Banking & Finance and Government

State approves $56.5B budget

July 17, 2017
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Governor Rick Snyder signed a $56.5 billion budget Friday that will spend more on at-risk students and Flint's water crisis, concluding a bumpier-than-usual process with the GOP-led Legislature that ended with a spending blueprint well before the fiscal year starts in October.

Overall spending will rise 2 percent. Major facets include boosting funding by nearly a third for school districts with economically disadvantaged students and spending hundreds of millions more to address billions in unfunded pension liabilities as part of a deal to coax more newly hired school employees into a 401(k)-only retirement benefit.

“We're making investments in smart things,” the Republican governor said at the Kent Intermediate School District Career Tech Center, which was chosen to host the bill-signing event so Snyder and other state officials could emphasize a focus in the budget on better preparing students for careers, including in the trades.

State-specific spending on transportation will increase by 8 percent, as a 2015 road-funding plan that includes fuel tax and vehicle fee hikes continues to be phased in. Snyder also secured a $35 million deposit into a statewide infrastructure fund that was created in 2016 in the wake of the lead contamination of Flint's tap water.

"We'll come back to the legislators this fall with more specific recommendations," Snyder said when asked how the infrastructure money will be used. A commission he established has recommended that the state spend $750 million over five years solely to help communities assess their drinking water and sewer assets. It is a portion of what the commission projected is a staggering $4 billion annual shortfall in spending on transportation, water and communications infrastructure over the next 20 years.

Senate Appropriations Chairman Dave Hildenbrand, R-Lowell, who attended the ceremony with other GOP lawmakers, mentioned how the route to enacting the budget was “unique” this year. Republican legislative leaders froze out Snyder for a time while pushing to close the teacher pension system to new hires. They settled instead on keeping a pension option intact but moved to make it less attractive and the 401(k)-only benefit more generous.

“It was a little more of a challenge than in the past, but we got it done,” Hildenbrand said.

Highlights include:

  • $48 million more for Flint's water crisis, bringing the total state commitment to nearly $300 million since the man-made disaster was discovered less than two years ago.
  • Base per-pupil funding increases ranging from $60 to $120, or 0.7 to 1.6 percent. The lowest-funded districts would get more, while higher-funded ones would get a lesser boost.
  • A new $25 payment to districts for each high school student, to reflect that it costs more to educate ninth- to 12th-graders than younger children.
  • Increased funding ranging from 1.6 percent to 2.7 percent at 15 state universities. State operations aid for the University of Michigan-Ann Arbor, Michigan State, Wayne State, Western Michigan and Eastern Michigan would remain below what it was seven years ago before a big cut.
  • Training 150 new state troopers. It is unknown how much the State Police ranks will grow because of expected retirements and other attrition.
  • Training 10 new conservation officers and two support staff to focus on Great Lakes enforcement.
  • A $150 million deposit into savings.

Snyder exercised his line-item veto power to nix nearly $6.4 million for 19 projects. The largest include an online math program, a pediatric traumatic brain injury project, an opioid-related study and the reconstruction of a playground and a pavilion at two state parks.

He also struck $150,000 to train grocers and others to prepare, clean and sanitize equipment used to serve draft beer. A 2016 law expanded the type of businesses that can let customers fill growlers for consumption off-site.

Snyder said in a letter to legislators that while some items may “serve valid public policy goals,” he vetoed items that were largely duplicative, interfered with programs already in place or had an “unclear purpose.” He also declared unenforceable a GOP-written provision to financially penalize K-12 districts that sign union contracts that ignore laws.

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