April 28, 2023 | This Week in Government: $400 Million for Local Roads Recommended by House Subcommittee

Local roads would get $400 million for maintenance under the budget recommended by the House Appropriations Transportation Subcommittee on Thursday.

The funding was not included in Gov. Gretchen Whitmer‘s budget, presented earlier this year.

The total for the subcommittee’s 2023-24 fiscal year budget bill (HB 4309) is $6.8 billion ($525.5 million General Fund), which is $223 million more than Whitmer’s budget. The proposal is an 11%, or $675 million, increase from the current fiscal year.

“We are making critical investments in our roads, our infrastructure while showing our commitment to the future of mobility and new technology in this budget,” said Rep. Ranjeev Puri (D-Canton). “We need to think holistically about transportation and the transportation budget. I recognize the dire need for additional local roads and infrastructure funding and the need to take a deeper look at how we fund our roads.”

The subcommittee included several one-time funding projects not provided for in the executive budget. The projects include $42.5 million to support new transportation technology, $33 million for a rail grade separation program, and $15 million for the St. Mary’s River passenger ferry. The budget also includes $10 million to support enhanced mobility and $7 million for an airport revitalization program. Other projects listed are $1 million for country road association software, $5 million for a new Shared Streets/Shared Spaces grant program, and $1 million for a speed enforcement pilot project.

An additional $15 million was included for local bus operating assistance, with the subcommittee recommending $75 million in total. The subcommittee also provided $600,000 for the Detroit/Wayne County Port Authority, which is $100,000 more than included in the executive budget.

Placeholders were put in the budget for the Intermodal Capital Investments grants and the Michigan Bridge Bundling Initiative, a program designed to address failing or critical bridges needing rehabilitation or replacement. Whitmer included $160 million and $200 million for the line items, respectively. For the Intermodal Capital Investments, the subcommittee shifted $60 million from the Comprehensive Transportation Fund to support local bus operations instead.

The proposed budget deleted several reporting requirements from the boilerplate language, including a report on the use of toll credit, the requirement for the department to report final project costs to local governments, the Mackinac Bridge Report, and the rail abandonment notice, which requires the Department of Transportation notify the legislature when railroad companies file for abandonment of lines.

Republicans made several amendments seeking to retain those requirements.

“I think for transparency’s sake and reporting’s sake, reinstating some of these boilerplate items would be more transparent for Michigan residents as well as this body,” Rep. Donni Steele (R-Orion) said.

All the amendments failed, but Democrats abstained from the amendments to reinstate reporting to local governments and railroad abandonment notices.

The recommended budget now advances to the full House Appropriations Committee, which is expected to vote on next week.

Gov. Gretchen Whitmer on Wednesday signed a handful of bills as part of a deal with legislative Republicans on delivery and installation taxes and Michigan Strategic Fund Board membership.

Whitmer signed HB 4039, HB 4253, and HB 4219 (Public Acts 20, 21, and 24, respectively). The bills would exempt delivery and installation from sales and use taxes while also modifying membership on the MSF board to allow minority legislative caucuses to receive an appointment.

The bills came as part of a broader deal with Republicans as the Democratic majority sought to move a supplemental with incentives for a Ford EV plant.

HB 4045 and HB 4143 (PA 23 and PA 22) were also signed Wednesday. The bills would establish a volunteer employee criminal background check program and update sentencing guidelines related to expanded firearm background checks.

“I’m proud to work with legislators to lower costs for Michiganders and keep our communities safe. This legislation will help families keep more of their hard-earned money and ensure peace of mind when families entrust caregivers to look after their loved ones,” Whitmer said in a statement. “These bills will also keep firearms from those who should not have them and amend the organization of the Michigan Strategic Fund to give Michigan the best opportunity to continue winning economic development projects and growing our economy. These bills are examples of the progress we can make when we all work together in a bipartisan fashion to get things done for Michigan. Let’s keep up the good work.”

House Minority Leader Matt Hall (R-Richland Township) praised the signing of his bill that would add members to the MSF board.

“Adding members appointed by the Republican caucuses to Michigan Strategic Fund board will bring a greater level of accountability, transparency, and bipartisan oversight to Michigan’s economic development plans into the future,” Hall said in a statement.

Legislation that would provide immediate effect for an expansion of the Earned Income Tax Credit moved through the Senate on a bipartisan vote despite some pushback and concerns raised by Republicans over how it has taken months to pursue the matter.

Earlier this year, the Legislature passed what is now PA 4 of 2023, which included an expansion of the credit to 30% of the federal EITC. Due to proposed $180 rebate checks contained within the bill that would have blocked the implementation of an income tax rate cut for residents, Republicans declined to provide enough votes to grant immediate effect (See Gongwer Michigan Report, Feb. 28, 2023).

To address residents’ inability to claim the credit during the current tax year since it was included in a more complex tax package, Sen. Kristen McDonald Rivet (D-Bay City) introduced SB 144, which would grant immediate effect for the EITC changes in law.

Senators passed SB 144 by a 27-10 vote Thursday, with seven Republicans joining all 20 Democrats in support: Sen. Joe Bellino of Monroe, Sen. John Damoose of Harbor Springs, Sen. Mark Huizenga of Walker, Sen. Ruth Johnson of Groveland Township, Sen. Dan Lauwers of Brockway, Sen. Roger Victory of Georgetown Township and Sen. Michael Webber of Rochester Hills.

McDonald Rivet spoke of the effect of the EITC expansion not being granted immediate effect earlier this year.

“The result of that is … over a million families that qualify for the increased tax credit did not receive it this year,” McDonald Rivet said. “What this bill will do is allow for checks to go to families that qualified for the increased Earned Income Tax Credit this year.”

Bellino said he supported the bill but spoke of frustration over how long it has taken to get to a floor vote. He said there has been bipartisan support for expanding the tax credit since last year when a bill containing an EITC expansion was vetoed by the governor.

He then chalked up its failure to be enacted with immediate effect this year to political gamesmanship due to it being placed in the tax package months ago.

“I will vote yes … but the majority’s political scheming and dysfunction are having a real-world impact on the working poor,” Bellino said.

Prior to the vote, Sen. Lana Theis (R-Brighton) offered an amendment that she said “brings accountability back to the Legislature where it belongs,” adding that it would also free up about $1.5 billion in the budget for other priorities, including road maintenance, a tax cut or funding for schools.

Theis also spoke about the Strategic Outreach and Attraction Reserve fund program, which she said was passed late last year with good intentions but has been radically altered under the Democratic majority.

“In a relatively short amount of time, SOAR has been turned into a taxpayer-funded slush fund for our governor and the big corporations,” Theis said. “This had never been more evident than over the past few weeks as hundreds of millions of dollars that should be going back into the pockets of Michiganders instead end up in the hands of a company with ties to the Chinese Communist Party.”

The senator was referring to a proposed Gotion, Incorporated, battery manufacturing campus in Mecosta County. Opponents of the project have expressed national security concerns along with worries about environmental effects.

McDonald Rivet countered by saying she had spoken with Theis about economic development policies.

“However, this bill is not about our economic development policies,” McDonald Rivet said, saying it is about putting money into the pockets of lower-income residents in need.

The Michigan League for Public Policy praised the Senate vote in a statement.

“Too many families are living paycheck to paycheck, and economic uncertainty continues to grow for Michiganders as the cost of basics like groceries, clothing, and household goods remains high,” Monique Stanton, the group’s president and Chief Executive Officer, said. “Today the Senate did right by working Michiganders, voting to make sure their money gets back in their pockets right away, rather than withholding it for another year.”

The Senate Appropriations Committee moved seven of its state agency budget bills Wednesday, each being reported on party-line votes with the only large amendment adopted in the Department of Corrections budget to provide for the use of $700 million in federal pandemic monies.

Wednesday’s votes send the individual budget bills to the full Senate for consideration, with the remaining budgets expected to come before the committee next week.

“We’re still on track in terms of making sure that our budget is done in late May, early June,” Committee Chair Sen. Sarah Anthony (D-Lansing) told reporters.

The House and Senate will soon move their individual budget bills through their respective chambers and trade bills ahead of conference committees.

Republican opposition will be closely watched. Each budget will need at least six Republican votes for immediate effect, assuming all 20 Democrats vote yes. While it would be without modern precedent for a minority caucus in the Senate to deny immediate effect on annual budget bills to assure the functioning of government when the new fiscal year begins, immediate effect this year has seen Senate Republicans use it heavily as a leverage tool.

Absent immediate effect, budget bills would not take effect until 91 days after the Legislature adjourns sine die. That would mean any sine die adjournment after June 30 (it’s traditionally in late December) would put the state at risk of a shutdown or worse, starting October 1.

None of the Republican members offered an explanation Wednesday as to why they voted against any of the bills.

On Wednesday, the Department of the Treasury announced that the next Consensus Revenue Estimating Conference will be held May 19 at 9 a.m. in the House Appropriations Committee room at the Capitol. The May revenue estimating conference will be a critical step in determining budget targets.

Revenue reports from the House and Senate fiscal agencies during the past few months have shown the collections of some revenues coming in lower than expected, which could affect what lawmakers can work with in finalizing the 2023-24 budget.

“The Senate has taken a pretty conservative approach,” Anthony said. “We want to be mindful that these really are very unique times that we’re in, and so what you have seen from our subcommittee chairs that are reported out is a very measured approach. We want to make sure that we’re setting up for success well beyond our terms.”

On Wednesday, the committee adopted an amendment for the Department of Corrections budget (SB 191) from Anthony. The S-1 substitute version of the bill was adopted and reported by a 13-6 vote along party lines, with Democrats in support and Republicans opposed.

A total of $700 million in federal American Rescue Plan funds were shifted to allow for offsetting public safety expenses allowable under the federal act. The amendment also contained a technical fix in bill language dealing with the number of full-time equivalent employees within the department.

Anthony said the amendment commits the funds to “address some of the pressing needs that we have” while avoiding the possibility of the dollars being subject to clawback by the federal government.

Another amendment Wednesday was for the Department of Agriculture and Rural Development budget (SB 187). Among the provisions in the amendment was language to enable the use of federal funds for farm stress assistance programs. The amendment was adopted, and then the bill was reported along party lines by a 13-6 vote.

Five other budgets also were reported Wednesday to the full Senate, all by party-line 13-6 votes: the Department of Natural Resources (SB 188), the judiciary branch (SB 191), the Department of Licensing and Regulatory Affairs (SB 195), the Department of Insurance and Financial Services (SB 196) and the Department of Environment, Great Lakes and Energy (SB 199).

S-1 substitutes were adopted for SB 188, SB 192, SB 195, and SB 196, while an S-2 substitute was adopted for SB 199.

The budgets for School Aid (SB 173), Department of Transportation (SB 178), the Department of Education (SB 186), general government (SB 189), the Department of Health and Human Services (SB 190), Capital Outlay (SB 193), the Department of Labor and Economic Opportunity (SB 194), the Department of Military and Veterans Affairs (SB 197), the Department of State Police (SB 198), higher education (SB 200) and community colleges (SB 201) are still awaiting movement in Appropriations.

Anthony said she chose to empower her subcommittee chairs early in the process to meet with stakeholders and craft budgets within the targets she provided.

“It’s really the first step,” Anthony said of where the process now stands ahead of negotiations with the governor’s office and the House. “Now’s the fun part.”

A recently introduced bill that would allow alcohol to be sold at certain on-campus sporting events at Michigan universities made a splash last week, but it’s not clear that the legislation will get a hearing any time soon.

Rep. Graham Filler (R-St. Johns) and Sen. Sean McCann (D-Kalamazoo) are leading a bipartisan effort to allow university governing boards to apply for liquor licenses to sell alcohol at basketball, football, and hockey games.

HB 4328 and SB 247 would allow the Michigan Liquor Control Commission to issue up to three tavern licenses or three Class C liquor licenses to be used for events within the public areas of university football, basketball, and hockey stadiums. Sales would be permitted one hour before each game.

The legislation was referred to the House Regulatory Reform Committee and Senate Regulatory Affairs Committee for consideration, but Rep. Tyrone Carter, who chairs the House committee, said the bill wasn’t one he was in a hurry to move.

Carter (D-Detroit) said the bill wasn’t at the top of his list priority list for the committee as there were other reforms he felt needed to be discussed first.

“That’s one of those things that if we do nothing, it’s not a big deal. It’s not a huge need,” he said. “But we’ll wait and see what side wants what.”

Other committee priorities include eliminating sunsets on some laws and addressing legislation related to the cannabis industry.

“We’ll get all the facts, and I’m sure that if and when we do get a hearing, we’ll have people for and against. I’m sure that both sides will…advocate pretty strongly for their positions,” Carter said.

One thing Carter said the committee would need to keep in mind is balancing the potential to generate revenue with any concerns about liability and safety.

“We know that people are tailgating in the parking lots and other places before and after games, and nobody’s asking for ID. But the thing of it is, at least if it’s being done at the stadium, we at least know that to purchase it, you have to be of legal age,” Carter said.

He also said that he didn’t want to create unnecessary work for people in charge of campus safety but that lawmakers would need to be honest about what was already going on at university games.

“If you can’t control it, you have to figure out a way to manage it,” he said. “So, would that give us an opportunity to manage some things? Possibly.”

Managing what is already going on at college games is an important part of the conversation for the bill sponsors.

“Giving universities the option to serve alcohol at their sporting events is about freedom, fairness, and recognizing that the responsible consumption of alcohol inside the stadium is much safer that the binge drinking that goes on in the parking lot,” Filler said in a statement. “Multiple examples exist that show alcohol-related incidents inside stadiums declining after alcohol sales are allowed.”

Of the 14 schools in the Big Ten, eight allow alcohol sales at football games, and most have seen positive results with the decreases in the number of alcohol-related incidents, a press release from House Republicans said. After Ohio State started selling alcohol stadium-wide in 2016, university police reported a 65% decrease in alcohol-related incidents inside its sports venues.

Filler introduced similar legislation last year, but the plan did not get brought up for a vote. The current plan has bipartisan support in the House and the Senate.

Sen. Jeremy Moss (D-Southfield), chair of the Senate Regulatory Affairs Committee, could not be reached Monday to discuss the Senate bill’s chances of getting a hearing.

“To me, it’s not one of those hot-button issues because when you look at it, it really, to me, circles around capacity,” Carter said. “But there’s a lot of things that would have to go into that. And I’d have to probably reach out to some universities and have them come and testify…what would be the economic impact versus what would be some of the unintended consequences.”

Those unintended consequences could be related to what happens if a university overserves someone and other liability concerns.

“As the old saying goes…is the juice worth the squeeze, in terms of that,” Carter said.