Senate Cuts Back Whitmer Spending In Preparation For Tax Cut Discussion

Roughly 10% of the spending Gov. Gretchen Whitmer wanted in next year’s health and human services budget was cut out of a Senate plan that moved out of subcommittee Wednesday afternoon as Republicans lay the groundwork for a tax cut conversation later this spring.

As proposed, the Governor set aside $6.45 billion from the General Fund in the Fiscal Year (FY) 2023 Department of Health and Human Services (DHHS) spending plan, 18.5% higher than this year.

But the Senate DHHS Appropriation Subcommittee moved SB 828, which didn’t include $325 million to build a new psychiatric hospital to replace a couple southeast Michigan facilities. It didn’t have $10 million for gun violence prevention, $40 million for home repair and public assistance grants and $50 million for food banks, among other first-time or one-time expenditures that Whitmer wanted.

Led by Chair Rick Outman (R-Six Lakes), the Senate put a priority on seniors and foster children, but kept the spending on Whitmer’s proposed new programs at a minimum as it prepares to negotiate with the Governor on a final 2023 budget plan. 

For the Senate, in particular, the longer play is reducing business taxes, whether that’s expanding the personal property tax repeal or reducing the corporate income tax. 

Addressing the long-term liability of some local government’s pension obligations is also a priority, but such goals require large amounts of money.

Making room for tax cuts means clearing out most of the Governor’s one-time spending wish list, which is what this and many other Senate budgets is about.

“A lot of it is that this is the start of a process. We’re going through it. We’re going to negotiate with the House, so this was just the beginning of a conversation that we’ll continue to have,” Outman said.

The panel’s three Democratic members voted against moving the DHHS budget to the full appropriations committee. All of the Republicans did vote for it.

Sen. Sylvia Santana (D-Detroit) said she wanted to see more money put in to address homelessness and those people at-risk. In all, $600 million is not going to people who have underlying health disparities, among other priorities and “that’s a lot to leave on the table,” she said.

Asked if she felt Wednesday’s DHHS budget is more about a negotiating tactic than a real statement on the Senate Republicans’ priorities in DHHS, Santana said:

“You know we have to do the dance. That’s how it goes,” she said. “That’s probably not a good thing for me to say, but I don’t care. It’s the reality. We’re heading into an election year so everything is negotiable.”

The Senate spending plan replaced around $30 million in federal money with state money so restrictions on abortions in Planned Parenthood could be tied into the budget. The House has tried this tactic in the past when former Rep. Tom Hooker made it the entire basis for him voting no on state budgets.

The federal Title V and Title X dollars for maternal health doesn’t allow for restrictions on abortions. To change that, the Republicans passed a budget that turned down the federal money and replaced it with state dollars so strings could be attached to it. 

Up to now, this maneuver has not been successful in getting it into a final budget. Santana said only $1 million of the $30 million in question goes to Planned Parenthood. In general, she said she didn’t feel this was a good use of state dollars.

“We’re saying we’re not going to prioritize helping to support moms who want to have children in the budget by helping them make their dates,” she said. “We need to make sure we’re prioritizing those things, as well.”

Outman put a priority on a program that allows older Medicaid patients to stay home longer as opposed to being moved to nursing homes. It’s called Program of All-includes Care for the Elderly.

“That’s a big one for me,” Outman said. “I wish it had been there for me and my grandmother. Maybe it would have kept her in her home a little longer.”

The Senate’s budget also signed off on a $41 million Medicaid fee-for-service dental option, more money for foster kids and higher Medicaid primary care rates.

With federal funding included, the Governor wanted $33.4 billion put into the DHHS budget for the coming fiscal year. The Senate’s plan came in at $32.5 billion, about 2% less than the budget.

A stripped-down Labor and Economic Opportunity (LEO) FY 2023 budget that wipes out nearly $550 million in mostly employee improvement and economic improvement programs the Governor wanted moved out of subcommittee Wednesday afternoon on a partisan 3-1 vote.

A $200 million regional empowerment program and $230 million in university grants for medical education, health sciences and electric vehicles were the biggest items left out of the Senate’s $1.77 billion budget, a 60% cut from the current year budget.

Chair Ken Horn (R-Frankenmuth) said the budget is “clearly the beginning of a process” and some of the items “I would like to see restored.” But he was given a low budget target to work from so he funded what he could — $40 million for the Pure Michigan marketing program and $500,000 for Focus: Hope, among the highlights.

“There are high-level conversations with the administration that need to take place,” Horn said. “Until then, it’s my intent to follow the lead of my chair.”

With roughly $3 billion in leftover federal money and excess state revenue still in play, the Democratic governor and Republican legislative leadership are looking for that sweet spot involving tax relief, new program funding and, potentially, long-term debt reduction.

Whether programs like Helmets to Hardhats, Tri-Share Child Care and MI Local Heroes will be paid for as Whitmer wants, is a conversation for a different day.

“There’s a lot of things missing from this budget that are incredibly important programs that need to be invested in for the people of Michigan,” Minority Vice Chair Curtis Hertel (D-East Lansing) said. 

Following the theme of thinning out state budgets of Whitmer’s big-dollar, one-time spending proposals, a separate Senate appropriations subcommittee did not include $175 million the Governor wants for a statewide judicial case management system.

The long-sought reform was part of the final report of the Trial Court Funding Commission, which laid out how Michigan’s 242 trial courts are using 16 case management systems and 150 computer systems.

Being able to standardize criminal justice data is being viewed as a large improvement in the judiciary. The House included most of the $175 million in its budget last week.

Otherwise, the Senate Corrections and Judiciary Appropriations Subcommittee went along with much of the Governor’s recommendations for both the Judiciary and Corrections budgets.

The State Appellate Defender Office (SADO) was expanded under SB 830 to include the juvenile lifer unit increase and the administration increase the Governor wanted. The House budget didn’t include money for four new administrative workers for SADO.

Another $460,000 was put in to support continuing education for judges, something the House budget said no to. And the Judicial Tenure Commission was given $223,000 to address a case backlog.

The only new big-dollar ask in the Governor’s Corrections budget was a proposed $30 million build-out of an electronic prisoner-staff communications system and a $10 million live tracking system for every prisoner in state custody.

The Senate didn’t include either in its subcommittee-level spending recommendations.

SB 829, the Senate Corrections and Judiciary Appropriations Subcommittee’s spending plan for the state prison systems for FY 2023 nixed the build outs, but kept much of the same spending levels the Governor recommended with a few exceptions.

The Senate budget added $1 million for a mentoring program called Chance for Life, $750,000 in one-time money for Goodwill Flip the Script, $500,000 for a Kalamazoo County pilot program that focuses on post-release mental health monitoring.

The $2 billion Corrections budget moved out of the subcommittee 3-0 and spent $39 million less than what the Governor proposed.