Aug. 16, 2024 | This Week in Government: Eubanks and Flood Discuss Budget, Fall Priorities at the Chamber

State Treasurer Rachael Eubanks said she is seeking guidance from the Department of Attorney General on the adopt and amend Supreme Court ruling, requiring her agency to calculate an inflation-adjusted minimum wage, following a presentation with the Detroit Regional Chamber on Tuesday.

The adopt and amend ruling, decided last month, held the Legislature cannot adopt and later amend voter-initiated laws in the same session. That led to the reinstatement of a law calling to increase Michigan’s minimum wage to $12 per hour by 2022 and bring tipped minimum wage up to the regular minimum wage.

The court decision now requires a revised schedule for the phase-in of minimum wage increases to account for inflation and the years that have passed since the original law would have taken effect. The current minimum wage is $10.33 for non-tipped workers and $3.93 for tipped workers.

Eubanks said that although the court requires the Treasury to implement the changes by November, the department is looking for clarification from the attorney general on “a technical standing” of what the wording in the court decision means to figure out a calculation as the court intended.

Eubanks said the department is not close to looking at an actual number or rate yet to adhere to the changes.

As for the implications on revenue in the state, Eubanks said the department is still studying the calculations in the instructions of the court decision, and needs to evaluate the court decision’s effects on the Michigan economy overall at the January Consensus Revenue Estimating Conference.

“Right now, I’m keeping an open mind about it,” Eubanks said. “Could it be no impact? Could it be an increase? Could it be a decrease? It’s too soon to say.”

Eubanks noted the effects on the state could come from two sides: its position as an employer but also with increased withholdings.

Budget Director Jen Flood said initial estimates show the impact to the state as an employer will be “minimal.”

Flood said the administration is working with the Department of Labor and Economic Opportunity in how to enforce this distribution of changing minimum wage, as well as helping employers with “navigating the complex policy.”

“The administration’s take is, how do we support employers through this transition?” Flood said.

Budget Director Jen Flood said on Tuesday that the administration is focused on economic development policies heading into the fall.

Flood said the state has $320 million left on the balance sheets for legislative and administrative priorities as it prepares to close the books on the 2023-24 fiscal year and consider any additional supplemental spending.

She said one of the top priorities for the administration would be to see action in economic development, including research and development tax credits or an extension in funding for the Strategic Outreach and Attraction Reserve Fund.

On that front, Flood said she was excited to continue conversations on HB 5768, sponsored by Rep. Jason Hoskins (D-Southfield). The bill is part of a plan to dedicate funding to SOAR for a decade while also putting money toward transit, housing, and community development.

Flood said this would be “a more comprehensive economic development strategy.”

While highlighting the education funding in the 2024-25 budget, Flood said the administration is still looking to “make more strides” in the funding of free preschool for every Michigan family. The recent budget allocated an additional $85 million to expand the program, putting it two years ahead of schedule for the administration’s goals. It was, however, less than what the Whitmer administration wanted for the program this year.

Flood said this program saves families $10,000 per child, but the state also must continue to work on recruiting teachers to sustain the program.

Flood also highlighted a partnership with the Department of Treasury: My Secure Retirement Program. The partnership sets up an optional program for small businesses with fewer than 100 employers to use at no cost to set up and track retirement savings plans.

Treasurer Rachael Eubanks spoke about preparing for the next recession in Michigan, and part of that process includes watching for when stimulus money Michiganders saved dries up by monitoring sales tax performance.

Eubanks also said, “to find a little comfort,” the Treasury forecasted a recession about a year ago but ended up taking it out of their financial predictions. She said they are not anticipating another scare in the forecast.

“We’re not anticipating that we will see a downturn or slow down,” Eubanks said. “That doesn’t mean that we won’t see slower growth, just not negative growth.”

Flood also pointed out that Michigan is sitting on a $2.2 billion rainy day fund if slow economic growth starts to rear its head in the state.

Covering an overview of Michigan’s economy at the meeting, Eubanks said that goods are down in inflation numbers and that while consumer sentiment is at record lows, Michiganders are continuing to spend and aren’t scared enough to not interact with the economy.

Eubanks also said that although manufacturing is consistently a top employment sector in the state, with 13.8% of employed Michiganders working in the manufacturing sector, it is not the top compared to 30 years ago. Now, education and health services, as well as professional and business services, are reigning among Michigan’s employment sectors, at 15.5% and 14.7%, respectively.

After a historically subpar growing season for Michigan’s sweet cherry farmers due to unpredictable weather, Gov. Gretchen Whitmer has requested federal natural disaster aid to help cherry growers and retailers offset the impact of crop loss.

In an Aug. 2 letter to U.S. Secretary of Agriculture Tom Vilsack, Whitmer explained how a spring and summer of high rainfall has led to “explosions” of spotted wing drosophila, a cherry-eating fly, and harmful fungi like cherry leaf spot and American brown rot.

“As a result of increasingly unpredictable weather and this year’s convergence of multiple systems, Michigan is experiencing a natural disaster for sweet cherry production,” Whitmer said in the letter. “Crop protection measures with safety and legal parameters were not sufficient, particularly when windy conditions furthered hindrance of their effectiveness. Mid-to-late growing season estimates of crop loss across the significant sweet cherry growing counties range between 30 and 75%.”

Whitmer said the damage to the cherry industry began in April and affected Leelanau, Antrim, Grand Traverse, Benzie, Manistee, Oceana, Mason, Berrien, and Van Buren counties.

Department of Agriculture and Rural Development Director Tim Boring and Rep. Betsy Coffia (D-Traverse City) praised Whitmer’s appeal to the USDA for help.

“Here in northwest Michigan, agriculture – and particularly sweet cherry production – is a vital part of our economy. From farmers to producers to retailers, so many members of our community rely on the success of crops like cherries,” Coffia said at an Aug. 8 press conference. “However, one thing is clear: Michigan is experiencing a natural disaster that threatens sweet cherry production, which brings us here, requesting a federal disaster declaration for our region’s sweet cherry industry.”

Boring, who joined Coffia at the Traverse City press conference, said she and Whitmer have been instrumental in supporting agriculture solutions.

“In submitting this letter to the USDA, Gov. Gretchen Whitmer has taken a bold and crucial step in an effort to bring much-needed relief to Michigan’s sweet cherry industry,” Boring said. “I want to thank Gov. Whitmer for her leadership and continued support of Michigan’s agriculture community. I also want to thank Rep. Coffia for her partnership and for consistently making agriculture a top priority, especially through her work as a member of the House Agriculture Committee.”

The USDA’s Farm Service Agency is collecting damage assessment information in the region, to be presented to Vilsack on Oct. 1. If Vilsack approves a natural disaster declaration, sweet cherry growers would be eligible for low-interest loans to recover from the difficult growing season.

“Our region is the proud home to many multigenerational families who are a vital part of our community and are finding it harder every year to keep farming,” Coffia said. “I strongly urge the USDA to grant this relief to support them as they face this devastating and costly crop loss after months of round-the-clock work and expenses to try and save it.”

The state continues to see more revenue from taxes on cannabis sales and online gaming, the House Fiscal Agency said in its July revenue report released Monday.

Additionally, the agency reported sales tax revenues are down on a year-to-date basis, while use tax revenue is up.

Overall, General Fund revenue was $1.4 billion in July, about $61.3 million above May estimates. For the year, the General Fund is $307.2 million above projections, HFA said.

The School Aid Fund saw $1.29 billion in July, about $9.1 million above May estimates. For the year, the School Aid Fund is sitting $68.7 million above projections.

Online gaming brought in $32.2 million in July and revenue is 22.7%, or $53.5 million, higher than last year.

Cannabis tax revenue this year is coming in $35.1 million, or 18.5%, higher than last year, HFA said.

Sales tax revenue is $90.1 million lower than last year, while use tax revenue is $39.1 million higher on a year-to-date basis.

HFA also said year-to-date lottery transfers are $74.4 million lower than year.

Net income tax revenue was $1.1 billion in July and $637.2 million less than during the same period last year. Still, gross collections on a year-to-date basis were $294.5 million higher than a year ago.

Net business taxes were $139.6 million higher through July 2024 on a year-to-date basis than last year. Michigan Business Tax refunds through July 2024 were $130 million less negative than last year, while Corporate Income Tax collections over the same period were $51.5 million lower than last year’s amount. Year-to-date insurance taxes were higher than a year ago by $57.9 million, or 17.1%.

A memorandum sent Monday to Department of Corrections staff from Director Heidi Washington details concrete programmatic responses to the latest correctional facility staffing complaints, which have intensified in recent months.

A copy of the memo from Washington was obtained by Gongwer News Service on Wednesday.

MDOC Public Information Officer Jenni Riehle confirmed that the memo was an internal communication sent to staff earlier this week.

In the memo, Washington first thanked staff for their commitment to the agency and recognized the sacrifices they’ve made to ensure facilities remain operational while they continue to address staff vacancies.

Some of those sacrifices have included mandatory overtime, creating a less-than-ideal work environment on good days and dangerous conditions on bad days, according to prison reform activists and the state’s corrections officers’ union, who have been united in calls for changes in the agency’s staffing strategies.

In response to increased complaints from advocates, the agency has highlighted work it has been doing to deal with the long-existing staffing issues. The memo issued this week details some new efforts the department is considering.

“We know that the more you are required to work, the less time you have to spend in your communities and, more importantly, with your families,” Washington said. “It is important that we stay on track to get you the support you need to have a better work-life balance.”

The memo was not an admission that its current strategies were not working, but rather detailed new initiatives hopefully improve on its goals.

Washington went on to say that the memo was a way to keep staff informed on new key initiatives the department is taking to improve and track progress on staffing levels and mandatory overtime.

They include the creation of traveling units, reductions in educational barriers for new recruits, identification of other recruitment barriers, targeted recruitment strategies, and a mode for facility feedback, with the latter synthesized into action planning.

On traveling units, Washington said administration was currently researching and collecting data on viability of permanent staff units that can be deployed to their hardest hit facilities.

“These units will provide immediate relief to staff and reduce the amount of required mandatory overtime. In addition, we will continue with the Volunteer Relief Program to help assist until designated traveling units are put in place,” she said. “Last year, volunteers were sent to the Alger Correctional Facility, allowing officers to expand their knowledge and familiarity of the MDOC while helping colleagues and the state.”

Washington said the request issued last week has already seen more than 50 volunteers interested in providing relief at the Marquette Branch Prison. The volunteer program is open to all officers and anyone who was previously certified and wants to be recertified for the program.

The department is also working with its legislative partners on key Corrections-related committees to remove the prerequisite college credit requirement for new officer recruits, as well as those currently working on a college waiver.

“This change will have an immediate, positive impact on staffing by allowing us to keep current officers on the job while increasing our recruitment pool,” Washington said.

She added that employment vacancies were affected by “several complex factors outside of our exclusive control such as housing availability, child care affordability, and economic opportunity.”

Washington noted that the department recently contracted with PFM Group Consulting LLC to give a “fresh perspective to our staffing challenges.”

“They will be working to collect statewide and regional data so we can partner with the right people to remove barriers for potential recruits and current employees,” she said. “There is an official kick-off meeting for this project scheduled for (Tuesday).”

On targeted recruitment, the initiative continues from past efforts, Washington said, as the Corrections recruitment team has been working job fairs across the state and finding other ways to engage recruits.

The team is now adding to those efforts with a targeted recruitment plan to reach previous applicants who were unsuccessful candidates for similar but different positions. Those positions include parole and probation officers.

“By directly communicating on an individual level with those in adjacent recruitment pools, we increase our chances of success,” Washington said. “We have already directly reached out to over 300 prior applicants to inform them of opportunities to become a corrections officer.”

Facility feedback will also help guide the steps ahead, Washington said.

“We understand that each of your facilities has unique challenges, and there is no one better to help solve those challenges than the people who work there,” she said. “We will be collecting results-driven feedback from all staff that is focused on identifying solutions, not just defining the problem. This will help us take your ideas and turn them into realities.”

Additionally, the department said it would keep staff informed on the progress it is making, a concern previously raised by those who have previously questioned the department’s leadership.

“We will be providing more robust details on each of our tactics in the weeks to come so everyone has a good understanding of what we are doing and the positive impact of this work. Also, to increase transparency, we will be providing quarterly reports to you that detail staffing vacancies across the state, which will be released on the same schedule as our officer recruit school,” Washington said. “There is also a webpage with the same information in development that will inform our partners, legislators, and stakeholders of the ongoing staffing needs of the department.”

Riehle, in an email to Gongwer, further clarified that the reduction of educational barriers has been an ongoing priority for the department.

“There is currently a known challenge for recruitment and retention of officers – a decades-old statutory requirement that corrections officers complete 15 credit hours of college. This is in addition to the MDOC’s 16-week academy and on-the-job training, which is considered some of the most comprehensive officer recruit training in the country,” Riehle said. “It is important that we focus on the skills needed to be an effective officer, which are taught at the academy and in the facilities, rather than educational prerequisites that may not directly relate to the job.”

She added that Corrections has been consistently working on recruitment and retention issues, and that the programs in the communication sent by Washington were just some of the steps the department is taking.

“With bipartisan support of the legislature, we have invested over $55 million in recruitment and retention bonuses over the last three years,” Riehle said. “In addition, officers have received an increase of over 18% in combined raises since 2019. These incentives help to draw in new recruits and encourage them to stay, increasing staffing numbers and decreasing training costs.”

Safely closing and consolidating prison facilities has been a focus, when possible, she said.

“As an example, in July, a unit was closed at the Baraga Correctional Facility, resulting in an immediate reduction in required daily staffing of 22 positions that would otherwise be filled by officers working overtime,” Riehle said. “We will continue to work to get potential new recruits excited about a career at the MDOC and to find safe ways to fill vacancies at our facilities.”

A message seeking comment from the Michigan Correction Organization was not returned at the time of publication.