LANSING – In a marked difference from the dramatic changes announced with the 2011-12 budget a year ago, Governor Rick Snyder on Thursday outlined a proposal for the 2012-13 budget that he said would build on the actions of the past 12 months and continue to help lead the state get more jobs.
Snyder, joined by Lt. Governor Brian Calley and Budget Director John Nixon, outlined a 2012-13 budget that called for $48.2 billion in spending (labeled as $47.6 billion in ongoing spending by the administration) and struck a more optimistic tone overall than his first budget. Because the state’s economy has improved, Snyder outlined a series of seemingly small budget increases, but tied most of those to what he called ongoing, continuing improvements in government operations.
The approach in the budget represented a significant continuation of Snyder’s call for restructuring government so it appears more transparently effective. In outlining the budget, Snyder also talked about hitting areas with real need, such as help to distressed, high-crime communities, but always with an eye towards accomplishing results.
Calley, in fact, said the current fiscal year’s budget has set a foundation on which to build more efficient and effective government, and he warned against “claiming victory when we’re not in the end zone.” The state must “resist the temptation to go back to the old way because the old way did not serve us well.”
And in a press conference, Snyder said the budget represents, “a major change in how government typically acts throughout the country and we’re going to lead that change.”
It was left to Nixon, however, to perhaps sum up to lawmakers the most immediate dramatic difference between the spending plan Snyder unveiled Thursday to a year ago when he outlined the most dramatic changes to state taxes in years. Compared to 2011, Nixon said, “there are no tax changes” in the new budget. The budget does anticipate the slight drop in the income tax scheduled to take place to 4.25 percent, but no other changes in taxes, Nixon told reporters.
Many of the proposals Snyder unveiled were first reported by Gongwer News Service, such as his 3 percent increase to public universities and community colleges provided they meet certain criteria, a big cut to graduate medical education, having Medicaid cover autism treatment and a $50 million investment in the state’s aging information technology system.
Reaction to the budget largely followed partisan lines. Almost in keeping with its overall modest tone, praise for the proposal was relatively modest and focused on the importance of budgeting to focus on controlling government spending.
House Speaker Jase Bolger (R-Marshall) said that while the Legislature will go over the state’s spending priorities carefully, “we must also ensure, however, that we can continue adding to the balance of our savings account and paying down more long-term debt to reduce the burden others had piled upon our children and grandchildren.”
Democrats and education supporters especially, in contrast, said Snyder’s proposal did not address critical funding needs. Their focus was mainly on education, which did see overall increases, though again those were tied to overall performance improvements.
Sen. Glenn Anderson (D-Westland), the minority vice chair of the Senate Appropriations Committee, said that after years of cutting education spending, then raising taxes on pensioners in 2011, as well as cutting revenue sharing, the state will see no relief. “His anemic efforts at reinvestment are liking using an eye dropper to fill a 50-gallon barrel,’ Anderson said.
But Snyder said for too long government has been about spending money, and in this budget he is trying to show that the state has to spend intelligently on its priorities.
Nixon said crafting the budget was hard, despite the improved economy, but not hard in the same way preparing the 2011-12 budget was. Last year the state had to make difficult choices in terms of cutting, he told reporters. This year, the requests for additional spending were so numerous it was hard to choose.
The overall budget is about 2.4 percent larger than the current budget, Snyder told reporters, and not all of that increase came from state sources. Federal funds also added to that increase.
Snyder also said he hoped the Legislature would complete its work on the budget in roughly the same time frame as last year when the budget was completed in May.
Also like last year, the budget will be presented in two omnibus bills, one for education spending – K-12, higher education and community colleges – and the second for everything else.
Asked what about the budget could help attract business to the state, Snyder said the fact that it was structurally balanced was the first point. Business people want to both know what the rules are and that there is certainty.
In that sense, the inability of the federal government to get its fiscal house ordered creates the biggest uncertainty for business, Snyder said.
The budget will also show the state no longer has a tax code like Swiss cheese, Snyder said, and that will help attract business as well. Illinois was forced to make major tax changes because its finances had gotten out of whack, he said, and many businesses are looking at leaving the state. “We have a great, simple tax structure,” he said.
In going over priorities Snyder singled out, he was asked about the decision to fund child dentistry services to be sure all kids on Medicaid had access to dental care. Snyder said that appeared to be a very important issue overall for better quality of life as well as future health.
Asked if providing a general fund payment to transportation would take the pressure off the Legislature to enact funding changes, Nixon said the change would be just for the coming fiscal year. The payment is to help the Legislature go through and make a proposal, but if it fails to do so then the state will have to recalculate its transportation funding system, he said.
The budget calls for a gross expenditure of about $49 billion and, when adjusted for interdepartmental grants and transfers, the total is $48.2 billion. All of the figures below are for what the administration considers ongoing spending.
Non-education spending accounts for an adjusted $34.6 billion in spending. Education totals $14.3 billion. Within the education component, school aid is $11.2 billion, higher education is $1.3 billion and community colleges totals $294 million.
Total general fund spending is $9.15 billion, with $7.753 billion going to non-education related expenditures. The School Aid Fund accounts for $11.184 billion, of which $398.1 million goes to community colleges and universities.
State restricted funds, including funding for roads and bridges, totals $7.3 billion.
Federal funding accounts for $18.2 billion.
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