Michigan budget tussle is about more than increasing gas tax

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LANSING, Mich. (AP) — What is expected to be a protracted tussle over Gov. Gretchen Whitmer’s first budget proposal is about much more than her call to hike fuel taxes.

A resolution, which appears months away, also hinges on the Democratic governor and Republican lawmakers settling big differences over education funding. The dispute is not just centered on how much more schools, universities and community colleges should get in state aid but also which accounts and taxes should fund the payments.

Whitmer has structured her spending plan so if $2.5 billion is pumped into road repairs and maintenance with higher taxes — a big if — the state would end what she calls two major “shell games.”

School aid revenue that has helped to fund universities in all but one of the last 10 years would again go to K-12 districts, as it had for decades before. And the state would no longer shift income tax revenue to roads — a major component of 2015 transportation-funding laws — freeing it up to fund universities and other priorities.

The move would help provide a $527 million boost in the school budget, a 3.5% increase. But it has not been embraced by the GOP-controlled Senate, where the Appropriations Committee this past week backed a $396 million, or 2.7%, boost.

“Michigan right now lags the rest of the country when it comes to outcomes for our kids and education,” Whitmer said, contending that her budget would make the largest investment in education in a generation. “Being 50th is not acceptable. It should scare the heck out of everyone in this state. And it completely correlates with the lack of growth in funding for education.”

The panel also did not support Whitmer’s proposal to begin a new “weighted” formula to account for extra costs to educate certain students. It instead favored a larger bump in ongoing base aid but smaller increases for special education and at-risk spending, which could only be used for one-time capital spending.

How the differences are resolved will affect the finances of every traditional district and charter school in the state.

Under Whitmer’s plan, for example, Detroit’s district would get $9.1 million more of a boost in ongoing operational funding than under the Senate bill while receiving $3.1 million less for one-time costs such as computers — $5.8 million more overall than in the Senate plan, according to a comparison of the proposals . Whitmer’s net funding increases would be higher in the vast majority of districts, both big and small, including Grand Rapids ($1.3 million more than the Senate), Ann Arbor ($2.9 million more) and Traverse City ($175,000 more).

“When we compare the direct financial benefit to our traditional public school districts, you can see a notable difference in the two budgets,” said Democratic Sen. Rosemary Bayer of Beverly Hill. “With this (Senate) budget, less money goes directly to teaching our children.”

The primary reason, she said, is because Republicans did not include the governor’s call to give extra funding for each low-income, special ed and vocational student as a percentage-based weight added to the base per-pupil amount. Whitmer’s approach is grounded in research backed by a coalition of education and business leaders who say the actual cost to teach a student should be the decisive factor in funding allocations.

Low-income and other “at-risk,” or disadvantaged, students account for half of Michigan’s 1.5 million students, so decisions related to that part of state aid are significant for schools’ bottom lines.

Sen. Wayne Schmidt, a Traverse City Republican who chairs the K-12 budget subcommittee, said his first goal is ensuring that all districts get a sizable increase in the base grant. Whitmer proposed a boost ranging between $120 and $180 per student. The Senate plan would provide a higher $135 to $270 increase — the largest in 18 years.

“We’re allowing the locals to have more money to decide what they need to do,” Schmidt said, noting that his budget would boost at-risk and special ed funding, albeit much less than Whitmer wants and in a different way.

The biggest disparity between her budget and the Senate plan, he said, is “we’re dealing with today’s revenues” while the governor is relying on passage of 45-cents-a-gallon gasoline and diesel tax hikes that GOP legislative leaders have rejected.

“I can’t work on a budget on things that don’t exist,” Schmidt said.

Senate Republicans have not ruled out a more modest tax increase to fix the roads but are not planning to propose an alternative until the summer. With Whitmer promising to not sign a spending plan unless the road-funding issue is resolved, budget talks appear likely to stretch over the summer months and potentially into the fall. The fiscal year starts Oct. 1.

The Senate and governor also are at odds over higher education funding and spending in many state departments. She outlined an overall 3% boost for universities and community colleges, double the Senate’s 1.5% increase.

The GOP-led House could unveil its education- and road-spending plans in coming weeks.

Senate Majority Leader Mike Shirkey, a Clarklake Republican, said the Senate’s proposal has general fund reductions in many budgets “so that we can reprioritize to squeeze some money out for roads and other priorities.”

2 COMMENTS

  1. Our state of Michigan has seen a recent huge increase in the price of fees, registrations, taxes on select income like senior’s pensions, fuel, and other areas. Roads are not any better on the local area. State services and government employees seems to increase in number and wages.
    Savings on prisons, and incarceration, have been transferred to another service. Property taxes have gone up for several years as the value of our homes and business properties increase to normal value.
    Here’s the rub; I believe that there must be a better way to balance the books while providing the state’s needs. When the Democrats take over power, they always seem to start with more taxes, more revenue, and more government. When the Republicans take power, the first thing they do is cut taxes and try to reduce the size of government. Later on, they realize the errors and try to slip in higher fees and charges for various types of services. Neither one gets it right. Time for a real change in the way our state funds its self across the board.

    There’s a few other states that have gotten a huge increase in population, business growth, and building the next generation of infrastructure to allow for even more growth. For example, Texas and Florida states continue to grow and develop faster than most others. What’s the difference in revenue? It starts with taxes. No income tax, but a sales tax of 6.25%, + 1 – 2% for county wide mass transit or the like, plus property taxes that fluctuate with local vote approval for bonds of important services like hospitals and schools.

    We can’t compete with this. Our elected officials will not entertain the idea of what we need to do. I’m one that has tried to get it into the mind of these good folks, but got shunned for even trying to make it a discussion. If you want to continue with this same thing as the last many generations of back and forth between the two parties, keep voting for it. Whatever you do, and I mean this with all sincerity, if you want to create real change your voice helps when you speak up. Just daily complaints about it to the neighbors at the local venues and not the one’s that makes the laws is like not voting. It’s time for us all to tell them what they need to get done. When they blow us off, say goodbye and vote that person out for a better. Not party’s next in line as the newest version of the same bs.
    I’m going to give you an example of one we worked with to get help with needed insurance reform, Rep. Brad Poquette, of Berrien county. He got it when we talked with him about this and other topics. Rep. Aaron Miller, the next district east of Brad, was a similar leader during his first two terms of elections. I fear the backslidden party lines have the ability to drag a good person down to toe the line with these folks who works hard initially, but get sucked down into the gutter of politics the longer they are in office.
    Time to wake them up and do what they need to do. Your voice matters. Time to use it to get a chance at a great state.

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