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Five takeaways from Gov. Rick Snyder’s final budget

By Lindsay VanHulle/Bridge Magazine • Feb 10, 2018 at 5:00 PM

Before he leaves office in January, Gov. Rick Snyder wants to fix more crumbling roads, pump more dollars into public schools and hire more state troopers and prison guards.

He’s all but certain to face challenges from Republican majorities in the Legislature, which are committed to giving tax cuts to residents in a year in which every seat in the House and Senate is up for election. Snyder’s budget priorities, announced Wednesday, will kick off months of negotiations over line-item details and high-level policy goals.

Among the big questions:

• Will lawmakers’ desire to give tax cuts dampen Snyder’s plans to speed up road construction?

• What would be the combined effect on the budget of more than $685 million in tax cuts already on the books for 2019 and proposals to sweeten Michigan’s personal income tax exemption and offer tax credits for child care and seniors?

• Will legislators support Snyder’s proposal to take some per-student funding away from online schools to boost funding for kids who attend traditional public schools (something he also tried to do last year)?

• Will lawmakers go along with a proposed $100 million investment in a major talent initiative Snyder plans to unveil this month?

• The general fund for the 2019 fiscal year, which starts Oct. 1, is flat at about $10 billion. The fund is mostly made up of income tax revenue and holds discretionary dollars that Snyder would use for many of his proposals.

Snyder, who is term limited, has warned legislators to take a long view of state finances and avoid pushing tax cuts without a plan to pay for them. Leaders of the House and Senate budget committees, however, want to restrain spending — particularly by a lame-duck governor who doesn’t have to defend his plans with voters this fall.

“Lots of them tend to want to spend a lot of money, and our job in the Legislature is to make sure that he doesn’t spend a lot of money,” said House Appropriations Chairwoman Laura Cox, R-Livonia. “He was kind of giving us a good-faith nod that he is going to consider reducing that revenue, and I think that’s really important.”

Democratic legislative leaders said that although some of Snyder’s proposals are an encouraging step, too many years of underfunding critical services have set Michigan back. “It’s seven years late and many dollars short,” Senate Minority Leader Jim Ananich, D-Flint, said in a statement.

Here are some of Snyder’s top spending priorities for the next fiscal year, by the issues.

Education

Public schools receive state dollars through a per-student funding formula, though not every school district receives the same amount of money. Schools at the lowest end receive $7,631 per student this year, while the richest school districts receive $8,289 per student.

Snyder proposes to raise that formula by $120 per student for school districts receiving the maximum funding level, while giving the districts at the bottom of the funding scale an extra $240 per student — the largest increase in 15 years. That investment would narrow the per-student funding gap between the wealthiest and poorest districts by more than half since the 2011-12 school year, he said, from $1,173 back then to $558 next year.

Vocational programs would receive up to $50 extra per student enrolled. Snyder has proposed reducing funding for cyber schools by $25 million and slashing funding for shared time programs for private-school students at public schools by $67.9 million.

Universities would receive a 2 percent bump, roughly $28.6 million increase for operations. Snyder called for public universities to restrain tuition increases to 3.8 percent, or roughly twice the projected inflation rate.

Infrastructure

Snyder would use an extra $175 million from the state’s general fund to pay for road construction, on top of $150 million already committed in the 2019 fiscal year from a Republican road-funding package adopted in 2015. That would be in addition to $632 million in new revenue from higher gas taxes and vehicle registration fees.

“In terms of ease or difficulty, I would say I would hope the most straightforward (funding proposal) is the additional investment in our roads, because I think that’s a clear message you can hear from our citizens in almost every corner of the state,” Snyder told reporters Wednesday.

But whether that happens will depend on how much revenue is left should Republican legislators succeed in raising the income tax exemption beyond what Snyder has proposed.

Democrats said Snyder’s roads proposal doesn’t go far enough.

“Despite Republicans patting themselves on the back for ‘fixing the roads’ years ago, Gov. Snyder states the obvious that we need to put more into repairing Michigan’s crumbling infrastructure,” Ananich said in a statement. “The governor is throwing pennies at our roads and schools and crossing his fingers that it makes up for his legacy of shortchanging Michiganders.”

Environment

Snyder’s “Renew Michigan Initiative” would raise $79 million each year primarily for cleanups at thousands of toxic sites across Michigan. Environmental regulators previously relied on funding from a bonding program approved by voters in 1998, but that money is now mostly gone. Snyder wants to hike Michigan’s relatively low fee on dumping at landfills, a proposal estimated to cost the average family an extra $4.75 each year.

Snyder’s budget also includes $110 million per year to help fix Michigan’s busted and rusted water and sewer systems — and to replace lead service lines in the wake of Flint’s water crisis. He wants to phase in a fee on users of public water systems that serve 1,000 or more people. The fee would start at $1 and increase by another $1 per year until capping at $5 per year in 2024.

Snyder said he considers the fees potentially the most difficult to get accomplished: “This is an election year. And that’s not just a partisan comment. I mean, I’ve heard that from legislators from both parties, (who) are somewhat concerned about having to vote for a fee increase in an election year. Well, I think it’s an important investment for our future.”

Public safety

Snyder proposed spending $6.9 million to hire 50 more Michigan State Police troopers, $3 million to pay for 80 more troopers in a state police attrition school, $1.25 million to replace outdated vehicle cameras, $9.2 million to hire and train 350 new state corrections officers to fill open positions, $1.5 million to hire 10 new conservation officers and $600,000 on campus sexual assault education and prevention.

Funding for State Police has already risen 37 percent during Snyder’s time in office, even as crime in the state has gone down, a Bridge Magazine analysis showed.

About those tax cuts

Snyder told reporters he would be open to raising the income tax beyond what he originally proposed to fix unintended consequences of federal tax changes. But how far beyond depends on what else the Legislature wants to spend money on, he said.

He cautioned against tacking on tax credits for child care or senior taxpayers, proposals that have cleared the House and Senate.

“As soon as you start bringing out something other than the personal exemption, you sort of open up the whole box of choices over the entire political spectrum and a whole range of things,” Snyder said.

“The easy way is to stick to the personal exemption, because once you go outside, not only will you get one idea, you’ll probably get 99 more to go with it.”

Senate Appropriations Chairman Dave Hildenbrand, R-Lowell, said he believes the governor is open to striking a balance between spending and cuts.

“I support the Senate-passed version at this point — that’s the one I voted for — but this is a system, a democracy, that we have to all work together to come up with a final product that we can all agree on,” Hildenbrand said. “So we’re going to start with our version and then reconcile the differences from there.”

Bridge environmental reporter Jim Malewitz contributed to this report.

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