Here are the winners and the losers in Michigan’s new budget

After months of negotiations, twists, stalemates and unprecedented moves, Michigan Gov. Gretchen Whitmer finalized the state budget this week just in time to avoid the first government shutdown in a decade. 

The first-term Democratic governor line-item vetoed nearly $1 billion of the $59.9 billion budget and shifted $625 million within state departments in a dramatic restructuring to better reflect her priorities. The Republican-led Legislature passed the budgets to Whitmer without her input after negotiations broke down last month. 

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Michiganders are left with a budget that advocates say will help make drinking water safer, will make preschool more reliable for low-income parents and will ease the transition to Medicaid work rules, but will also likely lead to fewer local government services and tuition hikes for college students.  

Whitmer has indicated she hopes to negotiate a supplemental spending bill to mete out the $947 million left over after her vetoes. In the meantime, here’s what advocates say were the biggest wins and losses in the new budget for their fields and what that means for the public.

Environment

Environmental advocates took home big victories in the budget, including $120 million in one-time funding for drinking water projects spanning PFAS research and remediation, Lead and Copper Rule implementation and more. 

Sean Hammond, policy director for the Michigan Environmental Council, said his group was pleased with a “healthy investment” of $60 million in funding for transit and passenger rail, which they hope will reduce reliance on cars and help ease air pollution and climate change. 

One place policymakers missed the mark, he said: dropping the governor’s proposed $60 million for filtered drinking water stations in schools and $1.4 million for finding pipelines like Line 5 that carry potentially hazardous substances across waterways.  

Nick Dodge of the Michigan League of Conservation Voters agreed: “With thousands of kids returning to school while negotiations are going on, to see that [funding for drinking water stations] zeroed out of the budget, we were disappointed in that.”

K-12 schools

While the down-to-the-wire budget decision was a problem for public schools — which started their fiscal years in July without knowing how much they had to work with — K-12 schools dodged some bullets in the final budget signed Monday, said Casandra Ulbrich, president of the State Board of Education.

The Legislature’s plan, which Whitmer vetoed, to require the administration seek legislative approval every quarter before receiving appropriated funds would have had a big impact particularly on early childhood education, Ulbrich said. 

Many early childhood education centers that primarily serve low-income adults who can’t afford childcare haven’t been enrolling kids since July. That’s because they didn’t know whether there would be funding, she said, leaving parents scrambling. 

“Imagine if you now have to do that four times a year because you don’t know on a quarterly basis whether or not you’re going to have the same funding from the state? That’s a problem.”

She also said the $128 million of vetoes in the School Aid Budget were a good move: Because many of the vetoed items were earmarks for specific education vendors, opening those services up to bidders will ensure “you’re getting the best bang for your buck and you’re getting exactly what you need,” she said. 

Whitmer also cut $35 million for a per-pupil funding increase for charter schools, which charter school advocates lambasted Tuesday. 

“Governor Whitmer wielded her veto pen as a vicious weapon against kids in Detroit and the public school teachers who dedicate their lives to educate them,” Beth DeShone, executive director of Great Lakes Education Project, said in a statement.

Higher education 

Michigan’s state higher education budget was left with just a 0.5 percent increase in operations funding. Because the increase doesn’t account for inflation, that’s underinvestment that represents “a larger than normal step backwards” for a state that already ranks 44th in per-student spending in higher education, said Daniel Hurley, CEO of the Michigan Association of State Universities.

That will likely mean higher tuition for Michigan college students; less state money for universities means schools must charge students more to make up the difference. Hurley said “it’s remarkably disappointing,” particularly because more educated states on average have a higher per capita income. 

“It’s frustrating that it’s not being recognized by state lawmakers,” Hurley said. “There’s a huge and bizarre disconnect between the state economic prosperity that comes from a highly educated workforce and all that that brings, and an unwillingness by the state legislature to not invest in that. It’s just puzzling.”

Students at the state’s private colleges are also likely to suffer under the new budget, said Robert LeFevre, whose organization Michigan Independent Colleges and Universities represents institutions such as Albion and Kalamazoo colleges. Whitmer vetoed $38 million worth of grants to nearly 17,000 low-income students that receive $2,400 annually through the program. It’s already been included in those students’ financial aid packages, so they’ll have to find a new way to bridge the gap in funding on their own if the budget remains as is. 

The governor included it in her first budget proposal and the House and Senate both agreed, so “we didn’t think it was a point of contention,” LeFevre said. “It’s devastating.”

One positive change the budget brought, Hurley said: An additional $6.7 million moved from higher education operating funds for the Michigan Indian Tuition Waiver program, which makes tuition free for Native American students.

“We at least appreciate the recognition by the state that it has shortchanged the universities” over the last several years by not fully funding the program, Hurley said. 

Health care

Whitmer used the Administrative Board to move an additional $6.1 million of funding to publicize the new Medicaid work rules, and another $9 million to implement those rules, which the administration hopes will make it easier for Michigan Medicaid recipients to transition to the GOP-led requirements. 

Chris Mitchell, executive vice president of public affairs for the Michigan Health and Hospital Association, said Whitmer “followed through on her commitment to maintaining coverage for the Healthy Michigan plan population,” but her vetoes of other funding could make it harder for Michiganders to get adequate health care. 

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The big ones, he said, were her choices to cut $16.6 million in funding for rural hospitals and $129.5 million in increases in hospital Medicaid rates.  

The cut in funding for rural hospitals “was a huge disappointment that put mothers and babies and patients in need of care right in the middle of this political debate,” Mitchell said, and stopping the increase in Medicaid rates increases the gap between the costs hospitals swallow to provide care for lower-income Michiganders and the amount they’re getting reimbursed for the state. That could eventually limit Medicaid recipients’ access to care, he said. 

Whitmer also struck about $1 million in grants for the Autism Alliance of Michigan, which helps people on the autism spectrum navigate the education, medicine and insurance systems using a program called the Navigator.

“Most people don't really have a good idea of how governments are constructed,” former Lt. Gov. Brian Calley, who has been an advocate for autism services and who has a daughter with autism, told Bridge Wednesday. “That’s why the Navigator is so important. It’s my hope they find a way to reverse it.”

Local government 

The Michigan Association of Counties is sounding the alarm about county services  being affected by what they say is around $60 million of cuts to funding supporting county-level programs.

A state program that reimburses counties for housing felons that would otherwise be sent to prisons, funding for sheriff departments’ secondary road patrols, money for veterans services and funds for county-level foster care were all cut by Whitmer’s veto pen Monday night. 

One of the hardest-hit programs, said MAC spokesman Derek Melot, is one in which the state pays counties housing state-owned lands that don’t pay taxes called Payment In Lieu of Taxes (PILT), which he says will result in a loss of $27 million. 

“Michigan residents rely on their county governments for daily, vital baseline services such as public safety and public health,” Melot told Bridge via email. “In about two-thirds of our counties, property tax revenues account for the majority of general fund dollars. When the state fails to meet its PILT responsibilities, it is in essence not paying its local property tax bill, which then means the particular county has fewer dollars to cover baseline services.”

Business

The fact that Michigan leaders avoided a shutdown is a boon for business, Calley, now the president of the Small Business Association of Michigan, told Bridge. 

“The overall operating environment is important to us, which means having a stable and predictable situation for Michigan government holds a lot of value to us,” Calley said, adding that the dramatic back-and-forth of this budget process nevertheless hurt that confidence.

Whitmer’s Michigan Reconnect and Opportunity Scholarship proposals, which would provide funding for Michiganders to pursue skilled trades training or some college education didn’t make it into the final budget. 

“These are both programs over time that will make a big difference,” Calley said. “I wouldn’t expect any kind of drastic and immediate change, but not having these sorts of things in place that help people prepare for what they need in the future limit your opportunity for individuals to thrive and for businesses to grow and reach their full potential.”

Rich Studley, CEO of the Michigan Chamber of Commerce, and Anna Heaton of Business Leaders for Michigan said they’d hoped a roads funding solution would have made it into the budget. Multiple business groups have said getting Michigan’s crumbling roads and bridges into shape (and raising the billions necessary to do so) is crucial to support business growth. 

Whitmer and legislative leaders reached a stalemate on roads funding last month — the governor wanted $2.5 billion annually for infrastructure repairs and the two sides couldn’t agree on how or whether to raise additional funding. 

“The roads won’t fix themselves so the problem won’t go away,” Studley said. “I imagine that will be the next opportunity for the Michigan Chamber to try to be helpful to the governor and the legislative leaders moving forward on that key issue.”