Issue 38 September 20, 2019 FIRST BUDGETS REPORTED

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Issue 38 September 20, 2019 FIRST BUDGETS REPORTED Volume XXXI - Issue 38 September 20, 2019 FIRST BUDGETS REPORTED – With the deadline for budget approval only 10 days away, legislators began reporting budgets out of their respective Conference Committees with the School Aid/K12 budget passing both chambers yesterday. MHSA has had extensive discussions with legislative and budget leaders and our understanding is that all budgets will be sent to Governor Gretchen Whitmer next week for her consideration. We expect Governor Whitmer to use her line item veto power to veto numerous items in the proposals but retain enough of the budgets for the state to remain open at the end of the fiscal year, which is Monday, September 30th. Once the 2019-20 Fiscal Year begins October 1, the Governor and Legislature will continue budget talks, and work to pass supplementals restoring the Governor’s priorities left out of the enacted budgets. They will also aim to settle any differences on items that were vetoed by the Governor. As of Thursday, the following budgets were reported from Conference Committees and are poised for adoption next week: Michigan Department of Health and Human Services (DHHS): One of the most anticipated budgets each budget season, the DHHS budget was approved 5-0 by the Conference Committee, with one Committee member abstaining. Under Senate Bill 139, proposed funds for Fiscal Year (FY) 2019-20 is $26.4 billion, an increase from current year totals of $25.5 billion. The largest allocation within the budget itself is for Medicaid, totaling $13.7 billion for expenditures. However, for the Healthy Michigan Medicaid expansion section, a $94.5 million increase is proposed, to total $4.08 billion. For the state’s 10 prepaid inpatient health plans, the budget would equal $211.4 million, as proposed earlier this year by Governor Gretchen Whitmer and maintained by legislators. Food assistance programs and public assistance funding would see decreases. The bill also includes language that the three groups under Section 298, the state’s integration of Medicaid payments for mental and physical health pilot programs, would be allowed to have contracts with “other behavioral health service providers” (meaning they would not be restricted to partnering with the local community health groups). Michigan Department of Corrections (MDOC): Along a party line vote of 4-2, Republicans passed the MDOC budget in Conference Committee on Thursday. The budget proposal, House Bill 4231, proposes FY 2019-20 funding to total $2,026,123,400, a slight increase over current the FY allocation of $2,019,056,200. Judiciary: Conference Committee members quickly approved House Bill 4238, calling for the FY 2019- 20 Judiciary budget to total $311 million (an increase over the current FY allocation which is $304 million). Michigan Department of Education: Under House Bill 4232, Conference Committee members approved a $419.8 million budget for MDE, an increase from current year amounts of $406.1 million. The budget allocates $104.9 million to three separate funding reserves ($314.9 million total) to only be accessed when a legislative transfer request is issued by the State Budget Office and approved by the Legislature. K12/School Aid: Following a sudden announcement by House Minority Leader Christine Greig (D- Farmington Hills) early Thursday that House Democrats had brokered a deal with House Republicans on a K12/School Aid budget, the bill passed both the House and Senate and is headed to Governor Gretchen Whitmer. Under House Bill 4242, proposed monies for Fiscal Year 2019-20 total $15.2 billion (current FY allocation is $14.8 billion). The vote counts in each chamber reflected splintered philosophies and/or approaches in handling the School Aid budget among the two Democratic caucuses. Overall, the budget passed the House 91-18 and the Senate 21-17 (all Democratic Senate members voted no). The budget adds $30 million for special education and makes boilerplate changes relating to at-risk students, the shared time program, and partnership districts. Michigan Department of Transportation (MDOT): An additional $400 million in funding for roads was included in the Conference Committee passed MDOT budget on Thursday, something Governor Gretchen Whitmer has openly opposed. The budget was reported from the Committee on a 4-2 vote. Ms. Whitmer has not been a part of the Legislature’s Conference Committee negotiations and has already opined the $400 million one-time expenditure (of General Fund monies) without a long-term fix would not adequately address the actual issue of roads and infrastructure. The $400 million proposed is in addition to the already allocated $468 million (as required under the 2015 roads plan) for road repairs, Republican members noted. The budget also includes $418,200 for the Detroit/Wayne Country Port Authority and $7.7 million for transit systems. Overall, the FY 2019-20 budget totals $5.39 billion, up from the current FY allocation of $5.01 billion. Michigan Department of Insurance and Financial Services (DIFS): For FY 2019-20, Conference Committee members approved a $68.9 million DIFS budget, an increase from current FY spending of $67.9 million. The budget assumes a larger workforce to cover changes in the Insurance Code (auto no- fault) and the bill was passed 4-0, with two legislators abstaining from voting on Senate Bill 141. General Government: Overall, as proposed under Senate Bill 138, the General Government budget would total $5.26 billion for FY 2019-20, a slight cut from the $5.27 billion from current year. Within the proposal, as passed out of the Conference Committee on a 4-2 party line vote, the new citizen redistricting commission would be moved from the Michigan Department of State to the Legislature and its funding would be cut by $1.3 million to $3.36 million. Cities, villages and townships would see an increase in funding however, totaling $256.02 million, and multiple state departments would see General Fund cuts. The new Michigan Department of Labor and Economic Opportunity (LEO) would see a 13 percent cut from the current year, DHHS would see a cut of $195,000 for legal services, and the Michigan Department of Technology, Management and Budget (DTMB) would see an 18.4 percent cut. Michigan Department of Licensing and Regulatory Affairs (LARA): Governor Gretchen Whitmer got what she asked for in the LARA budget: an additional $6 million and 300 new staff positions following the passage of Proposal 1 last election year (the legalization of recreational marijuana). Conference Committee members approved the LARA budget via House Bill 4239 on a vote of 6-0 on Thursday. The overall budget totals $566.3 million for FY 2019-20, a significant increase from current FY totals of $552.3 million. Also included in the budget is $20,000 for the Bureau of Fire Services for likely upcoming regulations on firefighting foam (which contains poly and perfluoroalkyl substances (PFAS)); $600,000 for the state’s urban search and rescue team; and $520,000 in federal monies for a refugee services database within the Office for New Americans. Michigan Department of Agriculture and Rural Development (MDARD): As proposed via House Bill 4229, the MDARD budget would include $4 million for food and agriculture business expansion and attraction efforts as part of an overall budget of $112.6 million. The current FY budget is $112.2 million. ROAD FUNDING PROPOSALS INTRODUCED – With budgets (finally) beginning to move through the House and Senate, legislators, outside of leadership, are beginning to kick the tires (pun intended) on road funding ideas. On Thursday, House members introduced House Bills 4965, 4966 and 4971 with the bills calling for a reconfiguration of the current road funding/spending mechanism to ensure the most at-need roads and areas are serviced first. Under HB 4965, funds distributed to a county for construction, preservation or acquisition would be subject to the county’s asset management plan instead of the Public Act (PA) 51 of 1951 (the current road funding plan). The bill also states that any monies from the Michigan Transportation Fund (MTF) can be spent as follows: on county local roads only if the funds are matched, or for bridge construction on local county roads. Up to 75 percent of the monies from the MTF can be used for repairs as well, but in cases of emergency, that percentage can be exceeded. As written in HB 4966, if an asset management plan is approved, distributed funds under the MTF would be required to be spent either as dictated by said plan or in an emergency. The final bill in the package, HB 4971 seeks to significantly alter portions of PA 51 and reinforce sections of PA 325 of 2018 as it relates to the soon-to-be implemented Transportation Asset Management Council (TAMC). The TAMC goes into effect October 1 of 2020 and would be required to annually review asset management plans submitted by local road agencies. The bills remain in the House Transportation Committee. WHITMER ORDERS RECYCLING DIRECTIVE – State departments will be required to implement a recycling program to track the amount each department is recycling, according to Executive Directive 2019-16 issued by Governor Gretchen Whitmer on Tuesday. If agency leaders do not believe a program is feasible, they will need to receive sign-off from their department directors. The Directive does include exemptions for certain buildings including if the facility is small, serves as livable quarters, is a utility structure, or does not have access to nearby recycling services. The Directive comes shortly after $1.23 million in recycling grants were awarded to Lower Peninsula communities and continues the attempt to reach the Whitmer Administration’s goal of increasing Michigan’s recycling rates to match or move past other states’ rates.
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