July Legislative Report, by Todd Tennis of Capitol Services

The Michigan Legislature is in the middle of its summer recess, but most legislators and staff have shifted into campaign mode.  Every seat in the Michigan House is up for election this year, though the Michigan Senate members will not appear on the ballot until 2018.  Before the Legislature left for the summer, they passed the final budget for the 2016-17 Fiscal Year.  They also passed legislation to make large reforms to the Detroit Public School district. 
 
The Legislature will return to session in early September after the Labor Day holiday.
 
Governor Signs Budget with No Line-Item Vetoes
 
On June 29, Governor Snyder signed the Omnibus Budget bill into law as Public Act 268 of 2016.  This act contains the Fiscal Year 2016-2017 appropriations for state government, including payments to local units of government.  It does not include funding for K-12 schools, community colleges or higher education, as those are contained in a separate bill.  The total non-education portion of the state budget is $38.8 billion and includes both state and federal funds.  When the school aid funds are added, the state budget for 2016-17 rises to nearly $55 billion.
 
Key changes by department include:
 
Agriculture and Rural Development
 
Overall increase of $7.5 million in total funding which includes $2 million for a new Rural Development Fund Grant Program to address energy, transportation, communication and water and wastewater infrastructure in rural communities; updates and improvements for the Geagley and Heffron labs;  and a new Animal Agriculture Initiative.  The budget also transfers equine racing lab responsibilities from MDARD to the Department of Treasury.
 
Corrections
 
The major news from the MDOC is the closure of the Pugsley Correctional Facility in Kingsley.  This was one of the most contentious issues during budget negotiations, as the Senate version of the bill had initially called for the closure of two unspecified MDOC prisons and the transfer of a large number of prisoners to the private prison facility in Baldwin operated by the GEO Corporation.   The Department had initially proposed zero closures, but in the end the Legislature and the Governor agreed on the closing of Pugsley.  The budget reflects savings of $27 million as a result of this closure.
 
The MDOC budget, however, also includes a number of increases that offset the savings from the Pugsley closure.  These include an additional $8.5 million for new officer training that will allow the department to train roughly 730 new officers; $3 million for field operations directed at parole and probation revocation reduction; $4.6 million for evidenced-based recidivism reduction programs;  $10 million for increased costs for treatment of prisoners with Hepatitis C; $1 million for increased mental health treatment services; and $36 million for negotiated increases in salary and wages.  The final MDOC budget for next year will receive an increase of $40.5 million bringing it to just over $2 billion.
 
Education
 
The Michigan Department of Education will receive an increase of just over $23 million for the 2016-17 budget bringing it up to nearly $332 million.  The bulk of that increase is targeted at the city of Flint to help deal with the effects of the water issue there with services like emergency child care and water testing.  It also reflects increases in federal funding for child care assistance statewide.
 
Environmental Quality
 
The MDEQ’s total 2016-17 appropriation will be just under $514 million, reflecting an increase of $13.5 million.  Due to the ongoing Flint water crisis, the MDEQ budget has seen a number of revisions in the current-year appropriation through supplemental budget bills.  The Omnibus bill continues corrosion control assistance to Flint for an additional year.  It also distributes nearly $15 million to 13 high-priority sites elsewhere in Michigan.  The Legislature also retained language from the current year budget that prohibits MDEQ from disciplining MDEQ staff for communicating with members of the Legislature or their staff.
 
General Government
 
The General Government portion of the Omnibus Budget covers a number of smaller departments and agencies within state government.  These include the Executive Office, Legislature, Legislative Auditor General, and the departments of Attorney General, Civil Rights, State, Technology Management and Budget, Treasury, and Talent and Economic and Development.  Most of these budgets were relatively flat with only economic adjustments, with the exception of:
 

•  Attorney General - $5.6 million for costs related to defending lawsuits from the Flint Water Crisis.
•  Secretary of State - $14 million to replace department mainframe systems.

Technology Management and Budget - $6.7 million for new sign-in and identity management tool (MILogin); $5 million for legal costs of potential litigation; $4 million for cyber-security updates.
 
Talent and Economic Development - $5 million enhancement to skilled trades training programs; $8.7 million for new Michigan Integrated Data System; $3 million to assess Michigan defense contractor needs; $1 million increase to Pure Michigan program.
 
Health and Human Services
 
The DHHS overall budget will see an approximately 1% reduction of $245 million in the next fiscal year.  This is primarily due to reductions in federal Medicaid funding stemming from the Healthy Michigan Plan caseload leveling off.  Plus, in 2017, federal match rates for the Healthy Michigan Plan will be lowered from 100% to 95%.  Although the budget overall is reduced, it includes several increases to specific programs.  These include:

• $20 million to continue improvements to the Child Welfare Information System (MISACWIS);
• $3.4 million to increase the FIP Clothing Allowance;
• $6 million to expand family preservation programs;
• $7.6 million for a new 30-bed unit at the Forensic Center;
• $20 million for the continued expansion of the Program of All-Inclusive Care to the Elderly (PACE);
• $43 million to for IT improvements to streamline electronic application and enrollment processes;
• $25 million to expand the Healthy Kids Dental program.

 
Insurance and Financial Services
 
DIFS saw relatively few changes to its overall budget, which will increase by $1.2 million to a total of $66.2 million in FY 2016-17. 
 
Judiciary
 
The Judiciary budget covers state and federal funding for court operations across Michigan.  The final budget will grant a $13.3 million increase for the next budget year, bringing the total to $298 million.  The major change to the budget is an additional $8.5 million to support statewide operation and maintenance of an electronic filing system. 
 
Licensing and Regulatory Affairs
 
LARA will receive an additional $8.2 million in FY 2016-17, bringing the department’s total budget to $418 million.  It will receive $2 million to support an IT upgrade to the Michigan Automated Prescription System; $1.5 million to upgrade three IT systems used by the Liquor Control Commission; and $3.4 million for a one-time increase for Fire Protection Grants.
 
Military and Veterans Affairs
 
The final budget for the Department of Military and Veterans Affairs will see a $5 million increase which equates to a 3% bump.  The will bring the total department budget next year to $174 million.  Some of the more notable increases include $2.8 million for the Grand Rapids Veterans Home to increase staffing levels and to renovate the 4th floor so that it meets Medicaid specifications; $1.1 million to improve the nursing unit level at the Jacobetti Home for Veterans; and $1.5 million in one-time National Guard Armory maintenance. 
 
Natural Resources
 
The MDNR is one of the few departments that will receive a net loss in funding in the next fiscal year.  Its total budget will drop by $5.7 million bringing it to $398 million.  The cut stems primarily from an end to one-time budget items in the current year budget and a reduction in federal funding.  However, the department will still see increases to some programs, such as $2.1 million to hire additional foresters to assess the impact of the spruce budworm; $4 million to upgrade land management tracking technology;  $1.1 million to replace aging forest firefighting equipment; and $1 million for invasive species prevention.
 
State Police
 
The Department of State Police’s budget will go up to $649 million next year, an increase of $21.6 million. The bulk of that increase ($15.7 million) will go to the ongoing costs related to the training and equipping of the 129th and 130th Trooper schools. 
 
Transportation
 
The first installments of the phased-in gas tax increase are going into the MDOT budget beginning in January 2017.  This is reflected in the MDOT final budget with a $218 million increase in gross funding.  The vast majority of this goes directly to state and local road and bridge funding, with a portion also being dedicated to public transportation, rail service, aeronautics and waterways.  The final MDOT budget for the next fiscal year will be $4.1 billion.