Advocacy News — Feb. 8, 2024
Governor Whitmer presented her Fiscal Year 2025 budget recommendation to a joint session of the House and Senate Appropriations committees Feb. 7. In total, the proposed budget tallies in at $80.7 billion — $1 billion less than the current budget and leaving just $19 million on the balance sheet.
Why it matters: The budget is the executive branch’s blueprint for key policy priorities and initiatives for the coming fiscal year. This proposal contains a few cuts and some significant spending on new programs, such as cost-free preschool for all four-year-olds and tuition-free community college for all graduating high school students. It also contains ongoing funding for a handful of programs long supported by the Michigan Chamber, such as the Going PRO Talent Fund and the contaminated site cleanup program.
The Governor’s outlined investment priorities include:
- Workforce Development – $20 million increase in one-time funding to the state’s existing Going PRO Talent Fund, which makes awards to employers to assist in training, developing and retaining current and newly hired employees. This represents a 36% increase in capacity to the program, which has been proven as a successful workforce development tool. Total recommended FY25 investment: $74.8 million.
- Contaminated Site Cleanup – Continued $80 million investment in contaminated site cleanup across the state so brownfield land sites can be put back into use and developed.
- Rainy Day Fund – $100 million deposit into the state’s Budget Stabilization Fund. These resources are restricted by statute and can only be used in the event of a significant economic downturn to support vital government functions. With this investment, the state will have a robust savings account with a balance of $2.2 billion.
- Cost-Free Preschool – $63 million to expand cost-free childcare to more of Michigan’s four-year-olds. Approximately 6,800 new children would be added to the governor’s goal of cost-free childcare to all four-year-olds. This is an expansion of an already existing program serving this age group at or below 300% of poverty level. Affordable, accessible childcare is a key issue for employers and working parents alike – but we will need to learn more about this proposal before weighing in.
- Tuition-Free Community College – $30 million increase funding for the Michigan Achievement Scholarship, ensuring every Michigan high school graduate can receive an associate degree or skilled certificate tuition-free at a community college. It is estimated that more than 18,000 students could save up to $4,820 on tuition each year under this expanded program. Post-secondary education and training can be an important factor in addressing the talent crunch and filling the jobs of today and tomorrow. However, we will need to see more details and gather member input before we can take a formal position.
- Permitting – An additional $4.4 million to increase staffing to ensure permits are more promptly evaluated by the Department of Environment, Great, Lakes, and Energy (EGLE).
- Tipping Fee Increase – $80 million in new revenue through an increase in the tipping fee for state landfills – moving the surcharge from 36 cents to $5 per ton – a 1,288% increase. This added fee represents a tremendous burden to industry and could increase the cost of trash pickup for Michigan households and businesses.
- Economic Development –
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- Research and Development (R&D) Tax Credit – $100 million for an R&D tax credit to spur innovation and attract more knowledge-based jobs to Michigan. The MI Chamber has been supportive of efforts to establish an R&D tax credit structure to help advance our state’s competitiveness and ensure we are no longer an outlier without such a tool. We will continue to engage in those policy discussions.
- SOAR – $500 million into the Strategic Outreach and Attraction Reserve Fund (SOAR) to attract new manufacturers and industries to Michigan. The fund has a current balance of over $1 billion. It is unclear how this money might be invested.
- Innovation Fund – $60 million investment to establish an Innovation Fund to invest in certain scalable startups that is not specific to any industry. Currently, there are few details available about this program.
- Locations and Expansions – $20 million investment in the Department of Labor and Economic Opportunity (LEO) for specialized economic assistance to businesses locating to or expanding in Michigan. Few details are available about this program at this time.
Keep In Mind: There were fund shifts within the governor’s budget proposal that may see vigorous debate, including a $670 million shift from teacher pension debt payments toward other school-related expenses. There was also $150 million in proposed new funding on top of $700 million of the last bond payment to improve Michigan’s roads and bridges. At the same time, there still is no longer-term solution to fund the repayment of those bonds or cover additional critical infrastructure and road and bridge needs.
What’s Next: As the budget process evolves, the Legislature will hold committee hearings to dive into the Governor’s proposal as well as propose their own state funding solutions. The Michigan Chamber will be watching to push for fiscally responsible budgeting practices as well as investments that advance a growing economy and stronger Michigan for all.
Learn More: Copies and more details of the Governor’s recommended budget are available HERE. If you have any specific budget questions or feedback, please reach out to Becky Burtka at bburtka@michamber.com.