Governor’s Budget Proposal Includes Major Investments in Local Government

The Whitmer Administration unveiled its proposed Executive Budget Recommendation on Wednesday for the upcoming 2022-23 Fiscal Year that starts October 1st.

The budget recommendation totals $74.1 billion, including a historic $14.3 billion in General Fund dollars, compared to the current year’s $11.7 billion…the highest GF budget proposal in recent history.  Over 40% of the budget proposal consists of federal funds from the state’s American Rescue Plan Act funding and expected Infrastructure Investment and Jobs Act revenues.  The proposal still leaves over $2 billion of General Fund balance available for additional spending discussions, along with a still to be determined amount of unallocated ARPA and IIJA funds that will be the subject of ongoing supplemental appropriation negotiations outside of this budget process.

The budget presentation made before a joint session of the House and Senate Appropriations committees provided specifics on the Governor’s previously announced spending priorities, with spending focused on education, public sector employment recruitment, retention and HERO pay, elimination of the state income tax on retirement income ($107 million cost in 2023 and $495 million per year by 2025), and increasing the state’s Earned Income Tax Credit from 6% of the federal credit up to 20% (costing $262 million in FY23).  Briefing papers on many of the Administration’s key initiatives can be viewed here.

Major spending proposals that support local governments were prevalent throughout the budget proposal, with the centerpiece being a 10% increase in statutory revenue sharing.  This $26.6 million increase would be the largest single-year increase in recent history and would result in the highest funding amount since 2011, but still not fully recovered from the $100 million Executive Order cuts enacted that year.  The recommended increase would be split 5% into the ongoing base and 5% would be labeled as “one-time”.  In addition to the revenue sharing increase, the Governor responded to the League’s request for assistance in holding communities harmless from any clawback in the Constitutional, per capital revenue sharing payments due to the delay in receiving their 2020 census population numbers.  The Governor has proposed spending $50 million to ensure that no city, village, or township with a declining population will see additional reductions from a clawback of overpayments because of the delay in the release of census numbers and Treasury paying communities for the past 14 months based upon their 2010 population numbers.  The budget proposal recommends this $50 million be appropriated in the current budget year to avoid any per capita payment adjustments scheduled to occur in April of this year.  The Treasury budget recommendation also includes a few other spending items that support local governments:

  • $40 million for Local Community Transition Support (general fund) to provide aid to communities that have experienced significant economic impacts from the departure or disinvestment of large-scale employers and their workforces from their communities. Funding will support various economic or community development activities, including rehabilitation, demolition, or adaptive re-use of vacant buildings, various support and recruitment and retention activities for new or existing small businesses, local community business incubator programs, and outdoor space enhancement projects.
  • $50 million for First Responder Retention Payments (general fund and ARP – state fiscal recovery funds) to state and local law enforcement and public safety personnel who have performed hazardous work related to the COVID-19 pandemic. Funding is recommended in a fiscal year 2022 supplemental and includes $30 million general fund and $20 million federal American Rescue Plan resources announced as part of the Governor’s proposed MI Safe Communities framework.
  • $20.6 million Increase for Existing Recreational Marihuana Grants (restricted funds) to counties and municipalities in which a marihuana store or microbusiness is located. These payments are required under the Michigan Regulation and Taxation of Marihuana Act, Initiated Law 1 of 2018, and are based on the most recent recreational marihuana revenue projections and total $50.6 million for fiscal year 2023.

Significant, community-focused investment programs can be found throughout the remainder of the proposed budget, many of which match up with Municipal League funding priorities and specific funding requests, including major investments in infrastructure.  The League issued this media statement on Wednesday’s presentation, recognizing the numerous areas of the budget that focus on investing in our communities.

The following spending proposals will be of particular interest to municipalities and were been pulled from the FY23 Executive Budget Book that was released Wednesday:

Environment, Great Lakes, & Energy –

  • $251.7 million for Water Infrastructure Projects ($36.4 million general fund) to provide loans, grants, and direct funding to local communities for water infrastructure. These projects are supported through the federal Infrastructure Investment and Jobs Act (IIJA) and include service line replacements, water treatment facility upgrades, and stormwater management systems.
  • $69.3 million for Contaminated Site Clean-up ($20.2 million general fund) to provide resources for revitalizing and redeveloping sites of historic and industrial contamination in the state. This investment will also support a rapid response fund to deploy resources for sites outside the scope of normal contamination clean-up efforts.
  • $48 million for Community Support for Lead Line Replacement and Water Treatment System Upgrades (general fund). This program will provide grants for technical, managerial, and financial assistance to communities throughout the state to ensure that projects are implemented effectively and efficiently. Grants will prioritize disadvantaged communities.
  • $34.3 million for Highwater Infrastructure Grants (general fund) to provide local communities with grants for high water level and resiliency planning and infrastructure needs. This program continues past efforts to ensure that communities are provided the resources needed to address issues like coastal erosion, flooding, transportation networks, urban heat, and storm water management.
  • $23 million for Energy Efficiency Grants (federal fund) to provide grants and financial support to local communities and businesses for the implementation of energy efficiency infrastructure and policies. This program is supported with federal IIJA funds and will provide community support through grants, state-backed loans, and direct project implementation.

Labor & Economic Opportunity –

  • $200 million for the Michigan Regional Empowerment Program (general fund) to support the growth, development, diversification, and resiliency of regional economies through a competitive grant program. Grants will support projects that leverage partnerships and make investments that provide long-term sustainable economic benefit to the local region and the state as a whole. Grants may be used to support a wide range of transformational projects including those focused on affordable housing, broadband, manufacturing, education and workforce development, and other areas specific to local regional needs.
  • $11 million for the Attainable Homeownership and Apprenticeship Program (general fund) to support the acquisition, renovation, and resale of properties in both urban and rural land bank inventories, increasing access to attainable housing while expanding apprenticeship training opportunities by requiring paid apprentices on each home renovation site.
  • $10 million for the MI Local Heroes Marketing Campaign (general fund) to conduct a comprehensive statewide marketing campaign that highlights the benefits of public sector employment and attracts more individuals to critical jobs like nurses, teachers, police and firefighters.
  • $750,000 for the Resilient Lakeshore Heritage Grants Program (federal funds) for a grant program that will support the rehabilitation of qualifying properties in rural communities along the Great Lakes.

Transportation –

  • In total, the Governor’s fiscal year 2023 recommended budget reflects a $1.1 billion increase for transportation over the current fiscal year. This includes $578 million of projected new funding under the federal Infrastructure Investment and Jobs Act (IIJA), as well as $481 million of state restricted and general fund support for transportation. An accompanying fiscal year 2022 supplemental request also includes $475.7 million of new federal IIJA authorization. Over the next five years, Michigan is projected to receive more than $2.6 billion in new federal IIJA transportation funding, as compared to the prior federal authorization act.
  • An additional $488.6 million for Road and Bridge Construction to support state and local roads, highways, and bridges, over $94 million will go towards an estimated increase for local roads and bridges. The total increase reflects an additional $377.8 million of federal IIJA funding, with the remaining $110.8 million attributable to net increases in baseline state restricted revenues.
  • $150 million for Road Improvement Projects that are economically critical, carry high traffic volumes, increase the useful life of key local roads, or will be completed in conjunction with important bridge replacement projects to minimize the impact to motorists and businesses.
  • $66 million to make State Transportation Infrastructure more resilient to future flooding events by adding reliable generator backup power to all 164 state-owned pumping stations. This investment is intended to address the significant freeway flooding events that have impacted southeast Michigan communities and disrupted important economic corridors in that region during recent storm events.
  • $60 million to support Rail Grade Separation Projects at key congested local rail crossings that impede efficient movement of commercial and passenger vehicles and jeopardize timely public safety response in an emergency.
  • The Governor’s recommendation includes $100.8 million of new support for local and intercity transit and $31.5 million for passenger and freight rail improvements. An accompanying fiscal year 2022 supplemental request also adds $10 million in federal grant funding to support construction of a new Detroit passenger rail and intercity bus terminal.

While seeing these items identified by the Governor is encouraging, this is just the first step in the state budget process.  Now that the budget has been presented, the Legislature will begin their deliberation of the proposals and will craft their individual versions of a Fiscal Year 2023 budget.  Details of the Legislature’s view on these recommendations will become evident over the course of the coming weeks, with initial drafts from each chamber expected around the Spring Break/Easter timeline, followed by refinements that will take place after the May Consensus Revenue Estimating Conference, with a target to finish negotiations by the end of June.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

White House Releases New Infrastructure Law Guidebook/Webinars

The White House and US Department of Transportation shared the following information yesterday on the recently signed Bipartisan Infrastructure Law.  The new law combined a reauthorization of federal transportation funding with significant other infrastructure investments in water, broadband, electric vehicles and charging, cybersecurity, and the nation’s energy grid.  This $1.2 trillion, 5-year spending plan is now starting to take shape and funds are expected to begin flowing to the states this Spring.

Monday’s communication offers stakeholders a detailed guidebook on the new law (BUILDING A BETTER AMERICA_FINAL) and registration option for two separate webinars later this week (see below).

According to the communication from the White House/USDOT…

The Bipartisan Infrastructure Law, signed in mid-November, is historic in its size – the largest ever investments in broadband, rail and transit, clean energy, and water, just to name a few – as well as the breadth of programs and sectors included in the law.  Implementing the largest investment in our nation’s infrastructure in generations will require deep partnership alongside Members of Congress, Governors, Mayors, Tribal leaders, local officials, and community members.

Today, the White House is releasing a Bipartisan Infrastructure Law guidebook to provide information so you know what to apply for, who to contact, and how to get ready to rebuild. This guidebook is a roadmap to the funding available under the law, as well as an explanatory document that shows direct federal spending at the program level. We will continue to update this resource online at Build.gov.  Our goal is for you—communities all across America—to take full advantage of the opportunity this new funding presents.

To help stakeholders better understand how to use this document and hear the latest updates on the Bipartisan Infrastructure Law implementation, we are hosting two webinars over the next week:

Resources:

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

US DOT Details New Infrastructure Act Impact on Michigan

The US Department of Transportation released an analysis today of how the recently signed Infrastructure Investment and Jobs Act would impact the State of Michigan for the transportation-specific programs outlined in that bill.

The $1.2 trillion IIJA included the necessary transportation reauthorization of the former FAST Act and is estimated to offer Michigan a more than 30% increase in our annual federal road and bridge formula allocation.  Michigan will receive approximately $7.8 billion over the next five years from the transportation reauthorization components of the IIJA.  The 30% increase will bring in nearly $500 million in additional road and bridge funding annually to the state, not including any of the $100-200 billion of competitive grant opportunities that Michigan will be able to apply for.

The attached outline from US DOT also highlights the formula funding that Michigan is expected to receive in program areas like motor vehicle, commercial vehicle, bicyclist, and pedestrian safety, public transportation, electric vehicle infrastructure, Amtrak passenger rail expansions and freight rail safety and improvements, and airport infrastructure investments.

Competitive grant opportunities will also be available to state and local governments:

Safe Streets for All ($6B, new) – This program will provide funding directly to local and tribal governments to support their efforts to advance “vision zero” plans and other
improvements to reduce crashes and fatalities, especially for cyclists and pedestrians.
Rebuilding American Infrastructure with Sustainability and Equity (RAISE)
Grants ($15B, expanded) – RAISE grants support surface transportation projects of
local and/or regional significance.
Infrastructure for Rebuilding America (INFRA) Grants ($14B, expanded) – INFRA
grants will offer needed aid to freight infrastructure by providing funding to state and
local government for projects of regional or national significance. The BIL also raises the cap on multimodal projects to 30% of program funds.
Federal Transit Administration (FTA) Low and No Emission Bus Programs ($5.6B,expanded) – BIL expands this competitive program which provides funding to state andlocal governmental authorities for the purchase or lease of zero-emission and low-emission transit buses as well as acquisition, construction, and leasing of required
supporting facilities.
FTA Buses + Bus Facilities Competitive Program ($2.0B, expanded) – This program provides competitive funding to states and direct recipients to replace, rehabilitate, and purchase buses and related equipment and to construct bus-related facilities including technological changes or innovations to modify low or no emission vehicles or facilities.
Capital Investment Grants (CIG) Program ($23B, expanded) – The BIL guarantees
$8 billion, and authorizes $15 billion more in future appropriations, to invest in new highcapacity transit projects communities choose to build.
Federal Aviation Administration (FAA) Terminal Program ($5B, new) – This
discretionary grant program will provide funding for airport terminal development and
other landside projects.
MEGA Projects ($15B, new) – This new National Infrastructure Project Assistance
grant program will support multi-modal, multi-jurisdictional projects of national or
regional significance.
Promoting Resilient Operations for Transformative, Efficient, and Cost-saving
Transportation (PROTECT) Program ($8.7B, new) – PROTECT will provide $7.3
billion in formula funding to states and $1.4 billion in competitive grants to eligible
entities to increase the resilience of our transportation system. This includes funding for
evacuation routes, coastal resilience, making existing infrastructure more resilient, or
efforts to move infrastructure to nearby locations not continuously impacted by extreme
weather and natural disasters.
Port Infrastructure Development Program ($2.25B, expanded) – BIL will increase
investment in America’s coastal ports and inland waterways, helping to improve the
supply chain and enhancing the resilience of our shipping industry. BIL overall doubles
the level of investment in port infrastructure and waterways, helping strengthen our
supply chain and reduce pollution.
5307 Ferry Program ($150M, existing) – BIL retains the $30 million per year passenger ferry program for ferries that serve urbanized areas.
Electric or Low Emitting Ferry Program ($500M, new) – This competitive grant
program will support the transition of passenger ferries to low or zero emission
technologies.
Rural Ferry Program ($2B, new) – This competitive grant program will ensure that
basic essential ferry service continues to be provided to rural areas by providing funds to States to support this service.
Federal Highway Administration (FHWA) competitive grants for nationally
significant bridges and other bridges ($12.5B, new) – This new competitive grant
program will assist state, local, federal, and tribal entities in rehabilitating or replacing
bridges, including culverts. Large projects and bundling of smaller bridge projects will be
eligible for funding.
FTA All Station Accessibility Program ($1.75B, new) – This competitive grant
program will provide funding to legacy transit and commuter rail authorities to upgrade
existing stations to meet or exceed accessibility standards under the Americans with
Disabilities Act.
Charging and fueling infrastructure discretionary grants (Up to $2.5B, new) – This
discretionary grant program will provide up to $2.5 billion in funding to provide
convenient charging where people live, work, and shop.
Reconnecting Communities Pilot Program ($1B, new) – This new competitive
program will provide dedicated funding to state, local, MPO, and tribal governments for
planning, design, demolition, and reconstruction of street grids, parks, or other
infrastructure.
FHWA Nationally Significant Federal Lands and Tribal Projects ($1.5B, expanded)
– This discretionary program provides funding for the construction, reconstruction, and
rehabilitation of nationally-significant projects within, adjacent to, or accessing Federal
and tribal lands. BIL amends this program to allow smaller projects to qualify for funding
and allows 100% federal share for tribal projects.
Strengthening Mobility and Revolutionizing Transportation (SMART) Grant
Program ($1B, new) – The SMART Grant program will be a programmed competition
that will deliver competitive grants to states, local governments, and tribes for projects
that improve transportation safety and efficiency.

Dollars from this new act are expected to begin flowing to states and local governments in the first half of 2022.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Governor Signs State Budget – Local Governments See Numerous Wins

Update: View excel spreadsheet detailing bridge appropriations.

The conference reports on Senate Bill 82 and House Bill 4400 were signed yesterday, one week after the Legislature sent the record-setting state spending plan for Fiscal Year 2021-22 to her desk.  This budget, which takes effect October 1st,  appropriates nearly $70 billion overall with nearly $12 billion from General Fund revenues.  Additionally, the budget agreement includes another $2 billion in spending for the current FY20-21 fiscal year, mainly from available federal stimulus funds.  While most of the revenue for this budget agreement comes from available state revenues, about $700 million of American Rescue Plan Act funds were appropriated to fund additional programs and grants between the current and coming fiscal year.  Beyond this budget, the state still has nearly $5.8 billion in federal ARPA stimulus funds they have yet to appropriate, along with over $2 billion in General Fund balance they have available to spend.  A string of supplemental budget appropriation bills are expected over the course of this fall that will focus these remaining funds into specific topics like water and sewer and economic development.

While the budget agreement represents a significant development from a relationship standpoint between the Governor and Legislature, there were a few areas of disagreement in the budget boilerplate language that the Governor called out in her transmittal letter to the House and Senate, accompanying her signature on the plan.  While few spending lines appear to have been vetoed, the Governor did weigh in on approximately 40 different boilerplate directives that the Legislature had included in the overall budget.  Many of the items she declared “unenforceable” were tied back to concerns about the language violating the separation of powers between the Executive and Legislative branches and issues of amendment by reference.

While the Governor did declare unenforceable a series of references to mask orders related to child care facilities and local public health department orders, she did not weigh in on language that was inserted in every departmental budget section related to prohibiting COVID-19 vaccination requirements.  Language in the General Government budget, which controls spending by the Michigan Department of Treasury for items like revenue sharing (found in Section 225 on page 95 of the conference report) specifically states:

Sec. 225. (1) Any department, agency, board, commission, or public officer that receives funding under part 1 shall not:
(a) Require as a condition of accessing any facility or receiving services that an individual provide proof that he or she has received a COVID-19 vaccine except as provided by federal law or as a condition of receiving federal Medicare or Medicaid funding.
(b) Produce, develop, issue, or require a COVID-19 vaccine passport.
(c) Develop a database or make any existing database publicly available to access an individual’s COVID-19 vaccine status by any person, company, or governmental entity.
(d) Require as a condition of employment that an employee or official provide proof that he or she has received a COVID-19 vaccine. This subdivision does not apply to any hospital, congregate care facility, or other medical facility or any hospital, congregate care facility, or other medical facility operated by a local subdivision that receives federal Medicare or Medicaid funding.
(2) A department, agency, board, commission, or public officer may not subject any individual to any negative employment consequence, retaliation, or retribution because of that individual’s COVID-19 vaccine status.
(3) Subsection (1) does not prohibit any person, department, agency, board, commission, or public officer from transmitting proof of an individual’s COVID-19 vaccine status to any person, company, or governmental entity, so long as the individual provides affirmative consent.
(4) If a department, agency, board, commission, subdivision, or official or public officer is required to establish a vaccine policy due to a federal mandate, it must provide exemptions to any COVID-19 vaccine policy to the following individuals:
(a) An individual for whom a physician certifies that a COVID-19 vaccine is or may be detrimental to the individual’s health or is not appropriate.
(b) An individual who provides a written statement to the effect that the requirements of the COVID-19 vaccine policy cannot be met because of religious convictions or other consistently held objection to immunization.
(5) As used in this section, “public officer” means a person appointed by the governor or another executive department official or an elected or appointed official of this state or a political subdivision of this state.

The Governor’s transmittal letter interprets this language as providing “a roadmap for public employers to ensure their employees either receive the safe and effective COVID-19 vaccine or undergo regular testing to keep their co-workers safe. It also avoids any conflict with federal law, recognizing that federal authorities may issue vaccination requirements.”  This last comment appears to be in reference to forthcoming US Department of Labor rules that would align with the President’s recent call for vaccination or testing requirements for large employers.  This language is still being evaluated, especially in light of the potential costs related to implementing a stringent testing program at the local government level.

When reviewing the 964 page state operating budget document and the related 179 page House Fiscal Agency summary there are a number of key items of interest to municipalities and some significant victories for local government:

Overall, there is a $500 million deposit into the state’s Budget Stabilization Fund

Statutory Revenue Sharing will see a 2% ($5.2M) increase added into the overall base for cities, villages, and townships.

MML advocacy also helped to successfully restore $433,000 for more than 100 local units that were forced to return the federal CARES funding they received in August of 2020 as replacement for the state budget elimination of the August revenue sharing payment last year

Additionally in Treasury, the legislature approved the Governor’s recommendation for a $5M grant program to assist local governments with training and recruitment of first responders.  $3M was included to increase funding for the Michigan Infrastructure Council and $16M was added to fund infrastructure enhancements for E-911 systems.

Key funding items in other state departments:

Environment, Great Lakes, and Energy –

  • $15M for drinking water emergency assistance related to contamination response
  • $14.5M PFAS contamination remediation for water systems
  • $10M contaminated site clean up
  • $10M lead service line replacement and drinking water safety improvements in the City of  Benton Harbor
  • $19M for public and private dam safety and emergency response grants
  • While funding for the Governor’s MI Clean Water Plan was not included in this budget, it is expected that a larger water/sewer/storm water spending plan will be proposed from available ARPA funds this fall.

Labor and Economic Opportunity –

  • $100M of ARP funds for Community Revitalization Program and Placemaking grants to local units (identified blight and historic rehab projects in downtowns and outdoor dining and social district investments)
  • $1.5M increase in arts and culture grants funding
  • $3.5M increase in the Rural Jobs & Capital Investment Fund
  • $48M for 25 targeted local infrastructure grants across the state
  • $147M for 175 distinct local “enhancement grants” in communities statewide

Dept of Technology, Management, & Budget –

  • $20M for Cybersecurity

Dept of Natural Resources –

  • $7M of available federal funds for local recreation lands and facilities through Land & Water Conservation Fund payments

Michigan State Police –

  • $45M of federal funds for disaster and emergency response activities
  • $2M one-time increase to secondary road patrol grants
  • $500,000 to provide de-escalation training for law enforcement officers

MI Dept of Transportation –

  • $52.8M increase to the MTF for local road funding from full implementation of the $600M road plan income tax earmark
  • $12.8M restoration of last year’s cuts to the Transportation Economic Development Fund
  • $3M restoration of last year’s cuts to local bus transit operating support
  • $5.6M increase to state rail programs

Beyond the funding for the coming fiscal year, over $2 billion dollars was added to the current year (FY21) budget

  • $150M ARP deposit into the Unemployment Insurance Trust Fund
  • $168M from GF and Federal funds into the Water State Revolving Funds to fund loan demand for local water pollution control facilities
  • $121M of ARP funds for a Homeowners Assistance Fund within LEO that will support housing needs – includes utility payments and delinquent property taxes
  • $36.3M of federal funding for Low Income Household Water Assistance support through DHHS
  • A series of line items within MDOT from available December 2020 federal stimulus funds –
    • $196M local bridge bundling program – will allow for repair/replacement of 100 local bridges across Michigan. View excel spreadsheet detailing bridge appropriations.
    • $68M for Michigan’s 15 primary airports
    • $2M for Michigan’s general aviation airports
    • $65M for local road & bridge programs
    • $55M for local/rural transit agencies
    • $3.3M for the intercity bus program

With the signing of the budget, leaders will now turn their attention to appropriating the remaining American Rescue Plan dollars, available state General Fund revenues that continue to come in above revenue estimates, and any additional federal revenue that may result from the federal budget reconciliation process and/or the Infrastructure and Jobs Act discussion in Washington, DC.  The League’s State & Federal Affairs team will be extremely active in these upcoming budget discussions, pushing areas of priority for League members, like housing, community development, and additional support for local budgets and services.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

MML Applauds $1.5 Billion Approved by State Senate for Local Bridges and Roads

Michigan Senate ChamberThe Michigan Municipal League today sent out a statement to the media expressing our appreciation of the state Senate approving a $1.5 billion plan for local road agencies and to repair and replace local bridges. Here is our statement from the League’s Dan Gilmartin, CEO and Executive Director:

The following statement from the Michigan Municipal League is in response to the Senate today approving a $1.5 billion plan to address the tremendous need for local bridge and road repair and replacement across the state. This statement can be attributed to Dan Gilmartin, the League’s CEO and Executive Director.

“The scale of resources needed to repair and replace Michigan’s bridges far exceeds the financial ability of Michigan’s local road agencies. That is why the League applauds the Senate’s recognition of this need and their willingness to take action to invest $1.3 billion in local bridges and $200 million for local road agencies to offset transportation revenue lost because of the COVID-19 pandemic. All levels of leadership in Lansing have prioritized the need to invest in this critical part of our community’s infrastructure used by every Michigander and visitor. The Senate’s $1.5 billion proposal recognized the scale of the problem. We estimate this investment is enough to address all our local bridges in critical condition.”

Dan Gilmartin, MML

Gilmartin added, “This is a strong start to the kind of bold investment our communities need. We look forward to partnering on similar strategic proposals for water infrastructure, housing, community and economic development, and public health and safety in a comprehensive and coordinated way to amplify our prosperity now and into the future. The Senate’s action today represents a key first step in catalyzing the impact of available resources. We encourage the Legislature and the governor to continue to work together to fully realize Michigan’s enormous capacity to ensure the health and wealth of its people.”

For additional information, contact the League’s Matt Bach, assistant director of strategic communications, at (810) 874-1073 (cell) and mbach@mml.org.

Michigan Municipal League is dedicated to making Michigan’s communities better by thoughtfully innovating programs, energetically connecting ideas and people, actively serving members with resources and services, and passionately inspiring positive change for Michigan’s greatest centers of potential: its communities. The League advocates on behalf of its member communities in Lansing, Washington, D.C., and the courts; provides educational opportunities for elected and appointed municipal officials; and assists municipal leaders in administering services to their communities through League programs and services. Learn more at mml.org.

Legislature Preps Competing Versions of State Budget

Since their return from Spring Break last month, the House and Senate budget subcommittees have been working to finalize their respective versions of the state budget for every state department and program for the upcoming FY21-22 state fiscal year.  Those budget subcommittees recently released their proposed spending plans and they are now being considered by the full Appropriations committees in each chamber before they will cross to the opposing chamber for further consideration and conference committee discussions, which are expected following the state’s May Consensus Revenue Estimating Conference scheduled for Friday, May 21st.  These House and Senate proposals are being developed in response to the Governor’s Executive Budget recommendation released earlier this year.

The League has been extremely active on a number of key state budget components, especially revenue sharing and transportation funding, among other municipal priorities.  None of the proposed budget versions described below have been negotiated with the other chamber or with the Whitmer Administration and a final budget agreement, expected prior to the summer recess, will look extremely different as all three sides negotiate for their priorities.

In the House:

The General Government budget for FY 21-22 funds a number of state departments, including revenue sharing and the Treasury department and the Labor & Economic Opportunity department (MEDC) spending. This spending proposal is being developed within House Bill 4398.

  • The House proposal provides a 1% increase ($2.6M) to statutory revenue sharing as opposed to the Governor’s recommendation for a 2% increase ($5.2M).
  • The House language would also require any increased CVTRS revenue sharing a community received that is “underfunded” on their pension system to spend any increase from revenue sharing on their pension system.
  • Additionally, the House has added new language that would require all cities, villages, townships, and counties to maintain the same level of public safety funding as their prior budget had expended as a condition for receiving statutory revenue sharing.
  • Following a League request, the bill does include $290,000 to restore August revenue sharing payment losses for any community that was unable to utilize the CARES funding they received as a replacement for the stricken August CVTRS payment last year.  Also included is a $245,000 line item that we had requested to provide for a restoration of any forfeited revenue sharing payments due to a community missing the December 1, 2020 “dashboard” reporting and certification requirement, so long as the certification was submitted by February 1, 2021.
  • The Governor’s recommendation of $40M for shoreline erosion grants for the coming budget year were referenced in this bill with a $100 placeholder amount.  As an alternative approach, the House did propose funding that $40M in recommended spending for shoreline erosion in their current year budget supplemental proposal (HB 4420) which is outlined later in this article.
  • The House version did not include the Governor’s recommended $5M recommendation for grants to local units for recruiting and training first responders.
  • This bill does also not include the Governor’s recommendation for $10M to be deposited into MSHDA’s Housing and Community Development Fund and reduces the Business Attraction and Community Revitalization line items by $5.9M.
  • The House version does insert an additional $500,000 into the Rural Jobs and Capital Investment Fund for a total line item of $1.5M.

The House proposal for the Michigan Department of Transportation budget is outlined in House Bill 4409.  While the overall revenue available to the State Trunkline Fund is expected to stay relatively flat for the coming year, balancing lower gas tax and vehicle registration fee revenue against the full $600M earmark from the state income tax and expected higher federal aid opportunities, the following items are important for local road agencies:

  • Local road agencies are estimated to receive an additional $52.8M through their PA 51 distribution.
  • The House version agrees with the Governor’s recommendation to restore $12.8M to the Transportation Economic Development Fund and a $3M restoration to transit agencies through the Comprehensive Transportation Fund.
  • The House adds a $226M line item aimed at local road and bridge repair and replacement, and a new program funded with $374M designed to repay existing transportation bond debt.

The House Environment, Great Lakes, & Energy Department budget proposal for next year (HB 4397) did include the Governor’s recommendation of $15M for responding to dam safety emergency issues, but the House did not fund the $20M one-time recommendation for contaminated site clean-ups or the Governor’s $290M MI Clean Water Plan proposal.  The House also included a one-time allocation of $25M for PFAS clean-up and other emerging contaminates.

In the Senate:

Their General Government budget proposal is included in Senate Bill 82

  • The Senate proposal agreed with the Governor’s recommendation on statutory revenue sharing by funding a 2% ($5.2M) CVTRS increase.  Additionally, the Senate builds this 2% directly into the CVTRS base, where the Governor’s recommendation had this 2% increase listed as one-time.
  • The Senate maintained the current requirement that any CVTRS increase amount must be dedicated to an unfunded pension liability for any community identified as “underfunded” under PA 202.
  • Based upon the League request, the bill also includes $433,000 to restore August revenue sharing payment losses for the more than 100 cities, villages, townships, and counties that were unable to utilize the CARES funding they received as a replacement for the stricken August CVTRS payment last year.
  • The Senate did not include the Governor’s $5M recommendation for local first responder recruitment and training grants, but they did include a $50M 100% matching grant program for any community with a pension system funded at less than 40% that makes an accelerated payment towards that unfunded liability.

In the Senate LEO budget for the coming year (SB 85) the Governor’s recommendation for $10M in MSHDA’s Housing and Community Development Fund was not included.  The subcommittee did recommend an additional $15M for Pure Michigan and increased Arts and Cultural grants by $1.5M above the Governor’s recommendation.

In their EGLE budget proposal (SB 91), the Senate subcommittee included $15M for dam safety and put $10M towards high water and shoreline erosion grants, but declined to fund the $290M MI Clean Water Plan or the $20M recommendation for contaminated site clean-up.

The subcommittee recommendation for the MDOT budget is detailed in SB 92. The Senate included the Governor’s recommendation for increasing local road fund through the MTF by $52.8M and supported the restoration of last year’s cuts to the TEDF ($12.8M) and transit agencies within the CTF ($3M).

 

In addition to the work on the budget for the upcoming state fiscal year, each chamber is discussing competing proposals to spend portions of the December federal stimulus funding and the recently passed American Rescue Plan Act stimulus.  These supplemental budget appropriations would apply to spending in the current state fiscal year and represent very different approaches from the two chambers.  The Administration has issued their recommendations for the spending of the December federal stimulus, but await forthcoming US Treasury guidance before making detailed ARPA spending recommendations.

The House has two General Fund related supplemental budget bills on the House floor awaiting further action.  House Bills 4419 and 4420 propose approximately $6 billion in new, non-education spending for the current budget year.  Highlights from the two House bills that would impact local governments include:

  • HB 4419 would pass through the anticipated $686M in ARPA funds that are designated for the “non-entitlement” local units of government.  Pending the disbursement of those funds from the federal government to Michigan.
  • The bill also includes $103M in federal LIHEAP funding, $378M from the December stimulus proposal for rental and utility assistance and housing stability services, $68M for airports, $65M of federal funds for local road agencies, and $76M for rural transit agencies.
  • HB 4420 moves federal dollars into a number of state GF/GP line items to free up those GF/GP dollars.  The bill then appropriates those state GF dollars into a host of different programs and lines.
  • This bill puts $350M into the state’s rainy day fund.  It directs $40M into high water and shoreline erosion grants and $25M for PFAS remediation and $25M for contaminated site cleanup grants.
  • The bill fully funds the state’s Flint water settlement, appropriating $595M versus the annual $35M bond debt service that is currently planned.  Along the same lines, the bill invests $74M into State Trunkline Fund bond repayment and another $626M into a new Transportation Bond Repayment Sinking Fund.
  • Additionally for infrastructure, this bill would spend $250M for natural gas infrastructure expansion, $150M for broadband expansion, $250M for water and sewer replacement grants, and $300M for local road and bridge replacement and repair.

The Senate’s supplemental budget bill for the current year (SB 36) focuses mainly on appropriating the remaining December federal stimulus funds.  The only ARPA dollars in this bill are related to anticipated day care funding the state expects to receive from the March federal bill.  This bill is also on the Senate floor awaiting further action.

  • SB 36 appropriates the $378M federal emergency rental and utility assistance dollars allocated to Michigan.  $46M of additional FEMA disaster assistance.
  • Of the transportation funds the December stimulus allocated to Michigan, the Senate proposes a statute change that would allow all of the dollars coming into Michigan to be distributed solely to cities, villages and counties.  Under this proposal, cities and villages would receive $93.5M and counties would get $167.8M.  State trunklines would not receive any of these stimulus dollars.

 

With additional federal guidance on ARPA expected in the next week and the state’s May revenue estimating conference scheduled for later this month, most of the upcoming budget activity will likely focus on positioning the budget and supplemental bills for final negotiations between legislative leadership and the governor.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

League President and Westland Mayor Bill Wild Meets with U.S. Energy Secretary Granholm About American Jobs Plan

Westland Mayor Bill Wild, MML President, and Grand Rapids Mayor Bliss, former MML President, met with U.S. Energy Secretary Jennifer Granholm Friday about the American Jobs Plan.

Westland Mayor and Michigan Municipal League Board President Bill Wild met with U.S. Secretary of Energy Jennifer Granholm Friday about the American Jobs Plan.

The meeting was organized by the U.S. Conference of Mayors. Mayor Wild, along with Grand Rapids Mayor Rosalynn Bliss, former League Board President, gave a presentation to the Energy Secretary. There is language within the $2.3 trillion Jobs Plan to support clean energy bock grants for state, local and tribal governments. The mayors were in support of this provision, Wild said.

“We are pushing to reauthorize the Energy Efficiency and Conservation Block Grant from 2009 and not try to create a new block Grant. The data is already available and the results are proven that it met the goals of the program and created/saved jobs,” Mayor Wild said.

President Biden recently announced the American Jobs Plan to rebuild the economy and create good-paying jobs for workers in America’s cities, towns and villages through investments in infrastructure and workforce development.

The League has advocated for additional investment in infrastructure in the traditional sense (roads, bridges, water, and sewer), but also in a more broad-based community infrastructure view (broadband, housing, parks and workforce development). This plan addresses many of those areas. Read more about the Jobs Plan in this Inside 208 post by the League’s John LaMacchia.

Governor Whitmer Delivers State of the State Message, Calls for Expanding Local Road Funding Options

Governor Whitmer delivered her third State of the State this evening with a focus of bi-partisanship and a theme she coined as “Fixing the Damn Road Ahead”.

The speech was delivered remotely for the first time in Michigan history and was markedly shorter than past speeches as a result.

The Governor reminded viewers of the bipartisan successes of the past year through agreements reached on the pandemic-impacted budget, the MI Reconnect plan for job training support and grants, and the Clean Slate package with delivered criminal justice reforms. She called for similar bipartisan action in the coming year.

Much of the speech focused on the Administration’s efforts to fight the pandemic, but on the policy front, the Governor identified proposals to improve K-12 education funding, expanded unemployment benefits, a new program to provide teacher support grants, and a call to renew the expired Good Jobs For Michigan economic development incentive that was first utilized by Pfizer at their Michigan facility that is now providing the COVID-19 vaccine.

Governor Gretchen Whitmer delivers her 2021 State of the State Address on Jan. 27.

Of interest to League members, the Governor went back to the road funding issue by calling for the Legislature to work with her to expand local road funding options.  It is expected that this will be a more collaborative recommendation, with no specific end result in mind, but pointing to bills introduced last term that would have provided for the option of a local vehicle registration fee and allowed for a local gas tax to be implemented.

She also called again for passage of her water infrastructure proposal she announced in the fall.  The MI Clean Water plan would reallocate $500M in existing federal revenues and state bond funds to support local clean water and contaminate clean-up investments.

In response to the speech, the Municipal League released this statement. League CEO and Executive Director Dan Gilmartin also wrote this opinion piece for Crain’s Detroit Business Forum series about how our Legislature and Governor can help communities emerge from the pandemic in 2021.

More details on these initiatives and other spending priorities are expected in two weeks when the Governor unveils her next budget recommendation.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Governor Signs State Budget – Hazard Premium Payroll Deadline Extended

Earlier today, Governor Whitmer signed House Bill 5396, the omnibus budget for the state fiscal year that starts tomorrow, October 1st.

The Senate Fiscal Agency summary of the budget agreement can be reviewed here.

The House Fiscal Agency analysis can be viewed here.

Major components of the budget deal included:

  • A restoration of the August 2020 $97 million statutory revenue sharing cut.  For the coming year, statutory revenue sharing will be funded at the same level as originally set for last year.
  • An extension of time for communities to pay out federally funded CARES Act first responder hazard pay premiums (see below).  The payroll deadline was moved out from September 30th to October 31st, based on a Municipal League request.
  • A $35 million increase to local road agencies (counties and cities/villages) based upon the final implementation of the $600 million state income tax earmark as part of the 2015 road funding deal.
  • $24 million was appropriated as disaster relief grants to help areas around the state that have been devastated by flooding.
  • The Business Attraction & Community Revitalization Program within MEDC was increased by $20 million.
  • Federal Community Development Block Grant funding was increased by $15 million.
  • $5 million was appropriated in anticipation of the passage of the League-supported Senate Bill 54, which would restore the Michigan Historic Preservation Tax Credit program.
  • A one-time authorization of $800,000 for blight removal grants in Redevelopment Ready Communities.

In response to the Governor’s budget signing, the Michigan Department of Treasury released the following information relative to the payroll time extension for hazard pay and a reporting deadline extension for funds received as a result of the August revenue sharing swap…

Updates for CARES Act Grant Programs

The Michigan Department of Treasury has a few short updates and reminders about the First Responder Hazard Pay Premiums Program (FRHPPP) and Coronavirus Relief Local Government Grants (CRLGG) Program.

First Responder Hazard Pay Premiums Program (FRHPPP)

  • Today, the Gov. Gretchen Whitmer signed legislation that extends the deadline for when eligible hazard pay premiums must be paid to employees, changing the date from September 30, 2020, to October 31, 2020.
  • The application deadline for submitting reimbursement requests remains September 30, 2020.

Coronavirus Relief Local Government Grants (CRLGG) Program

  • The CRLGG Program’s first quarterly reporting due date will be extended. The Quarterly Financial Status Report was anticipated to be due on October 7, 2020. The federal government provided the state of Michigan an extension, so this date will be extended for local units of government.
  • A new date for local reporting has not been set yet. The reporting will be done in an online system that will launch mid-October. We are finalizing training sessions and due dates. More information will be forthcoming.
  • If a local unit does not plan to spend all their CLRGG Program funds, unused funds must be returned to the state Treasury Department. Returned payments must be accompanied by Form 5733, Treasury CARES Act Return of Funds Received Form. Form 5733 is available on the CRLGG website.

Additional Information

Additionally, the Michigan Department of Treasury has developed a webpage with numbered letters, memorandums, webinars, and resources regarding COVID-19 updates for local governments and school districts. This webpage was created to ensure Michigan communities have access to the most up-to-date guidance and is updated frequently with information and resources as they become available.

Questions about CARES Act-funded grant programs should be directed to the Revenue Sharing and Grants Division at 517-335-0155 or Treas-CARES@michigan.gov.

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Whitmer Administration Pitches FY21 Budget Proposal

In addition to the League’s official media statement in response to the Governor’s budget presentation yesterday, here are some of the more critical details for League member communities:

The Governor’s Fiscal Year 2020-21 budget utilizes $11 billion in General Fund dollars, just barely higher than the $10.7 billion spent in the 2000 state budget.  Overall this budget proposal would spend nearly $62 billion from all sources, up almost 4% from the current budget year.  With limited new revenue to spend and the ongoing debate over road funding, the Governor focused most of her new programming proposals on the K12 education budget and talent/job training programs.

Constitutional Revenue Sharing payments are estimated to increase by 1.9% ($16.4M) over current year directly tied to expected sales tax revenue growth.  These dollars are distributed to all CVTs on a straight per capita basis.

Statutory Revenue Sharing payments are proposed to increase by 2.5% ($6.5M).  These dollars would flow in direct proportion to what eligible CVTs received in this current budget.

A new grant program that would allocate $40M in one-time dollars for planning and infrastructure improvements that would address municipal impacts from climate and high-water erosion concerns ($10M for local government planning and $30M for infrastructure projects).  Planning grants will be limited to a $200,000 maximum per award and infrastructure grants limited to no more than $2.5M per award.  A 20% local match will be required.

A new Rapid Environmental Contamination Response program is being proposed that would be funded with $20M to deal with initial abatement activities at contaminated properties.

While the MDOT budget proposal does not reflect any of the revenue related to the Governor’s proposed $3.5B bonding proposal for state trunkline roads, it does include about $200M more than the current year budget, with $132M of that amount coming from the final phase of the General Fund earmark diversion from the 2015 road funding package and nearly $50M in expected increased federal highway revenues.  Transit and rail programs are also proposed to receive an additional $30M under the Governor’s budget proposal.

The Community Revitalization and Business Attraction program at MEDC would see their line item returned to prior year funding levels ($100M) following the current year’s $20+M reduction.

An additional $36.5M is recommended to continue funding local court system costs for indigent defense commission standard requirements.

The budget proposal also calls for a supplemental/current year appropriation of $14M to fund local clerk expenses related to the upcoming March Presidential Primary election.

Copies of the Governor’s Executive Budget Proposal can be downloaded here.  Specific proposal briefing papers and copies of the proposed budget bills can be viewed on the State Budget Office webpage here.

Now that the Governor’s budget has been presented, the House and Senate Appropriations committees will begin their review of the overall budget and each individual department starting next week.  The Senate General Government budget subcommittee is already scheduled to begin reviewing the budget that houses revenue sharing on February 12th.  Legislative review and deliberation will occur through the spring break period, with the May Consensus Revenue Estimating Conference serving as the final benchmark in the process before legislative leaders and the Governor sit down to hammer out final details in an effort to complete the budget prior to the new July 1st deadline.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.