Michigan’s State Budget: What’s At Stake & What’s Going On?

With Michigan’s lawmakers trying to fix a $2.8 billion shortfall in the budget, it is a lot at stake to how to fix it without hurting children and public safety to name a couple of things. Nonetheless, tough decisions have to be made and as reported on the news yesterday, it seems as if both sides have a solution to the state’s budget problem and hopefully on Sunday lawmakers will vote for resolution to fix the state’s budget gaps. However thanks to lawmakers like State Representative Bert Johnson and State Senator Martha G. Scott, I have constantly received budget updates that I believe helps the public understand exactly what our state is facing in regards to the decisions that our lawmakers will make.

So there should be no doubt that Michigan is facing one of the most difficult budget crises our state has ever seen according to some lawmakers. This crisis is greater than the 2007 budget shutdown of the state. There have been several proposals on how our state can solve this $2.8 billion shortfall, but no matter what, difficult cuts must be made. While Senate Democrats realize this, they also understand that with these devastating cuts, Michigan would not be able to successfully compete with other states in the region and our already-struggling families would continue to suffer. A budget that is only focused on slashing valuable programs will do more harm than good, and the Legislature should also be considering serious reforms.

So many of residents across Michigan have contacted their lawmakers in the past month, asking them to support funding for Medicaid, education, the Healthy Michigan fund, natural resources, libraries, the Michigan Promise scholarship, early childhood education, foster care, public transit, school community health centers, mental health programs and roads. In fact, residents all across Michigan have contacted their lawmakers asking that deep budget cuts be avoided and that there be no tax increases this year by nearly five to one.

According to Senator Martha G. Scott, the Senate Democratic Caucus’ budget priorities focus on the things that will make our communities a safer place to live and make our state more attractive to new businesses. These include early childhood and public education programs; Promise scholarships that help our students afford higher education; local revenue sharing that provides police officers and fire fighters to watch over our loved ones; and health care programs that keep our citizens from needing more expensive care down the road.

The funds to restore these vital programs won’t appear out of nowhere. That’s why Senator Scott and her colleagues have identified a number of reasonable funding sources that would allow them to restore these key investments. These include assessing just a 2 percent fee on physicians, as we do with other health care providers, to allow us to secure a 3-to-1 match from the federal government. This alone would provide more than $300 million dollars towards to offset painful cuts.

Another opportunity for reform is joining the majority of other states by decoupling from the federal government on estate taxes for estates more than $2 million. Asking multi-millionaires to pay their fair share could collect at least $130 million. Other reform ideas include reducing the more than $36 billion in tax expenditures the state hands out every year to avoid wiping out important services. Senator Scott says, “We can also limit our tax loopholes, as Michigan currently gives millions of dollars in breaks to oil and gas companies, insurance companies, and others.”

Also Senator Scott goes on to say, “We can’t fix our budget through cuts or tax increases alone. Michigan needs to get its priorities straight and take these reforms into consideration to protect important programs. The safety and well-being of our communities and the future of our state will be in jeopardy if the Senate Republicans continue to ignore these ideas. My colleagues and I will continue to do whatever it takes to restore these priorities and protect Michigan’s future.”

On the House side, Rep. Johnson sent out an update stating, “We are faced with a deficit of roughly $2.8 million as a result of the economic downturn's negative effect on the amount of revenue the state has to fund its programs and services. My colleagues and I are making progress in reaching a resolution and I do not expect there to be a government shutdown like there was in 2007. It is not an easy task, though.”

There are tough choices that must be made. And between the decline of the auto industry, the national recession that did the most damage here in our state, and the 15.2 percent unemployment rate, there will surely be some painful cuts made. Rep. Johnson acknowledges this and says, “We Democrats in the House realize and understand this. However, there are certain lines I will not cross in the name of cuts. There are basic necessities that I will not vote to do away with. I will not agree to balance this budget on the backs of our most vulnerable citizens, which I consider our children and our elderly, and I will not agree to remove things from the budget that I view as essential. Those things are:

1) Police and fire protection (revenue sharing): We need safe communities, bottom line. Our communities have been plagued by crime and lack of protection as it is, and I will not vote to cut those services further.

2) School readiness programs and K-12 funding: If we plan to turn this state around, we have to educate our children with a top-of-the-line education system. Anything less is selling our future short.

3) The Michigan Promise Scholarships: When our children finish high school, they should be able to receive an advanced education right here in our wonderful state. And with the costs of tuition continually rising, I refuse to cut back on scholarships for college degree programs.

4) Health care: I will not turn my back on the children and seniors who lack basic medical care. Health care is something every man, woman and child in this state (and this country) deserves.

Senate Republicans have passed a budget with the following cuts:
-Cut revenue sharing (local police and fire protection) by $97.5 million
-Cut $20.7 million from the Healthy Michigan Fund.
-Cut K-12 funding by $110 per pupil.
-Eliminated the Michigan Promise Scholarship for college students ($140 million).
-Eliminated school readiness grants (both district and competitive) ($103.5 million).
-Cut Community Mental Health non-Medicaid aid by $61.8 million.
-Cut Family Independence Program grants to very poor families with children by $24 million.
Rep. Johnson says, “These cuts and eliminations are unacceptable. When you consider the consequences of such cuts, I think you'll agree. Firefighters that will be stretched too thin, schools that won't be able to afford materials for our students, kids not receiving a healthy start to their lives and families no longer being able to look forward to seeing their son or daughter off to college… it's sad and frightening to think about. I promise to stand strong for you and those you care about most in your life.”

Still as bipartisan conference committees have met throughout the days and weeks to make progress toward balancing our state's budget, there has been a lot of unknowns as to how our budget will be balanced but at the same time there has been progress. The conference committees were ordered to slash a total of more than $1.2 billion – a staggering amount that simply cannot be cut without doing serious damage to our residents, our communities and our state. Now we all wish that a budget was passed that leaves all of our essential services and valuable programs at their highest funding levels but that is just not possible in these tough economic times. Still many groups have gone to their lawmakers in Lansing voicing their concerns over certain cuts. Hospitals, school health centers, library associations, mental health boards and school administrators are just a few who have made their cases as to why their funding should remain; and while many lawmakers like State Rep. Johnson and Senator Scott agree with them, Michigan's economic crisis demands that the state make painful choices. But no matter what, some lawmakers especially Johnson and Scott have said they will not support a budget that destroys any chance of turning our state around – and that is what this current budget plan will do.

Rep. Johnson put it best in one of his updates to his constituents which said, “I will continue to fight for the priorities that truly matter:
--Fire and police protection: We must invest in making our communities safe, not take even more firefighters and officers off the streets.
--School readiness programs and K-12 funding: Our educational system already has enough problems and leaves enough children behind. We must not further debilitate our schools' ability to educate our children.
--Promise scholarships: Today, college degrees are as essential as high school diplomas. Michigan's children must have every opportunity to advance in the global economy in which we all compete.
--Health care for children and the elderly: We must give our kids a healthy start and treat our seniors with dignity, not neglect our kids and put our grandparents out on the street.
Cuts are necessary, but they must take us in the right direction. Severe cuts in these priority areas will take Michigan down the wrong path.”

Seven of the 15 bipartisan House-Senate conference committees have reported their compromise budgets to the full Legislature for a vote. They are: Agriculture, Higher Education, Judiciary, Economic Development, Community Colleges, State Police and School Aid. One of the budgets approved was Community Colleges in which the House voted earlier this week to maintain funding for these versatile schools, which provide thousands of our residents with affordable access to the training they need to obtain 21st century jobs. Community colleges play a pivotal role in the success of the No Worker Left Behind Program, which has enrolled more than 82,000 unemployed or underemployed workers who seek re-training to land good-paying jobs in high-demand fields. The original Senate plan would have cut $3.1 million from community colleges statewide, including nearly $727,000 from Wayne County Community College District, damaging their ability to serve our local students and workers at a time when its enrollment is up 20 percent over this time last year. The conference committee reached an agreement that avoided these cuts. Michigan must invest in education in order to get our residents back to work and create the top-notch workforce that will attract emerging industries – and investing in community colleges is one of the best investments we can make!

With nearly 100,000 Michigan students rely on the Michigan Promise Scholarship to attend community college, university or vocational training. That's why it is said to report that the Higher Education conference committee voted this week to approve the Senate's plan to eliminate the Promise Scholarship. The scholarship provides high school graduates with a total of $4,000 after they maintain a grade-point average of 2.5 or higher for two years. Every student who works hard deserves the opportunity to further their education and make a better life for themselves. And Michigan needs to create a well-educated workforce in order to attract jobs in emerging industries. The Promise Scholarships are making this possible by opening the door to college for tens of thousands of middle class families – and we cannot break that promise! However not all lawmakers in Lansing are willing to vote to pass this elimination of the Promise Scholarship. State Representative Bert Johnson said, “That is why I will vote against the plan to eliminate the Promise Scholarships when it comes before the full House.”

Still eight conference committees assigned to the remaining departmental budgets that make up the overall state budget are still working reach agreements and some in Lansing say that those agreements have been reached a full vote on those agreements will come to a floor on Sunday. There are extremely tough choices to make, given the state's $2.8 billion deficit and Michigan's still-struggling economy. And we must make all these decisions in time to make the Sept. 30 deadline to balance the budget. Still as lawmakers examine each budget being presented by the bipartisan conference committees; let’s hope as residents that all of them are think carefully about its impact on our communities and our state's future. Will the plan move us forward or backward? That is truly the question in today’s economic and political climate.

That is why the School Aid budget is so important. If the state budget cuts go through as is, it will devastate our state's chances of making economic progress. The School Aid budget guts K-12 school funding at a time when our schools are barely getting by, and just when the school year is already in full swing. The cuts will force massive teacher layoffs, crowd classrooms beyond 30 or 40 students, eliminate bus service in some areas, and cause other disruptions that will severely damage our children's ability to be safe and learn the skills they need to succeed. Education is the most important investment we can make as a state. Our state relies on our schools to prepare our children to compete for good-paying jobs in the global economy. We need our schools to produce the top-notch workforce needed to attract high-tech industries that will revitalize our communities and turn our economy around.

Our schools cannot do this if we don't provide the resources they need! That is why lawmakers must vote against the proposed cuts to the School Aid budget, which cuts $218 per pupil. Some examples of the local effect of these cuts include:
$18.69 million from Detroit City School District
$620,012 from Hamtramck Public Schools
$521,901 from Highland Park City Schools

Still our state will and must find a way to balance the budget. Nonetheless below is information that I think all residents of Michigan should know as to what certain terms mean and what the whole set up and purpose of conference committees are. This information was provided by State Representative Bert Johnson daily updates on the state budget but it is imperative information that is vertical to understanding what exactly our lawmakers are dealing with. Therefore as a state, we can only pray and hope that come Sunday night, our state lawmakers will pass a balanced budget that Governor Jennifer Granholm can sign on Monday or Tuesday morning at the latest, which is before the September 30 deadline. Tough times require real leadership and require sensible decisions that will move our state forward and not backward which what I hope all our lawmakers are taking into consideration as they pass bills to balance our state’s budget.

PURPOSE OF CONFERENCE COMMITTEES
Conference committees are appointed when a house rejects the other house's version of a bill. One house always has the power to amend the other house's amendments. (A substitute is considered a single amendment, regardless of length, so a substitute can always be amended.) If a house votes to reject any of the other house's amendments, it informs the other house of the rejection and appoints conferees. The other house can recede from the rejected amendment and avoid conference. If it does not, it also appoints conferees.

The conference committee is charged with resolving the differences between the houses. The proposed resolution is called a conference report.

STRUCTURE OF CONFERENCE COMMITTEES
A conference committee is composed of two committees: one made up of three Representatives, and the other of three Senators. The conference committee is chaired by the first named member of the originating house (the house where the bill was introduced - commonly called the "first house"). The committees are appointed in the same manner as standing committees: the Speaker appoints the Representatives, and the Majority Leader appoints the Senators.

The House Fiscal Agency and Senate Fiscal Agency serve as staff to the conference committees for budget bills. The fiscal agent of the first house is the clerk of the conference committee.

RULES GOVERNING CONFERENCE COMMITTEES
Conference committees are governed by the Joint Rules. Since the Joint Rules govern both the House and the Senate, neither has the power to suspend them.

An appropriations bill is typically sent to conference when one house rejects the other house's substitute. (A substitute is an amendment that replaces the entire content of a bill.) Under Joint Rules, an item that is identical in both versions of an appropriations bill is not a point of difference. An item that is not in either version may not be added to the conference report, unless the item must be added to reflect agreement on a point of difference.

If a conference report is rejected by either house, a second conference committee may be named. The rules do not allow a third conference committee.

PROCEDURE
The Open Meetings Act requires six hours notice for any meeting of a first conference committee, and one hour notice for any meeting of a second conference committee. A meeting is called by the chair of the conference committee.

A proposed report must be adopted and signed by a majority of each of the two committees before it is referred to the first house. The two committees vote separately.

A report is referred to the first house. For bills, the votes of a majority of those elected and serving (currently 56 Representatives, 20 Senators) are needed to adopt the report.

If the first house adopts the report, it sends the report to the second house. If the second house adopts the report, it returns the report to the first house so that it may be enrolled and sent to the Governor.

Conference reports are not subject to amendment.

TYPICAL SEQUENCE FOR APPROPRIATIONS BILLS
· appropriations bill is introduced in first house and referred to appropriations committee (the House and Senate switch which is the first house for each department each budget year)

· appropriations subcommittee makes recommendation to appropriations committee

· appropriations committee reports bill with recommended substitute

· first house adopts substitute and floor amendments and passes bill

· second house refers bill to appropriations committee

· appropriations subcommittee makes recommendation to appropriations committee

· appropriations committee reports bill with recommended substitute

· second house adopts substitute and floor amendments, and passes bill

· first house rejects second house version of bill and names conferees

· second house names conferees

· chair (first named conferee of first house) calls conference committee meeting

· conference committee adopts and signs report

· first house adopts report

· second house adopts report

· first house enrolls bill and presents bill to governor. Governor may veto bill or line items, including boilerplate that sets condition on spending

GLOSSARY
Adjusted Gross Appropriations: gross appropriations, less interdepartmental grants (IDGs), and intradepartmental transfers (IDTs)

Boilerplate: language sections contained in an appropriations act which place conditions on line item expenditures, including required reports

Budget Stabilization Fund (BSF): the Countercyclical Economic and Budget Stabilization Fund, sometimes referred to as the "rainy day" fund

Federal Revenues: federal grant or matchable funding dedicated to specific programs

Full Time Equivalent (FTE): The equivalent of one full-time employee

General Fund/General Purpose (GF/GP): the state's primary operating fund; the portion of the state's General Fund that does not include restricted revenues

Gross Appropriations: summation of all applicable line item spending authorizations

Interdepartmental Grant (IDG): revenue or funds received from another state department (usually for a service the receiving department provides)

Intradepartmental Transfer (IDT): transfers or funds being provided from one appropriation unit to another in the same department

Lapse: unspent/unobligated balance remaining in a line-item account at the end of the fiscal year that reverts or "lapses" to the state fund from which it was appropriated

Line Items: specific amounts detailed in an appropriations bill which establish spending authorities for a particular program or function (may be for a single purpose or for multiple purposes)

Local Revenue: revenues from local units of government

Restricted Funds: state revenue dedicated to a specific fund (other than the General Fund); or revenue earmarked for a specific purpose

Point of Difference: an item that is different in the House and Senate versions of a bill

Private Funds: revenues from non-public entities such as rents, royalties or interest payments, payments from hospitals, payments from individuals, and gifts and bequests

School Aid Fund (SAF): primary funding source for K-12 schools and Intermediate School Districts (ISDs)

Target: the limit set for gross appropriations in a budget

Work Project Appropriation: appropriation made for a specific project which does not lapse at the end of the fiscal year, but continues (under specified conditions) for a specified time