LANSING – Gov. Rick Snyder Thursday called the approval of Michigan’s $46 billion budget in advance of his May 31 target date “an achievement that underscores the power of Michigan.”
Earlier in the day, the Michigan Senate passed the omnibus budget bills for the 2011-12 fiscal year, sending them to Governor Rick Snyder for his signature. The education bill (HB 4325) passed 21-17. The bill for the departments and agencies (HB 4526) passed 23-15. With the final votes, the Legislature completed the budget for the coming fiscal year in May for the first time in 50 years, said Sen. Roger Kahn (R-Saginaw Township), the Senate Appropriations Committee chair.
Less than an hour before, the Michigan House moved the final 2011-12 budget over to the Senate.
The main budget bill, HB 4526, was adopted on a 62-47 vote, with Rep. Thomas Hooker (R-Byron Center) joining Democrats in opposing the budget.
The education budget, HB 4325, moved 59-50 with Rep. Patrick Somerville (R-New Buffalo), Rep. Holly Hughes (R-White River Township), Rep. Kurt Heise (R-Plymouth Township) and Rep. Paul Muxlow (R-Brown City) joining Democrats in opposition.
To finish the 2011-12 fiscal year budget some four months and five days before the start of the fiscal year – and in the middle of the day as opposed to the middle of the night, as has become the norm, no less – had virtually every longtime observer of the Capitol shaking his or her head in amazement Thursday. Although there had been some discussion that the Legislature had not passed a budget this early since the 1960s, Gongwer News Service archives (see below) show the Legislature finished the 1981-82 fiscal year budget on April 15, 1981.
More recently, the earlier finishes to the budget came with the 1999-2000 fiscal year and final legislative action on June 17, 1999. Since then, the budget, or at least some part of it, has dragged on into the summer or later. Most infamously, in 2007 and 2009, the Legislature and then-Governor Jennifer Granholm could not reach agreement until after midnight October 1, causing a partial shutdown of the government for a few hours until deals were reached and continuation budgets passed with final action later in the month.
“This is a historic day in many respects in terms of the new Michigan and getting accomplishments done,” Governor Rick Snyder said at a Capitol news conference about an hour after final action. “I presented a major challenge to the Legislature, and they have really stepped up and over-achieved.”
But Snyder also said the policy in the budget is more important than the timing.
“More important than speed is quality, and this is a high-quality budget,” he said.
In total, the 2011-12 budget contains $47.45 billion, $8.45 billion of which comes from the general fund, according to the House and Senate Fiscal agencies. Those figures include $692.6 million ($171.6 million general fund) in what Snyder and Republican legislative leaders are calling one-time spending. There’s also a $255.8 million transfer to the Budget Stabilization Fund.
There is still some work yet to go. Between 50 to 60 bills need to pass the Legislature to complete all the actions to make the budget work, most critically the 1 percent health insurance claims tax to replace the 6 percent tax on the state’s Medicaid HMO’s, a move needed to retain $1.2 billion in the Medicaid budget (SB 348 ).
The basic tenets of the budget are well known. It cuts per pupil funding by $300 ($470 if one includes the $170 per pupil cut made for the 2010-11 school year that was negated by one-time federal stimulus money that is no longer available). Districts can recoup $100 per pupil if they meet four of five best practices factors, and they also will receive an average of $100 per pupil to make a payment toward their Michigan Public School Employees Retirement System costs, bringing the cut to as low as $100 on average for districts that get a share of the best practices money.
Aid to public universities falls 15 percent. Funding for community colleges drops 4.1 percent. Medicaid is largely left untouched, but graduate medical education and the Healthy Michigan fund take sharp cuts. Some 12,600 people who have been on welfare for 48 months or more will no longer receive public assistance. The clothing allowance will end for most children, continuing only for cases where only the children receive assistance.
Revenue sharing will change, requiring local governments to take certain actions to get a share of $215 million in what was a $300 million pot of discretionary revenue sharing money in the current 2010-11 fiscal year. A series of privatization moves will take place at the Department of Corrections and state employees will be asked to make $145 million in concessions.
Underlining it all is a historic tax change, the replacement of the Michigan Business Tax with a 6 percent corporate income tax and the elimination of most business and income tax credits and exemptions, including one that will mean the eventual taxation of pension income for those born in 1946 and afterward. The Earned Income Tax Credit will drop from 20 percent of a filer’s federal EITC to 6 percent.
“We didn’t walk away from people in need,” Snyder said. “To say this was easy, the answer would be no, though. We did have to cut a lot from this budget to be successful for the long term.”
Snyder declared of the state’s structural deficit, “Yeah, it’s dead.”
Thursday’s action mirrored the entire year so far: quick and devoid of drama. In other words, the opposite of so many previous budgets.
REACTION: Completion of the budget, as is usually the case, won praise and scorn from various organizations.
Health care groups – the Michigan Health and Hospital Association, the Michigan State Medical Society and the Michigan Osteopathic Association – issued a joint statement praising the preservation of Medicaid and relatively small cut to Graduate Medical Education after total elimination was earlier considered.
“Ensuring Medicaid patients have access to the care they need is essential to building a healthier workforce and stronger economy,” MSMS Executive Director Julie Novak said. “In addition, we are pleased that GME funding was largely restored. GME funding helps teaching hospitals offset the costs of operating medical residency programs and provides patient care to vulnerable populations in hospitals and clinics.”
Business groups also lauded the budget.
“This action coupled with the tax bill signed earlier this week represents an historic moment that instantly makes Michigan more attractive to job creation and business growth -especially to our members who have been making products and providing services for years,” said Steward Sandstrom, president and CEO of the Kalamazoo Regional Chamber of Commerce.
The Michigan Environmental Council praised keeping funding for public transit at current year levels as Snyder recommended. “This news is a relief to the thousands of Michiganders across the state who depend on public transportation to get to work,” said Tim Fischer of the council.
But the Michigan Education Association blasted the move (see separate story). And the liberal We Are the People Coalition went after Rep. Andrea LaFontaine (R-Richmond), who voted no on the original House version of the K-12 budget, but yes Thursday on the final bill.
“After flip-flopping on this critical vote, Rep. LaFontaine will have some tough questions to answer from parents back in her home district,” coalition spokesperson Zack Pohl said in a statement.
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
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