Whitmer proposes $80.7B budget focused on education, curbing some costs

Lansing — Gov. Gretchen Whitmer’s $80.7 billion proposed budget centers around boosting K-12 school spending, expanding taxpayer-financed preschool and community college to anyone who wants it and creating state subsidies and policies to alleviate large-cost expenses such as housing, medication, vehicles or utilities.

The Democratic governor’s spending plan for the coming year, presented Wednesday to the House and Senate appropriations committees, came in below the current $82 billion state budget, which benefited from the tail end of COVID-era surpluses.

"This budget is sort of a return to normal," State Budget Director Jen Flood said.

If adopted by state lawmakers, Whitmer's proposed budget blueprint would leave $19 million on the balance sheet, a stark departure from the multibillion-dollar surpluses the state juggled in recent years.

Whitmer's marquee proposals include making two years of community college free to any new high school graduate and expanding taxpayer-funded preschool programs to be free for any 4-year-old, regardless of a family's income. Those two programs would cost state taxpayers about $93.5 million more in the fiscal year that begins Oct. 1.

"Let’s work together to make life more affordable by lowering costs on the biggest expenses in people’s budgets," Whitmer told lawmakers Wednesday in Lansing, where Democrats control the Senate and are expected to regain control of the House — currently split 54-54 — after special elections in April.

Lawmakers, in the coming months, will begin their own budgeting process in the hopes of adopting by July 1 a spending plan for the 2024-25 fiscal year starting Oct. 1.

Republicans slammed the budget plan Wednesday as "public relations talking points" meant to disguise the fact that Michigan's budget is approaching a structural deficit — with a $19 million margin — so soon after the state boasted a $9 billion surplus.

"With cost pressures increasing annually and so little set aside after last year’s spending spree, it seems like it’s only a matter of time before spending officially outpaces revenues if we do not change course," Senate Republican Leader Aric Nesbitt, R-Porter Township, and Sen. Jon Bumstead, R-North Muskegon, said in a Wednesday joint statement.

Whitmer also used her annual budget presentation Wednesday to announce that eligible low-income families will start receiving tax rebate checks in the mail next week as a result of the Legislature's voting last year to increase the Earned Income Tax Credit. As many as 700,000 Michigan households are expected to get a refund check averaging $550.

More:Whitmer plan shifts $670M in teacher retirement money to education budget

Proposed education funding hike

The proposed increase in K-12 aid would represent a 2.5% increase, or about $241 more, to $9,849 per pupil in the base funding for each student from the year prior. There also would be corresponding spending increases for weighted measures for at-risk students, who cost more to educate.

The governor’s plan to lift any income caps on who can get taxpayer-funded preschool for 4-year-olds, if approved by the Legislature, would require this year about $63.5 million more in funding for a total appropriation of $650 million. The additional $63.5 million is expected to finance an additional 6,800 4-year-old children.

Whitmer proposed the creation of the Michigan Guarantee, a $30 million outlay that would make community college for two years free to high school graduates to pursue an associate's degree. She suggested the scholarship program could help attract families to Michigan and help students obtain skills for in-demand jobs.

"This would be a transformational opportunity for our students," Whitmer said.

The K-12 Alliance, a group made up of education leaders in Southeast Michigan and Genesee County, celebrated the additional funding for schools and said recent spending increases in schools are working and should not only continue but be built up.

“The reality is that investments recently made in our public schools across Michigan are beginning to bring the increased, individualized support to our students that educators have requested for decades," said Robert McCann, executive director of the K-12 Alliance.

The governor's Growing Michigan Together Council said in its report that there had been "attainment gains in recent years," but Michigan is "lagging behind" other states. Fewer than 33% of Michigan students are proficient in reading or math in the fourth and eighth grade, the council's report noted.

But the charter school group, Michigan Association of Public School Academies, criticized the spending plan's 20% cut to students in online charter schools.

"Cutting public education funding for only one segment of students ― those who tend to be most at-risk — makes no sense," said Dan Quisenberry, MAPSA president.

Boosts for child care, school meals, tutoring

The budget includes some childcare increases, including $4 million for continued funding of child care networks, $18 million for transportation and $250,000 for evaluations. Another element would set aside $60 million to provide free child care for child care workers.

Whitmer also proposed $4.8 million to improve child care inspection timeliness, $37.9 million for a 10% increase to child care provider rates and $35 million to start new classrooms.

The spending plan includes a $59 million budget earmark for a program Whitmer announced at January's State of the State address that would allow caregivers to claim an up-to-$5,000 tax credit on money spent to care for a loved one.

Taxpayer-funded breakfast and lunch for students would continue after the first year of implementation, with the money allocated for the project coming in at around $200 million.

The governor also proposed spending $150 million for another year of the state's MI Kids Back on Track program to help educators get kids experiencing pandemic-era learning loss back up to grade level in their education. Another $50 million would go toward before and after school programs, and more than $180 million would be targeted for professional development for literacy education.

The budget proposes about $175 million to support teacher development, including mentorships, fellowships and student-teacher stipends.

Whitmer also outlined what she called “the $670 million question” — a proposal to divert $670 million from teacher health care retirement spending to be used for an increase in funding at-risk students; higher special education aid; and a shift of mental health, school safety, and breakfast and lunch options out of the state's School Aid Fund.

The State Budget Office said the state could afford to redirect money earmarked for public school retiree health to other education programs because the long-term liability is almost fully funded.

The plan, which drew immediate criticism from Republican lawmakers and the conservative West Michigan Policy Forum, would likely require a change in state law.

Environment, child welfare, economic development

The Whitmer budget plan also would boost funding for certain environmental programs.

It includes about $80 million for contaminated site cleanup, $40 million for water infrastructure improvement, $25 million for an expansion of electric vehicle charging stations, $4.4 million to improve the environmental permitting process and $20 million to begin transitioning the state's vehicle fleet to electric or hydrogen fuel-powered vehicles.

The Department of Natural Resources would see about $17.2 million set aside for state park improvements.

The spending blueprint also boosts spending for welfare programs. The budget plan for the Department of Health and Human Services targets about $108 million for summer food assistance programs, $15 million for assistance paying energy bills, $11.9 million for juvenile justice programs and facilities, and $10 million toward advancing the state toward an exit of federal oversight of Michigan's child welfare system.

Public health priorities in the HHS budget included $193 million to expand the state's community behavioral health clinics, $7.3 million for a crisis helpline for individuals experiencing mental health issues and $35 million to put in place recommendations of the Racial Disparities Task Force.

The proposed spending plan for the state’s Department of Labor and Economic Opportunity contains $500 million for the Strategic Outreach and Attraction Reserve fund thanks to a diversion of corporate income tax revenue toward the controversial job creation program; $60 million for the state's startup investment program, the Michigan Innovation Fund; $25 million to prepare sites in Michigan for real estate development; and $20 million for business attraction and community revitalization.

The LEO budget includes $20 million for Michigan marketing, a program that builds off an ongoing $15 million for the Pure Michigan tourism campaign. Another $4 million would go toward the expansion of goals identified by the Growing Michigan Together Council, which is seeking ways to grow the state's population.

The LEO budget included money for people whose employment is hurt by the rise of electric vehicles. About $10 million would be set aside to create a “transition fund” for individuals, communities or businesses whose work is disrupted during the transition from internal combustion engines to electric vehicles or form the decarbonization of the energy industry in general.

Whitmer's EV transition proposal drew criticism Wednesday from one conservative political group.

“Auto workers should be outraged to learn that their governor plans to use their tax money against them in the upcoming year,” Abby Mitch, executive director of Michigan Rising Action, said in a statement. “Their government is putting them out of work and they know it. That’s why the governor tossed $10 million at a symbolic pilot program for the thousands of autoworkers permanently put out of a job.”

The state’s licensing and regulatory agency would receive $258.3 million for indigent defense costs and $33.6 million for the Cannabis Regulatory Agency, a $3.4 million increase from the current fiscal year.

Whitmer's budget blueprint includes $7 million for implementation of the state’s clean energy legislation that she signed into law in November, as well as $1.9 million for nursing home surveys and investigations.

Cash for financial disclosures, transportation

About $1.1 million was set aside for the Secretary of State Jocelyn Benson's office to set up a financial disclosure reporting system that will be required of lawmakers, the governor, attorney general and secretary of state starting in April.

Another $18.8 million would fund the continued implementation of early voting rights, and $5.7 million would be shifted toward election security measures.

The transportation budget includes a 2% increase or $397.6 million more for Michigan roads and bridges, about half of which would be financed with federal funds.

The increase would come in addition to the state’s last $700 million tranche of about $3.5 billion in the Rebuilding Michigan program, a bonding program started in 2020 that has helped to finance large rebuilding projects across the state. The Department of Treasury budget includes about $25 million for a rebate program Whitmer announced earlier to support new vehicle purchases.

More:Gov. Gretchen Whitmer signs new state budget, but roads weren't a big winner

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