Whitmer signs $82B Michigan budget: ‘Good stuff’ or wasteful ‘spending spree’?
- Gov. Gretchen Whitmer signs last half of $81.7B Michigan budget for fiscal year 2024
- First budget with new Democratic Legislature includes business incentives, affordable housing and more
- Plan also includes roughly $1B for one-time ‘pork’ projects
Michigan Gov. Gretchen Whitmer on Monday touted planned spending on business incentives, affordable housing and public safety as she finished signing a record $81.7 billion state budget into law.
"There's a heck of a lot of good stuff in this budget," Whitmer said in a ceremony outside the Wyandotte Fire Department, where she celebrated $15 million in new spending on fire gear equipment grants.
It’s Whitmer’s fifth time signing a budget, but her first since fellow Democrats won majorities in both the House and Senate, giving the party full control of state government for the first time in four decades.
House Minority Leader Matt Hall, R-Richland Township, blasted the budget as a "ridiculous spending spree" that Democrats used to reward "political allies with pork projects and unsustainable programs."
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Most Republicans opposed the new spending plan for the 2024 fiscal year, but Democratic leaders championed it as a bipartisan success after winning support from a combined 11 GOP legislators.
The new law includes $500 million for the state’s primary business incentive fund, nearly $300 million for a new “Make it in Michigan Fund” and $50 million for affordable housing, which Whitmer predicted will help Michigan continue “economic momentum” that includes a decades-low unemployment rate.
“We are going to be the ones to define the future of advanced manufacturing, while continuing to diversify our economy, and deliver great quality of life at a good cost of living,” Whitmer said.
Here’s what you need to know.
It's big, but HOW big?
The $57.4 billion spending bill Whitmer signed Monday is the second part of what amounts to a record $81.7 billion budget for fiscal year 2024 (the governor signed the $24.3 billion education portion earlier this month).
While lawmakers often approve additional spending throughout the year, this is easily the richest budget a Michigan governor has ever signed. It spends the equivalent of $8,138 per person in Michigan, a state of about 10 million residents.
The spending plan is $4.7 billion larger than the $77 billion budget Whitmer signed last year, which was a record at the time. And it's $24.9 billion larger than the $56.8 billion budget former Gov. Rick Snyder signed his last year in office.
In five years under Whitmer, Michigan's budget has ballooned by nearly 44 percent.
Much of that is due to a massive surge in federal funding, including a flood of COVID relief and infrastructure dollars, along with stimulus checks that fueled unexpectedly high tax collections by the state government.
The largesse won’t last: The new budget spends most of what had been a projected $9 billion state surplus, leaving only $620 million on the books. Michigan's largest chunk of discretionary federal aid — $6.5 billion from the American Rescue Plan Act — is now gone, according to the budget office.
Some savings
Despite the spending surge, Michigan’s so-called rainy day fund is as large as it’s been. With another $200 million deposit in the new budget, Michigan now has a record $2 billion in its Budget Stabilization Fund.
The deal also includes $450 million for a new rainy day fund for schools.
“We were fiscally responsible. We made sure that we put a little money to the side,” Senate Appropriations Chair Sarah Anthony, D-Lansing, said Monday.
More business incentives, economic development funding
Whitmer continues to push for new business incentive funding to try and lure employers to the state or encourage others to expand. And while there has been some heartburn among progressives, most Democrats continue to agree.
The budget includes the first in a series of annual $500 million deposits into the Strategic Outreach Attraction Reserve Fund, which the state has used to secure major projects from General Motors and Ford Motor Co., among others.
Republican legislators helped create SOAR in 2021, but many have since soured on the incentive, citing concerns over some recipients, including Gotion Inc., an American subsidiary of a Chinese firm planning a $2.3 billion electric vehicle battery factory near Big Rapids.
The new budget also includes $286.8 million for what Whitmer calls the “Make It in Michigan Competitiveness Fund,” which she says will help Michigan “leverage” federal funding opportunities for infrastructure, health and public safety projects under initiatives by Democratic President Joe Biden.
More ‘pork’ too
For the second straight year, Michigan officials added roughly $1 billion in earmarks to the budget for special projects in their districts. The no-bid grants are popular with lawmakers who celebrate “bringing home the bacon,” but the so-called pork spending has sparked transparency and oversight concerns.
The latest round of earmarks include millions of dollars for private companies who are touting plans but won’t be required to meet any job creation or economic impact goals. There's $28 million for skilled trades training programs run by union groups, who are major donors to Democrats.
There’s also nearly $10 million for pools and splash pads, $3 million for minor league baseball stadiums, $1 million for a Detroit horse-riding program, $900,000 for a cricket field in Troy, $200,000 for a disc golf course in New Buffalo, $250,000 to upgrade a boxing gym in Lansing, $600,000 to rehabilitate the old Lee Plaza apartment building in Detroit, $1.6 million for the Grand Rapids ballet and money for for-profit projects.
Acknowledging concerns about the process, Democratic leaders added some new rules.
By Jan. 15, lawmakers will have to disclose which earmarks they sponsored, and state departments will eventually be required to post that information on public websites — but not until Sept. 30. 2024, which is the end of the next fiscal year.
The budget also includes new "clawback" language designed to help the state recoup any misused or unspent funds from grant recipients who fail to comply.
Small bump for roads, infrastructure
Despite her long-running pledge to "fix the damn roads," Whitmer and legislative Democrats aren't using much of the remaining state surplus to do so.
The budget boosts total state transportation spending by about $500 million, but $118.4 million of that will be used for debt service on bonds Whitmer previously issued to borrow for state highway improvements.
The new spending plan includes $114 million extra for municipal road agencies, about $25 million extra for county road commissions and $80 million to address failing or critical bridges across the state.
There's another $181.6 million for 27 specific "critical infrastructure projects" selected by lawmakers, including $20 million each for a rail grade separation project in Trenton, construction of a US-131 business loop interchange in Kalamazoo and work on a moveable bridge in Wayne County's Grosse Ile.
The targeted spending is far short of the $2 billion in annual funding increases Whitmer had sought in 2019 under an aggressive fuel tax hike plan that was rejected by the Legislature. Republicans this year had sought $1 billion for local roads.
The fiscal year 2024 budget includes $280.5 million for local water infrastructure projects, along with another $61.4 to help replace lead plumbing in Michigan homes.
New money for affordable housing, blight fight
Whitmer and fellow Democrats also celebrated $50 million for two new programs: A Housing and Community Development Fund that will be used to support affordable housing projects, and Revitalization and Placemaking Grants intended to help improve local communities with projects such as blight removal or adding outdoor dining in downtowns.
Those appropriations are expected to continue for at least the next two years, meaning up to $150 million each for placemaking and affordable housing over three years, along with additional earmarks for several specific projects.
The housing fund can be used to finance projects for low-income housing in a downtown area or adjacent neighborhood, with allocations based on the number of persons living in poverty, economic or housing distress.
“We must build more housing to increase supply and lower costs, and we must make our cities and towns more attractive places to live and to work,” Whitmer said.
Capitol gun ban part of $5.4B for this year
In addition to funding the state government for the 2024 fiscal year, the budget bill Whitmer signed Monday includes another $5.4 billion in “supplemental” spending for the current year.
Most of that is federal funding the Biden administration sent to Michigan for a specific purpose, including $1.6 billion to expand broadband access to “unserved and underserved” areas of the state, along with $233 million for water infrastructure improvements.
But Whitmer and lawmakers are also devoting $150 million in state funds to support the potential restart of the Palisades nuclear power plant in Van Buren County, which is currently owned by Holtec International. The state spending is contingent upon additional federal support needed for the project.
The spending plan also includes $5 million to help implement Michigan Capitol Commission plans for a total weapons ban at the historic building, which houses the state Legislature and some lawmaker offices.
The commission banned openly carried guns in 2021 after armed COVID policy protests at the Capitol and is poised to ban concealed pistols soon, with installation of a new weapons detection systems slated for Aug. 8.
“We're doing this to improve the security of the building and reducing the risk of any catastrophes moving forward,” Michigan Capitol Commission Executive Director Rob Blackshaw said earlier Monday.
The current-year spending plan also includes $124.1 million in federal grant funding for five road and bridge construction projects: $73 million for replacement of the Lafayette Bascule Bridge in Bay City, $25 million for an autonomous and connected vehicle corridor in Detroit, $21.7 million for a pedestrian bridge over I-696 in Oak Park, $2.6 million for a road use charge pilot project and $1.8 million for a “smart freighter corridor” on the Blue Water International Bridge.
A ‘transformative’ education budget
Bridge Michigan wrote about the education budget earlier this month when Whitmer signed it into law, garnering praise from education officials who called it a "transformative" plan for Michigan.
The $24.3 billion plan will increase per pupil funding for K-12 schools, fund free school meals for all and expand pre-K access, among other things.
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