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LANSING – Michigan lawmakers and Gov. Gretchen Whitmer have an agreement on how to allocate billions in taxpayer dollars toward K-12 schools and higher education, local government pensions and much more.
But the late-night compromise on the approximately $76 billion budget deal does not include a huge deliverable championed by both Republican legislative leaders and the Democratic governor: tax cuts for people or businesses.
House and Senate lawmakers approved the two-bill package after 2:30 a.m. Friday morning. The measures passed both chambers with overwhelming bipartisan support.
In addition to specific funding priorities, the deal includes up to $7 billion that could go toward funding potentially sweeping tax cuts, but the prospect of shepherding a multibillion-dollar deal through Lansing at the height of what is expected to be a raucous election cycle remains unknown.
"I am proud that the budget will grow Michigan’s economy and workforce, make record investments in every student and classroom, protect public health and public safety, expand mental health resources, and empower working families and communities," Whitmer said in a statement.
Legislative Republicans echoed those comments while pointing to the billions of dollars still available to deliver tax cuts at some point later this year.
“Between the looming recession and inflation hitting families hard, we absolutely had to nail this budget plan to give everyone in Michigan the support they need,” said House Speaker Jason Wentworth, R-Farwell.
“I’m glad we were all able to take our time and work together across party lines to build a real plan and move Michigan forward. Our budget prioritizes school funding, road repairs, health care access, job training, and even sets aside billions for tax relief."
Lawmakers generally try to get a budget deal done by the end of June, but state law requires the budget be enacted by the end of the financial year in September.
The budget represents a nearly $7 billion increase over last year's $70 billion final deal. That increase reflects the ongoing impact of healthy state coffers buoyed substantially by billions in federal pandemic relief. That's how legislators and the administrators were able to set aside billions of dollars to backfill possible tax cuts later this year.
Since the start of the year, Republican legislative leaders and the governor agreed in theory that the influx of COVID-19 funds paved the way to reducing some state taxes. But the two sides couldn't find a way to make that work in practice.
"Michiganders are struggling. And for many, it’s not just a matter of sacrificing a summer vacation, baseball game or amusement park visit. They’re worried about feeding their families or having enough gas to get to work and keep their job," tweeted Sen. Aric Nesbitt, R-Lawton, earlier Thursday.
"People need real help. But unfortunately, (Whitmer) and Democrats stood in the way of our every attempt to lower taxes, leaving Michiganders on their own for a long, painful summer."
Whitmer repeatedly called for eliminating taxes on pension income, expanding the Earned Income Tax Credit and other similar actions, while Republican legislative leaders said it was time to roll back the personal income tax rate and expand other tax credits. The governor vetoed several measures GOP legislators sent to her desk, arguing some either went too far financially or would not take effect quickly enough to help people.
Both the administration and lawmakers agreed they wanted to do something to reduce gas prices, but couldn't agree on whether that should come through temporary cuts to the state gas tax or sales tax collected on fuel purchases.
What's in the budget?
The final budget deal includes more than $19.6 billion for the School Aid Fund, bolstered by a $450 increase in per-pupil funding. That bumps up per-pupil funding to $9,150 per student. That's in addition to $2 billion for institutions of higher education and $530 million for community colleges.
The budget dedicates $1.92 billion to "special education resources," a substantial shift in how the state has approached funding in this area. Lawmakers dedicated $575 million to programs aimed at recruiting and retaining teachers. One creates $175 million in grants for school support staff to become certified teachers. Others set aside millions to pay student teachers, create a new pathway to teacher certification for veterans and boost funding for Teach For America.
Another $625 million is slated for "mental health services," including $150 million to be allocated to school districts on a per-student basis. The money is intended to help hire support staff, create student screening tools, facilitate consultations with behavioral health experts and more.
More than $168 million goes toward school safety and infrastructure — the money funds grants to help schools in any number of possible programs, from coordinating safety plans with law enforcement to providing training on responsible gun ownership. An additional $25 million is intended for school resource officers.
Outside of schools, there's $6 billion dedicated to rebuilding local roads, repairing bridges, updating airports and other infrastructure projects. The plan also sends $2.65 billion toward paying down public pension debt, a key priority for House Appropriations Committee Chairman Thomas Albert, R-Lowell.
The budget plan adds $180 million to the state's rainy day fund while dedicating $130 million for public safety and community policing, according to House Republicans.
By nature of the deal being a compromise, there are still components both GOP legislative leaders and the governor do not like. The governor attempted to remove language that aims to restrict the usage of documentation showing whether someone is vaccinated against COVID-19. Last year, she blasted lawmakers for putting similar language in the budget, arguing it created a fair amount of confusion for local health departments scrambling to combat the pandemic.
Ultimately, lawmakers again decided to leave that language in the budget.
The Senate, meanwhile, tried to create a new program that allowed departments and agencies to hire outside lawyers to do legal work that is supposed to be done by the attorney general. Recently, the Legislature intervened in an abortion-related lawsuit filed by Planned Parenthood of Michigan after Attorney General Dana Nessel said she wouldn't use her office's time or resources on the case.
But the governor and specific lawmakers tasked with finding a deal agreed to nix the provision.
After approving the budget, lawmakers decamp from Lansing for the summer break. Although there are a handful of work days scheduled over the next two months, regular legislative sessions resume in September.
The budget heads next to Whitmer for signature and is expected to take effect Oct. 1.
Contact Dave Boucher: firstname.lastname@example.org or 313-938-4591. Follow him on Twitter @Dave_Boucher1.
This article originally appeared on Detroit Free Press: Whitmer, lawmakers agree to $76B budget deal — but not tax cuts yet