Gov. Gretchen Whitmer rolled out her third state budget proposal Thursday morning, with $67.1 billion focusing on education, economic development, infrastructure and public health for Fiscal Year (FY) 2022.
This is a 7% increase from the current fiscal year’s $62.8 billion budget. The Whitmer administration contends increasing the budget for the time being is possible due to increased federal aid and a reduction of state expenditures last year, which have provided a better revenue outlook.
“Because of the management we had at the beginning of the pandemic, we now have an opportunity to invest in our residents. And I want to really stress — this is an opportunity that is really unparalleled in the recent history of the state,” State Budget Director David Massaron told lawmakers Thursday.
Whitmer’s FY 2022 budget is built on the COVID-19 recovery plan she announced last month, which hasn’t been approved yet by the Republican-led Legislature. The recovery supplemental for FY 2021 involves allocating the $5 billion of federal relief aid already awarded to the state to COVID-19 funding and vaccines, helping businesses, schools and frontline workers, expanding broadband internet in rural communities, providing funds to ban weapons at the Capitol and providing funds for job-training programs.
Republicans in both the House and Senate have offered up their own COVID-19 supplementals in contrast to the Democratic governor’s plan. The House passed legislation distributing funds on a quarterly basis, totaling about $3.5 billion, but would withhold billions in federal relief funds. Senate Republicans have offered a separate $2 billion recovery plan.
“I think the greatest danger in the Legislature not moving swiftly on the supplemental and not moving all of the federal dollars that have been made available is that we need to run a real COVID response to get 70% of our population inoculated as quickly as possible,” Whitmer said during a press conference with reporters on Thursday.
“Our ability to do that, though, is absolutely relying on those federal dollars getting deployed into and across the state of Michigan.”
Massaron told legislators on Thursday that revenues did not experience the steep drop in revenues that had been anticipated, allowing the state to make some significant investments while the fiscal outlook is still good. The new fiscal year begins on Oct. 1.
Last February, Whitmer recommended a $61.9 billion budget for FY 2021.
Negotiations for the current budget were complicated by the COVID-19 pandemic. Under a law signed by Whitmer after the FY 2020 budget standoff, there is a July 1 deadline for the Legislature to submit a budget plan to the governor. However, the pandemic’s impact on the economy and state finances upended that and Whitmer signed legislation suspending the early deadline. She signed the FY 2021 budget in September.
Michigan’s budget outlook has been temporarily boosted largely by one-time federal funds to the state for areas including schools, health care and unemployment benefits, but the Fiscal Year 2023 budget forecast is much tighter, Massaron said.
There are two main accounts for discretionary spending in Michigan. The School Aid Fund primarily goes to K-12 schools. The General Fund includes prisons, state parks, higher education, natural resources, the Michigan State Police, aid to local governments and more.
For FY 2022, Whitmer’s General Fund budget is $11.4 billion and the state’s School Aid Fund budget proposal is $14.7 billion.
Whitmer is proposing $203 million for school districts to increase per-pupil funding, based on a formula that aims to reduce the gap between the highest- and lowest-funded districts.
Most schools will receive a $164 per-pupil increase, while better-funded districts will receive an $82 per-pupil increase. From last fiscal year, this is a 2% and 1% increase for per-pupil funding, respectively.
There also will be a $14.1 million increase, or 2%, for students in rural areas, economically disadvantaged students, English language learners and special education students.
Community colleges and public universities will see a one-time funding increase of 2% of operations funding and an additional $70 million in one-time support if these schools implement COVID-19 testing, quarantining and contact tracing policies.
Whitmer said the budget was carefully prioritized to direct money where it is needed most in the midst of the state’s ongoing COVID-19 outbreak. One of the largest priorities addressed, as expected, is public health.
“Every forward-looking aspect of this budget … is taking place against the backdrop of a raging pandemic,” Whitmer said. “… We as public servants owe the people we represent the absolute best, and a lot of that starts with healing deep wounds opened by this virus.”
To address this, Whitmer’s administration is proposing major investments in maintaining health benefits that were extended during the pandemic, addressing systemic disparities that were highlighted by COVID-19 and investing in the physical and mental health of children and seniors.
That includes a significant investment of $360 million to permanently extend the now-temporary $2 per hour wage increase for direct care workers, as part of Whitmer’s MI Covid Recovery Plan.
The administration also recommends increased support to workers in behavioral health services, skilled nursing care and more, which will in turn support and maintain jobs in the health care sector.
Many other investments are specifically aimed at tackling health issues faced disproportionately by Michiganders of color and low-income residents. That includes $2.1 million to create a Race, Equity, Diversity and Inclusion Office within the DHHS, $8.4 million to reduce racial and economic health disparities by improving access to health services and millions more to support Michiganders who face disproportionately worse health outcomes.
State House Appropriations Committee Thomas Albert (R-Lowell), responded to Whitmer’s budget proposal in a statement that was mostly critical of her recommendations.
Albert called her proposal a “spending spree with taxpayer dollars,” adding that there will be “sharp differences” between the governor’s plan and the GOP-led Legislature’s plan.
“The governor has talked about being bipartisan, but at other times, she has shown she’ll do anything to advance her own power and political agenda … This upcoming budget process will go smoothly if the governor does the right thing and puts people ahead of politics,” Albert said.
Senate Appropriations Chair Jim Stamas (R-Midland) said he supports many of the priorities Whitmer has laid out in her budget, but “the devil is in the details on how to make it work.”
“I am very concerned about the significant growth in spending and how we will pay for it in the long term when we run out of the one-time federal funding,” Stamas said in a statement. “Despite our differences, we have many of the same budget goals, and I look forward to working with the governor and our legislative colleagues to find common ground on a responsible spending plan that helps improve our state and the lives of our people.”
Some public health highlights from Whitmer’s recommendations are:
- $360 million investment to permanently extend the $2 per hour wage increase for direct care workers
- $91 million to improve access to and consistency of behavioral health for Medicaid enrollees and those served through the child welfare system
- $38 million for a one-time nursing home COVID supplemental payment to address lost revenue from reduced bed occupancy during the pandemic
- $26.5 million for the Certified Community Behavioral Health Clinics Pilot to provide integrated behavioral health services to adults in the state
- $19.1 million for the MiChoice program expansion to provide alternatives to nursing home care by gradually increasing slots for Medicaid Home and Community Based Waiver services (increase of 1,000 slots by the end of FY22)
- $10 million one-time for the Lead Poisoning Prevention Fund to help eliminate lead poisoning in homes by injecting private capital into lead remediation efforts
- $8.4 million to reduce health disparities and expand the use of community-based navigators to enhance access to health coverage, and improve screening, data sharing and interoperability of existing data systems through the Michigan Health Information Network
- $7.4 million to expand the Infant Home Visiting program by 1,000 additional home visits to support at-risk families with infants born with substance exposure
- $6.7 million for the Sickle Cell Disease Initiative to expand treatment coverage to around 400 adults and increase outreach and clinical capacity supporting the estimated 4,000 Michigan residents living with sickle cell disease, which disproportionately affects Black people
- $5 million one-time for a pilot program to promote pre-weatherization construction, renovation, and repair services required to make single and multi-family structures eligible for energy efficiency or weatherization programs
- $3.5 million for cross enrollment expansion to improve technology and communication tools to better identify and enroll individuals needing support and services
- $2.1 million for the Race, Equity, Diversity and Inclusion Office to promote racial equity and inclusion in DHHS-administered services