Lack of retirement savings in the United States will cost state and federal government an estimated $1.3 trillion by 2040,” he said. As a fiscal conservative, these numbers are staggering and concerning. My Republican and Democrat colleagues and I recognize that the tax savings on an auto-IRA program would have on Delaware, which is why we advocated for it.”

Pettyjohn said the initial investment for Delaware was $1.2 million.

Amanda Fisher, representing the National Federation of Independent Business-Michigan, testified in opposition, saying small business owners oppose a mandated program.

“I completely agree that the legislation does not mandate that employees participate, but it does mandate that employers participate and offer it,” Fisher said. “Any of you that know me know that my members and I do not like additional government programs, but I think setting something up that’s voluntary for an employer, but also that employees can go directly into this program without having to do it through an employer, I think that would be a solution that we could look at, that we would be ok with.”

The Community Economic Development Association of Michigan and the Detroit Regional LGBT Chamber of Commerce submitted cards supporting the legislation. The Small Business Association of Michigan, the Michigan Retailers Association, and the National Association of Insurance and Financial Advisors Michigan submitted cards in opposition.

No further action was taken on the bill on Thursday.