May 10, 2024 | This Week in Government: House Adds Claw Backs, Selfridge Funding

The House moved all 18 of its budget bills, plus two omnibus bills and an accompanying natural resources bill, on Wednesday to send its $80.9 billion budget recommendation to the Senate.

“When we started out the House budget, we decided that we wanted to focus on local, and we wanted to focus on the people,” House Appropriations Chair Rep. Angela Witwer (D-Delta Township) said. “This isn’t about politics. This is taking care of the people in Michigan.”

Witwer said she was especially proud of the money that the House was putting toward housing, water infrastructure, local revenue sharing, and the Public Safety Trust Fund.

Overall, Republicans voted no on most of the budgets, with just a single bill getting a yes vote from a GOP member. Minority Leader Matt Hall (R-Richland Township) said the spending plan generally lacked guardrails for any of the funding.

“There should be more stringent requirement on these programs,” he said. “You should be able to audit them. They should have more teeth to do it.”

The budget should focus on return on investment, Hall said, and cut out grants for special projects, which he called “earmark corruption.”

In the coming weeks, the Legislature intends to adopt the finalized budget. The Consensus Revenue Estimating Conference is scheduled for May 17, after which the Legislature will set new targets for their budgets, and negotiations between the House and the Senate will begin.

“There are plenty of points of difference,” Witwer said. “Starting with revenue sharing, going on to the Public Safety Trust Fund, how much will be invested in water, how much will be invested in housing.”

The Legislature is on pace to have a final version of the budget passed by the end of June, Witwer said.

Although the final budget isn’t likely to be ready for viewing until shortly before the Legislature votes on it, Witwer said Democrats have worked to be transparent about the process.

“We gave transparency to the grants,” she said. “Since I’ve started, and I’ve been in the minority most of my time here … we’ve had maybe an hour, maybe two hours to look at the budgets. So, this is nothing new.”

The Democratic caucus is asking for more time to review the budget this year, though, Witwer said.

“We tried to do that this time with the House budget,” she said. “We put it out much earlier than we have in the past, and we are making sure that everyone signs on to whatever they’re responsible for. And whenever we talk to our members, we make sure that it’s a member priority if we’re doing something.”

In total, House Democrats adopted 15 amendments to budget bills on Wednesday. House Republicans offered more than 200 amendments, but none were adopted.

One of the amendments the House adopted gives the Michigan Economic Development Corporation authority to claw back grants given to Global Link International and the Clare Health Campus during the last fiscal year. The amendment was made to HB 5516, the General Government Budget.

Global Link International, a nonprofit operated by Fay Beydoun, was awarded $20 million during the fiscal year 2022-23. The nonprofit is currently the subject of an investigation by the Department of the Attorney General over potential misuse of funds.

The second claw back is related to a $25 million no-bid grant awarded to a nonprofit headed by David Coker, a former staffer for former House Speaker Jason Wentworth, which is also being investigated by the attorney general.

“It would be to lapse the money that has not yet been distributed under the MEDC and to take back the money that was already distributed,” said Amber McCann, press secretary for House Speaker Joe Tate (D-Detroit).

The Senate passed a supplemental appropriations package last week to achieve similar goals. SB 749 directs the State Budget Office to let the remaining unspent grant funds from two projects lapse with a change to boilerplate language.

Both Democrats and Republicans put forward amendments to add funding for Selfridge Air National Guard Base. The Republican amendment, put forward by Rep. Tom Kuhn (R-Troy), would have increased the fund for the base to $10 million. The Democratic amendment,

sponsored by Rep. Denise Mentzer (D-Mt. Clemens), added $2.5 million in funding for the base for a total of about $10 million.

Gov. Gretchen Whitmer originally proposed $10 million for Selfridge in the 2024-25 budget. The House recommended $7.5 million in its budget recommendation and then adopted the Mentzer amendment.

“I support this amendment, but it’s the wrong way to do the right thing,” Kuhn said about the process. “Next year, let’s just Selfridge without all the unnecessary drama.”

Other amendments added $10 million for the Department of State Police Safety Academy, $3.5 million for firefighter health screening, and $2.5 million for first responder PTSD program. The House budget also provided $15 million for the GoingPro Program, $450,000 for Starr Commonwealth in Calhoun County to use toward an economic development program for 16-24-year-olds (editor’s note: the amount and purpose for Starr was corrected), an addition $5 million for the Neighborhood Talent Concentration program and $2 million for the Center for Social Enterprise Development and small business support.

Nearly every budget bill passed along party lines without Republican support. Rep. William Bruck (R-Erie) was the lone Republican to vote for HB 5509, the budget for the Department of Military and Veterans Affairs.

The omnibus shell bills that passed Wednesday were HB 5507 for education and HB 5500 for departments and agencies. The House also passed SB 817 for Natural Resources Trust Fund projects.

Individual budget bills that passed were for the Department of Environment, Great Lakes and Energy (HB 5499), the Department of Lifelong Education, Advancement and Potential (HB 5501), the Department of Labor and Economic Opportunity (HB 5502), School Aid (HB 5503), community colleges (HB 5504), higher education (HB 5505), the Department of Education (HB 5506), the Department of Corrections (HB 5508), the Department of State Police (HB 5510), the Department of Agriculture and Rural Development (HB 5511), the Department of Natural Resources (HB 5512), the Department of Insurance and Financial Services (HB 5513), the Department of Licensing and Regulatory Affairs (HB 5514), judiciary (HB 5515), the Department of Transportation (HB 5517) and the Department of Health and Human Services (HB 5556).

LIVONIA – During a tour of Livonia Technical Career Center, Gov. Gretchen Whitmer pushed her proposal to make community college tuition-free for every high school graduate, emphasizing her desire to make technical school more accessible for every student.

Whitmer is continuing to push key recommendations in her budget proposal as the House and Senate are currently working on their own, which have strayed from the governor’s original proposal.

Whitmer said she is still negotiating with the Legislature to get this investment in their plans, knowing that paths to skills are “crucial in order to be able to make a good living in this economy.”

On the pre-K side of the guarantee, the House and Senate are instead looking to increase the financial threshold for families to be able to secure free pre-K through the Great Start Readiness program. There is concern that current preschools do not have the capacity to address education for all younger students across the state. However, Whitmer said the state has been able to pay down a lot of its debt and build up a rainy-day fund, putting the government in a strong financial position to make this happen for families.

“We’ve got the ability to provide this for all 4-year-olds across Michigan, and parents who don’t currently have this opportunity are telling us they expect us to do this and to get it done,” Whitmer said. “That’s why I’ll continue to push, and I’ll work with the Legislature to try to get over the finish line.”

Sen. Dayna Polehanki (D-Livonia), who is the vice chair of the Senate Appropriations PreK-12 Subcommittee, said she wants to meet somewhere in the middle.

She said she recently voted yes on the subcommittee’s budget that would make a family of four that makes $120,000 or less eligible for free preschool instead of the overarching free pre-K proposal.

As the governor took a trip through the school, touring the world-class robotics facilities and auto repair garages, she asked students attending the career center what was next for them after high school, many of them looking at skill certificates and community college.

Many were planning on attending Schoolcraft College, where the technical center is starting a partnership to create an early middle college where students can get a two-year degree with zero cost to them.

After the tour, Whitmer spoke to the crowd of parents, career center administrators, and students about the “simple promise with huge implications” she wants to make to the students and parents utilizing the Livonia center.

“Every Michigan student deserves a free public education from pre-K through community college,” Whitmer said in her speech. “Pre-K for all is not just the right thing to do to set our youngest Michiganders up for success and a lifetime of health and wealth determined by those early years, but also it saves their parents about $10,000 a year on child care, and most importantly gets our kids ready.”

This concept comes from her budget plan for the upcoming fiscal year which includes the Michigan Guarantee, a proposal that centers around educational access, claiming every Michigander should have the guarantee of free education from pre-K to community college.

This proposal is part of her Sixty by 30 initiative, which would result in 60% of working-age adults in Michigan having postsecondary education by 2030.

When it comes to free community college, Whitmer has said the tuition-free plan would save students an average of $4,000 to earn an associate degree or skills certificate at a community college as well as secure a higher-paying job.

At the event, Whitmer also said a student who gets a degree after high school will, on average, receive $23,000 more in yearly salary, citing that investment in education proves to result in more return to the state.

Whitmer said if passed, Michigan would be the first state in the nation to offer pre-K and community college tuition-free.

Whitmer also said she wants to change the definition of the K-12 landscape to the pre-K through 14 education path, while also saying she would love to push it further to pre-K through 16 but wanted to work one step at a time.

“Not everyone needs or should go to a four-year traditional school in order to make it, but every person needs to have a path beyond high school,” Whitmer said.

Layla Marshat, a Livonia Technical Career Center student, said that with her senior year coming up, she has been worrying about the cost of college for her family. She said that because of this community college initiative, she would have the opportunity to take classes without worrying.

“This initiative isn’t just about me,” Marshat said. “It’s about all of us, and it’s about getting the chance to pursue their dreams, regardless of their financial situations. It’s about breaking down barriers and opening doors.”

Polehanki (D-Livonia) said she wants to expand the Michigan Achievement Scholarship while also getting “as close as we can” to the pre-K through 14 paths Whitmer has introduced.

Members of the Senate took a step toward the creation of a sales and use tax exemption for enterprise data centers Thursday through a bipartisan vote on an amended bill to establish the proposed credit.

Besides creating the new exemption for enterprise data centers, the bill would extend to 2050 a credit created in 2015 that exempts data center equipment from the sales and use tax. That tax break is currently scheduled to expire after 2035.

The Senate voted 24-11 on SB 237, which was amended prior to the vote to include a Dec. 31, 2029, sunset provision for the Michigan Strategic Fund Board not to issue any new certificates for the new tax exemption for enterprise data centers after that date.

As passed, the S-11 substitute version of the bill includes provisions requiring energy efficiency certification for data centers as well as, where applicable, requiring facilities to hook up to municipal water systems to prevent excessive water use.

Enterprise data centers are defined as a facility housing data center equipment with at least $250 million in capital investment and maintaining at least 30 new jobs in Michigan with an annual wage equal to 150% or more of the prosperity region median wage.

There have been multiple unsuccessful attempts in recent years at an enterprise data center tax exemption.

Sen. Rosemary Bayer (D-Keego Harbor) spoke in opposition to the bill, raising concerns over ensuring the protection of the state’s natural resources and keeping in line with state policy in transitioning to renewable energy.

Nationally, she said data centers now make up about 2% of the country’s energy use and have led to expensive electrical grid upgrades and depletion of local aquifers.

“We can put some regulation in place to make sure that these super large data centers just have some specific regulation to make sure that we do not overuse our waters, that we do move to the green energy that we’ve already committed to and that we continue to protect our residents’ ability to pay their utility bills for their use, not for the use of commercial enterprises,” Bayer said.

Two other Democrats, Sen. Erika Geiss of Taylor and Sen. Sue Shink of Northfield Township, voted against SB 237. Republicans voting no were Sen. Thomas Albert of Lowell, Sen. Jon Bumstead of North Muskegon, Sen. Michele Hoitenga of Manton, Sen. Jonathan Lindsey of Coldwater, Sen. Ed McBroom of Vulcan, Senate Minority Leader Aric Nesbitt of Porter Township, Sen. Jim Runestad of White Lake and Sen. Lana Theis of Brighton.

Bill sponsor Sen. Kevin Hertel (D-Saint Clair Shores) told reporters he believes the bill, as passed, would make Michigan an attractive place for companies to locate data centers while not having negative environmental impacts.

“If you look at the language that we put in this legislation, it is the most environmentally friendly language of any state in the country that has done this so far,” Hertel said.

He said about 30 other states have some form of data center tax credit in place.

“These are happening in areas all around us today, and that’s why I think it’s important that as Michigan, we get on board,” Hertel said.

The senator was asked about the argument that when operational, data centers do not feature large numbers of jobs. Hertel said there are huge numbers of construction jobs for the building of data centers, which take a long time to construct. Regular upgrades to the facilities, such as to their servers, also would lead to good-paying jobs for those who do that work.

As passed, the bill also allows tax exemptions for facilities through 2050 if they meet certain criteria and through 2065 if located on brownfield sites.

More than two dozen Republican floor amendments were rejected Thursday by the Senate Democratic majority as it began wading through budget bills, passing nine of its 15 budgets.

Republicans made attempts to shift or add funding to several policy priorities.

Right out of the gate, funding for a policy proposal pushed recently by Senate Minority Leader Aric Nesbitt (R-Porter Township) was offered in the first amendment of the day for SB 762, the Department of Military and Veterans Affairs budget.

Nesbitt’s amendment contained $8 million to fund Michigan National Guard members for deployment to the nation’s southern border.

“The failed … policies of the Biden administration have created a crisis of historic proportion, making every state a border state,” Nesbitt said. “The states have a duty to step up with a federal government that has failed to protect our residents.”

Sen. Kevin Hertel (D-Saint Clair Shores) countered that a border solution is needed on the federal level, accusing Republicans of not offering solutions but exploiting the issue for political gain.

“This amendment that is proposed by my colleagues on the other side of the aisle is just more about political theater than our state or our national security,” Hertel said. “This decision should be made by our general and by military experts, not politicians who have an agenda.”

Hertel also said more than 400 National Guard members have been deployed to the southern border in the past four years and that his understanding is that another deployment is scheduled for this fall.

The amendment failed along party lines, as did two other GOP amendments before SB 762 passed 20-16 along party lines.

Sen. Thomas Albert (R-Lowell) introduced an amendment for SB 756, the Department of Corrections budget, that would have increased the state’s 401(k) contribution for corrections officers rather than move them into the state police retirement system as Democrats are recommending be done.

“This plan to implement a pension would increase risk over the long run for both Michigan taxpayers and for the troopers that are already part of the Michigan State Police Retirement System,” Albert said. “My amendment presents an alternative that I believe is more financially viable.”

Sen. John Cherry (D-Flint) called for the amendment to be rejected, saying corrections officers have told him that the best way to address recruitment and retention is to restore retirement benefits.

“What we’ve seen across the country is that … removing these retirement benefits from corrections officers have been a disaster,” Cherry said.

The Albert amendment failed, along with two other amendments, prior to the 20-16 party-line vote to pass SB 756.

Also passing along party lines Thursday were the budgets for the Department of Lifelong Education, Advancement and Potential (SB 748); higher education (SB 752); the judiciary (SB 757); Department of State Police (SB 763); Department of Environment, Great Lakes and Energy (SB 768); and Department of Education (SB 769).

By a 22-14 vote, SB 761, the Department of Transportation budget, was passed with two Republican votes. The GOP members backing the MDOT budget were Sen. Jon Bumstead of North Muskegon and Sen. John Damoose of Harbor Springs.

The remaining Senate budgets to be voted on, which are expected to take place next Tuesday, are for school aid (SB 751); community colleges (SB 753); general government (SB 760); Department of Labor and Economic Opportunity (SB 766) and Department of Health and Human Services (SB 767). A fiscal year 2023-24 supplemental appropriations bill, SB 749, is also waiting on final passage.

The Detroit Regional Chamber announced its agenda for this year’s Mackinac Policy Conference in a Wednesday press conference, which will include a U.S. Senate debate and feature leaders in business, politics, and higher education on various panels.

Detroit Regional Chamber CEO Sandy Baruah and conference chair Suzanne Shank explained that this year’s conference theme, “Bridging the Future Together” was created in hopes of engaging Michigan’s leaders in “mutual respect.”

“We wanted a theme around collaboration and working together to move Michigan,” said Shank, who is CEO and co-founder of Siebert Williams Shank & Co., LLC. “So, our theme is centered on inspiring radical collaboration.”

The conference, which takes place from May 28 to May 31, will include the first debate between candidates for Michigan’s open U.S. Senate seat. Baruah said that the three highest-polling candidates from either party were invited to participate, and the chamber is confirming attendance in the coming weeks.

U.S. Rep. Elissa Slotkin, actor Hill Harper and businessman Nasser Beydoun were the three Democratic candidates invited to the debate. On the Republican side, former U.S. Reps. Mike Rogers and Justin Amash and businessman Sandy Pensler were invited.

“The format will allow both parties to be onstage at the same time,” Baruah said. “We think this is a unique format that really pushes candidates to a broad audience just as opposed to speaking to their base voters. So, it does create a different dynamic, and we’re very excited about that.”

A new speaker was also announced for the conference: U.S. Secretary of Commerce Gina Raimondo, who will participate in a conversation about her tenure in President Joe Biden’s administration.

“We’re looking forward to having a one-on-one discussion with her about her extraordinary career and her leadership of the Department of Commerce,” Shank said. “And, her leading role in the development of many of the policies in the administration, we think, have been critical to our businesses, including the Infrastructure, Investment and Jobs Act.”

The conference will also feature Gov. Gretchen Whitmer, legislative leadership from both parties, members of Michigan’s congressional delegation, presidents of the state’s flagship public universities, U.S. Chamber of Commerce CEO Suzanne Clark, Detroit Mayor Mike Duggan and Rocket Companies founder Dan Gilbert as speakers, among others.

Full conference schedules and a speaker’s list can be found on the Mackinac Policy Conference website.