Michigan Legislature starts passing budget plans

LANSING, Mich. (AP) -- Lawmakers began setting the table Wednesday for how to spend $49 billion in the next Michigan budget, with big disputes to be resolved next month over expanding Medicaid, boosting road maintenance, giving tax credits for movie-making and laying off public-assistance workers.

Two large spending bills — one for education and another for the rest of state government — won approval almost entirely along party lines in the Republican-led House. The GOP-controlled Senate, meanwhile, passed 7 of its 17 budget bills.

As expected, the House decided against allocating an additional $1.2 billion for the worsening transportation system because legislators have not agreed to tax and fee increases to pay for it. A budget bill approved 59-51 also does not include $1.3 billion for making 320,000 more residents eligible for Medicaid health insurance in 2014, despite a push from Republican Gov. Rick Snyder and Democrats that it be included.

"We actually save money in Michigan every year by expanding Medicaid. We've miscast this as a political question rather than as a math question," said Rep. Jeff Irwin, D-Ann Arbor.

But Republicans countered that their spending plan is prudent and careful.

"It is based in reality. It doesn't spend money we don't have. It doesn't make promises that we cannot keep. It pays down debt, protecting our future generations and putting Michigan in position to continue our renaissance," said Rep. Al Pscholka, R-Stevensville.

After the Senate finishes approving its budget bills Thursday and next week, the debate will play out in House-Senate conference committees in May. Legislators want to wrap up by June 1, four months before the fiscal year begins.

Perhaps the biggest unknown moving forward is Medicaid expansion, because — if Snyder cannot bring enough majority Republicans into his corner — about $100 million in savings he wants to use for other spending will be rejected throughout the budget.

Under the contentious federal health care law, the U.S. government would cover the entire cost of new Medicaid enrollees for three years, phasing down to 90 percent in 2020 and after. The state initially would save $200 million a year because more people receiving health care with state aid would instead be covered with federal money. Snyder proposes tucking away half the savings, so Michigan would not owe anything for covering more people until 2035.

The Senate's Medicaid budget so far remains in a committee, the only 2013-14 spending bill that has not reached the floor.

Some Republicans might be open to adding more recipients if changes are made to the Medicaid system — so needy participants pick up more of the cost their care, for example, and are incentivized to be healthier or are tested for illegal drug use.

Some other budget fights are brewing over:

— Tax credits for the film industry, which cannot exceed $50 million now. Snyder hopes to set aside $25 million for the program — half this year's allocation — while the House voted to eliminate it entirely and spend the money on road maintenance. The governor has struggled to get support for $1.2 billion in increased fuel taxes and license plate fees for road and bridge upkeep, and some in the GOP are looking to cut other spending to fix the road-funding problem. The House, for instance, also took $25 million from an economic-development fund and earmarked it toward transportation.

Senate Majority Leader Randy Richardville, a Monroe Republican, said he would like to see at least $50 million in film incentives, which is "just enough to keep the pipeline alive."

— State aid for K-12 schools, universities and community colleges. They would get an overall 2 percent funding increase, though legislators disagree on how to divide funding among schools that meet performance benchmarks, "best practices" or technology improvements. Democrats say education spending is not going up enough regardless. The GOP counters the increase is adequate.

Snyder wants put 16,000 more 4-year-olds in a preschool program for kids at risk of failing. The Senate agreed, while the House added fewer enrollees. The governor and Senate — when it votes on the higher education budget Thursday — would require colleges to hold tuition and fee increases to less than 4 percent or lose part of their state aid. The House limited the hikes to 3 percent.

— State workers. The House voted to cut more than 1,000 jobs, or nearly 9 percent, from the Michigan agency that handles welfare, food stamps and foster care partly because of smaller caseloads. Snyder and the Senate would trim fewer positions. Democrats warned the budget could hamper Michigan's ability to comply with a legal settlement mandating that it improve conditions for children needing foster care and protective services.

"Some of you have gall to say you actually care about children," House Minority Leader Tim Greimel, an Auburn Hills Democrat, told Republicans.

Also Wednesday, both legislative chambers agreed to hike some hunting and fishing license fees to help the state hire 41 more conservation officers and improve parks, trails and other natural resources. They would be the first significant increases since 1997.

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Associated Press writer Alanna Durkin in Lansing contributed to this report.

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House Bill 4228: http://1.usa.gov/ZNGELZ

House Bill 4328: http://1.usa.gov/15HTtyA

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Email David Eggert at deggert(at)ap.org and follow him at http://twitter.com/DavidEggert00