Whitmer prepares 1st budget: 'There are no easy answers'

By David Eggert
Associated Press

LANSING, Mich. (AP) — Gov. Gretchen Whitmer wants to spend billions more to fix the roads and boost a lagging education system.

But as the Democrat prepares to deliver her first budget proposal to the Republican-led Legislature, she faces fiscal pressures that complicate her task.

She notes that the general fund — Michigan’s second-biggest account — has not grown much from 20 years ago. Inflation-adjusted revenue, in fact, is down during that period after a series of tax cuts, and the fund is being increasingly tapped to bolster the budget for road and bridge repairs.

Whitmer, who will present her plan Tuesday, recently told a conference of township officials that she also must account for a number of lawsuits that were filed against her predecessor’s administration over the Flint water crisis and other issues.

“I tell you all of this not to complain, but so that you have an understanding of the pressures that we are under as we are creating this budget,” she said. “There are no easy answers.”

The budget presentation is Whitmer’s opportunity to detail just how she plans to “fix the damn roads” and pay for priorities like letting high school graduates attend community college for free. What to look for:


Whitmer has long been building her case for a multibillion-dollar infrastructure package. She contends that Michigan’s pothole-ridden roadways are forcing drivers to pay hundreds of dollars a year on vehicle repairs and a failure to act now would ensure that road conditions deteriorate further. The rub is how to finance it. She campaigned on seeking unspecified “user fees” — which typically means fuel tax or vehicle registration fee increases. A backup option could include borrowing, but that would hamstring the state in the long term, according to a new report from the nonpartisan Citizens Research Council. It is unclear to what extent, if any, Whitmer could seek to overhaul a funding formula that favors less-used rural roads.


Between 1995 and 2015, Michigan ranked last among states in the growth of K-12 education spending, according to a study by Michigan State University. Whitmer hopes to significantly boost the base per-pupil grant to districts. One option she has publicly backed is to no longer “raid” the $14.8 billion school aid account to help fund universities and community colleges, which became routine under former Republican Gov. Rick Snyder. The nonpartisan Senate Fiscal Agency reports that $908 million is being shifted from the school fund to postsecondary education this fiscal year. The obstacle for Whitmer would be plugging the corresponding hole in the general fund. Educators also will watch to see if she proposes weighting the base funding amount to factor in higher costs to teach certain students, as she outlined in her campaign.


Whitmer will detail the cost of her proposal to provide free community college to all high school graduates or a two-year, $2,500 annual scholarship to certain qualifying graduates attending a four-year college or university in the state. Adults age 25 and up without a bachelor’s or associate degree could go tuition-free to a community college, union apprenticeship or an industry certificate program. Michigan once provided a merit-based scholarship, but it was cut nearly a decade ago. Whitmer wants to grow the number of residents with a postsecondary credential.


Outside of her call for more transportation revenue, Whitmer said little specifically during her campaign about raising taxes to fund other spending priorities. She has been open to them in the past, having backed some as a legislator. It is unclear what she might propose. She spoke last year about closing unspecified “loopholes,” or targeted tax breaks. Democrats generally contend that Republicans cut taxes too much for business during their eight-year run controlling the state. Any bid to increase business taxes, however, would be resisted by GOP legislative leaders.


One area where Whitmer and lawmakers could find common ground is revisiting a 2011 law that eliminated or reduced exemptions from the taxation of pension and other retirement income. Whitmer campaigned on ending the “retirement tax,” which was included in the law that slashed business taxes. A Republican-led House committee voted overwhelmingly Thursday to repeal the so-called pension tax, endorsing a $330 million tax cut for seniors. Whitmer spokeswoman Tiffany Brown said retirees “need relief” but because of the “huge fiscal impact,” the taxation of retirement income should be discussed as part of the budget process. “We look forward to working with the Legislature on a real solution that provides relief and is fiscally responsible,” she said.


Whitmer to propose $507M boost in K-12 spending

By David Eggert
Associated Press

LANSING, Mich. (AP) — Gov. Gretchen Whitmer will propose a $507 million increase in state K-12 classroom spending in her first budget, including a $180 boost to the minimum per-student grant and substantial funding hikes to teach Michigan’s low-income, vocational and special education students, according to an overview of the plan obtained by The Associated Press.

The Democrat also was expected Tuesday to call for new “weighted” formula to factor in higher costs for certain students. The plan includes $235 million in additional base aid — a 2.5 percent bump — along with $120 million more for special education, an extra $102 million for economically disadvantaged and other at-risk students, and $50 million more for career and technical education students.

Whitmer’s administration is billing it as the largest increase in classroom spending in 18 years, if state payments for retirement costs are not counted.

Whitmer also will propose tripling the number of literacy coaches statewide from 93 to 279. She wants to drop a requirement that county-level districts split half of the cost, and instead have the state fund them entirely. The coaches have been hired in recent years to help local districts and charter schools in advance of a law that, starting next academic year, requires third-graders to be held back if they lag in reading.

The minimum per-student allowance — which most districts receive, including charters — would increase from $7, 871 to $8,051, a $180 increase. Districts at the higher end would get $8,529, or $120 more than the current $8,409 allotment.

The increased funding for at-risk and vocational students would be distributed as a multiplier on top of the base grant, while existing money would be apportioned as it is under current law. The approach reflects Whitmer’s goal to base funding on the actual cost to educate students with different needs. It’s also an initial step toward phasing in recommendations from the School Finance Research Collaborative, a group of education, business and civic leaders that contends the current system is broken.

Whitmer’s proposed boost on spending for at-risk students, to $619 million — a 20 percent increase — would be the third big spike in five years. The funds help schools provide additional supports, such as tutoring and counseling, to low-income and other disadvantaged students who account for half of Michigan’s 1.5 million students. The funding would equate to $894 per at-risk student, up from about $720.

Overall spending on career and tech education, or CTE, would more than double to $109 million. Schools now get $25 for each ninth- through 12th-grader enrolled and another $25 for each student learning “critical skills.” Districts could qualify for $487 per CTE student under Whitmer’s budget, according to a document summarizing her new proposed funding formula.

Whitmer has been emphasizing the need to better prepare people to enter the workforce.