LANSING – The Democratically-led Michigan House moved forward Wednesday with a capital outlay budget expanding the state’s bonding to cover construction projects for 39 community colleges and public universities, a move that was criticized by Republicans for creating more state debt for future generations.
HB 5221 was sent to the Senate on a near party-line 59-49 vote after coming out of the House Appropriations Committee earlier in the day. The Joint Capital Outlay Committee never voted on the bill as a hearing Tuesday did not garner enough Senate Republican members to constitute a quorum.
The bill essentially provides schools with planning authorizations for the projects in order for them to fundraise their portion of the funding. The bill contains $100 placeholders for those projects, but when the shovels hit the dirt, the state would have to come up with its portion of the project dollars that would total more than $684 million.
The legislation also includes pass-through federal dollars for airport projects, which Republicans argued should be taken up first via SB 511 that is already pending on the House floor, instead of the expanded House bill.
Rep. John Proos (R-St. Joseph), who sponsored an amendment to make HB 5221 mirror SB 511 that was eventually withdrawn from consideration, said he has heard the airport projects already have missed part of the construction season at a time that costs are increasing. The Senate Fiscal Agency has said the drop-dead date to pass the airport funding would be May 1.
But while the expanded House capital outlay budget still comes below the state’s $2.7 billion bond cap, Appropriations Chair Rep. George Cushingberry Jr. (D-Detroit) said he plans to take up HB 5888 that would raise the cap by $1 billion in order to look at other “investments” the state can make if the bond market is favorable.
One area that may receive more attention is projects for the state’s largest universities under Cushingberry’s plan. Rep. Pam Byrnes (D-Chelsea) noted that the budget includes a $40 million assistance cap to Michigan State University, Wayne State University and the University of Michigan, whereas other schools are matched up to 75 percent of the total cost of a project.
Proponents of the House bill say it will create 29,000 jobs and that the universities and community colleges left out of the governor’s recommendation have made their case to be included.
“The hundreds of projects included in this plan will benefit Michigan now and well into the future,” said House Speaker Andy Dillon (D-Redford Twp.). “The immediate payoff will be the tens of thousands of jobs that will be created for our residents, which will help get our working families back on their feet. The benefits also will be realized for years to come as our world-class universities produce top-notch workers to join our workforce and make Michigan a magnet for businesses looking to expand or relocate.”
But House Minority Leader Craig DeRoche (R-Novi) countered that the state’s millions of residents “can’t afford to go further in debt for projects we simply can’t afford now.
“House Democrats today raced to spend more than even the governor’s inflated suggestions. It is important to take care of issues addressing the state immediately and look at pork later, after the May revenue estimating conference. We cannot be in a hurry to spend another $2 billion of taxpayer money.”
The governor’s capital outlay budget had totaled approximately $562 million in bonding for school projects.
Al Valenzio, a House Fiscal Agency analyst, said the state will feel the effect of the bill in the 2012-13 fiscal year because schools will have to spend their money first on projects before the state does. But he also said that because the capital outlay budget under the House plan is larger than previous capital outlay budgets, it will take longer for the state to be able to do another round of them down the road.
While the budget does not go over the state’s bond cap, if all of the projects are done, it would leave about $60 million remaining below the cap. A Republican amendment that would have required the state to reduce its spending by the amount of added debt service from the school project bonding was not added to the bill.
TARGET SETTING: The House Appropriations Committee took testimony, but did not vote, on SB 1117 , which would require the governor, legislative leaders and appropriations chairs to set budget targets by May 30 of every year.
Sen. John Pappageorge (R-Troy), sponsor of the measure, said the budget process in 2007 was a mess because the discussion was always about how big the budget should be and not about how to set targets based on available revenue. The bill would codify a process that has been formed over the past 30 years, he added.
The ranking Republican member, Rep. Dan Acciavatti (R-Chesterfield Twp.), suggested requiring that the budget be done by July 1 to help the process more, but Pappageorge said it all comes back to the target numbers.
“Last year, 38 budget chairmen sat on their hands waiting for a number. We did it to ourselves,” Pappageorge said.
But Rep. Alma Wheeler Smith (D-Salem Twp.) argued that last year was an “anomaly” and that “we weren’t moving forward without new revenue.”
Cushingberry told Pappageorge that a vote on the bill will eventually come, but that he wanted to talk with ranking members on the committee and leadership before the full committee acted.
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