State Budget Target Talks Continue
Spokespersons for the House and Senate Democratic caucuses did not return messages seeking comment about the status of the annual negotiations to set the framework for finalizing the 2023-24 fiscal year budget.
Other sources outside the meetings but briefed on their status, speaking on background, said the meetings are going long, as they usually do. This also is the first time Democrats, with full legislative control plus the governor’s office, are in charge of them, adding a new wrinkle.
The plan had been for a target agreement to be reached this week, conference committees to approve bills for each department and major budget area next week and then the House and Senate to pass omnibus final budget bills sometime the week of June 19-23. Over the past 20 years or so, the Legislature combines all of the education budgets (K-12, community colleges and higher education) into one bill and everything else into another bill.
In the more distant past, each department and major budget area had its own bill. The House and Senate have queued up shell omnibus budget bills. HB 4437 , for state departments and agencies, has passed the House and is sitting on the Senate floor. SB 174 , the education omnibus budget, has passed the Senate and is in the House Appropriations Committee .
There is a nonbinding deadline in statute for the Legislature to complete action on the budget by July 1. That is when the fiscal years begin for many entities that rely on state funding, like K-12 schools and local governments. Governor Gretchen Whitmer has said she anticipates having a budget done before June ends, and that also appears to be the goal of the Legislature.
One source said differences between the House, Senate and governor on programmatic spending are no obstacle to an agreement. What is proving more challenging is spending for local projects, sometimes called Enhancement Grants. Various regions have long lists of asks. Then there’s the matter of assuring that not only all members of the narrow Democratic majorities in both chambers are satisfied with the list of projects but also enough minority Republicans to assure enough votes for immediate effect in the Senate to achieve the required two-thirds majority.
Are Economic Incentives A Waste Of Money If Population Growth Isn’t The ROI?
Now at the year’s halfway point of June, lawmakers on the Senate and House Appropriations Committees have approved deploying $585 million in performance-based corporate incentives to be distributed by the Michigan Economic and Development Corporation (MEDC).
From January 2019 through September 2022 specifically, the MEDC oversaw the approval of more than $641.9 million in placemaking funding.
As Gov. Gretchen Whitmer’s administration and the MEDC specifically look to compete for substantial investments from the semiconductor and electric vehicle industries, Michigan’s economic development corporation has calculated that for every 100 direct jobs added to the state’s "automotive electrical equipment industry," the population could change by 350.
The MEDC has additionally estimated that for every 100 direct jobs added to the semiconductor industry in Michigan, the population could change by 150.
However, during the 2023 Mackinac Policy Conference, which took place from May 30 to June 2, MEDC Chief Executive Officer Quentin Messer Jr. said an incentive for a particular project "will not necessarily relate (to) an immediate, sustainable population" boost.
"We need to look at, in 27 years from now, has Michigan grown in a way that outpaces the national average? I would argue we are in a very strong position to do that," Messer said to MIRS. "Frequently, what we’re seeing companies doing (is) coming, making decisions today that it will take four or five years to fully ramp up full operations. Now, in the interim, you’re going to have thousands of construction jobs, but you’re not going to see the full number of people who are going to work…"
Although the state’s Strategic Outreach and Attraction Reserve (SOAR) Fund – financed by the General Fund and designed for attracting large-scale corporate developments – has been linked to luring $16 billion in projects with 16,000 projected job creations, Messer said it probably won’t be until 2040 when the awards will be linked to new Michiganders.
"You’ve got births and deaths, you’ve got other things … but we certainly know what happens when companies leave," Messer said. "What we’re trying to do is get in front of it now, win in the sectors that we need."
Ultimately, when asked if economic incentives – like the aforementioned $585 million provided through the SOAR Fund this year – are a waste of money, Messer quickly said, "Hell no."
Even so, despite the latest stream of actions to compete and incentivize, the Citizens Research Council (CRC) of Michigan and the Ann Arbor-based Altarum Institute have started releasing a report finding that from 2025 to 2030, starting two years from now, the presence of Americans moving to Michigan domestically will fall by 72,000. From 2045 to 2050, the report estimated there will be 83,000 fewer Americans putting down roots in Michigan.
When asked if business incentives are a waste of money if Michigan is not attracting more residents in return, Brad Williams, the Detroit Regional Chamber’s vice president of government relations, said it’s a little more complicated than just that.
"Sometimes these incentives are laying the groundwork, making infrastructure that is going to allow for population growth," Williams said. "We need to look at everything with a critical eye, whether it’s tax incentives or government spending, we always need to make sure we’re getting a good return on investment, but we can’t only consider one metric to see if that’s a return for investment."
For example, when it comes to state spending to support battery manufacturing developments for electric vehicles, like the approximately $800 million in approved legislative appropriations to back Ford Motor Company’s incoming "BlueOval" battery park, Williams said he honestly couldn’t speak to how much population growth Michigan will get in return.
However, Williams said the developments will "allow us to continue to do automotive manufacturing in this state going forward."
“If those battery plants were located in Tennessee or Alabama, the plants that we have now that are doing internal combustion engines, as we phase out of an internal combustion economy, those plants become … less and less needed," he said. "Having those battery plants in place keeps those plants viable going forward."
Nonetheless, he did say when the SOAR Fund was created in December 2021, it was intended to be the cherry on top of the ice cream sundae. Because of deals coming in so quickly, "it has had to become the whole sundae."
He said while it won’t be easy, developing things like a state-funded research and development tax credit could be part of returning the SOAR Fund to what was initially intended.
"Those are the types of incentives that are in existence in other states that can make it, so the SOAR Fund isn’t a $700 million check every time we have a new project coming into the state," Williams said. "There is some gray area here, but there are some concrete steps we know we can take."
House Gets To Work On Prop 2 Implementation Bills
The House Elections Committee heard testimony on bills that would provide for early voting, absent voter ballot drop boxes, expanded definitions of voter identification, permanent mail ballot voters, signature matching and curing and expanded precinct sizes.
The Senate Elections and Ethics Committee heard testimony on its own version of the legislation Wednesday.
Rep. Penelope Tsernoglou (D-East Lansing), who chairs the committee and is the sponsor of several bills in the package, called it a "massive effort to expand voting access."
Deputy Secretary of State Aghogho Edevbie said it was "another step in the right direction ensure each voter has the flexibility they need to cast a ballot and have their voices head in Michigan’s elections.
"First and foremost, we believe that these bills provide the flexibility needed by clerks in counties, cities and townships of all sizes across our state to implement Proposal 2 in the ways they need to do it," he said. "These bill level the playing field by giving every voter the right to return their absentee ballot to a secure drop box, by mail with pre-paid postage, or to use an early voting site. … These are national best practices to ensure that the amendment is enacted in a way that maintains the fairness, accuracy and security that Michigan voters demand."
HB 4695, sponsored by Tsernoglou, would provide for and clarify early voting procedures. Under the bill, municipalities could work together or with their county to provide early voting access. Most restrictions on where polling places can be held would also be removed to allow for the nine days of early voting required by Proposal 2.
HB 4696, another sponsored by Tsernoglou, would provide sentencing guidelines for early voting violations.
Republicans on the committee raised concerns about ensuring the security of ballots during early voting.
Rep. Jay DeBoyer (R-Clay) also questioned the expansion of polling locations and asked if clerks would be given unilateral authority to select venues.
"When we’re dealing with something as significant as modifying, fundamentally, the election process, I think we need to be much more specific," he said.
HB 4697, sponsored by Rep. Matt Koleszar (D-Plymouth), would modify requirements for absent voter ballot drop boxes. Under the legislation, every municipality would have to have at least one drop box, and at least one drop box for every 15,000 registered voters. The bill also outlines drop box security requirements but removes the current requirement that drop boxes located outdoors must have video monitoring.
Rep. Rachelle Smit (R-Shelbyville) asked why the requirement for cameras was being removed.
Edevbie said that although the Department of State still believed there should be a requirement for video surveillance, the goal was to provide flexibility for rural communities that may not have the necessary broadband access.
"There are major parts of the state that don’t have any internet access," he said. "One of the things we have to think about is how much is it going to actually cost to have cameras across the state at every single drop box in a way that conforms with the existing law, and we certainly are welcome to figuring out other approaches to make sure that drop boxes are secure and voters can have confidence in the system."
HB 4698, sponsored by Rep. Kara Hope (D-Holt), would expand what identification is accepted for election purposes to include a current military photo identification card issued by the state of Michigan, a current photo identification card issued by a local government and a current student photo identification card issued by an education institution in Michigan.
Those who testified in support of the bill clarified that the identification required to register to vote would be different from the identification voters were required to present before voting.
HB 4699, sponsored by Rep. Erin Byrnes (D-Dearborn), would allow voters to register as permanent mail ballot voters. That means people who submit a signed absent voter ballot application could receive an absent voter ballot by mail for all future elections.
Once the application for all future elections was verified, the voter wouldn’t have to apply again, unless the application was rescinded.
HB 4700, sponsored by Rep. Carrie Rheingans (D-Ann Arbor), would provide for signature matching and curing for absent voter ballot applications and return envelopes, allowing for voters to be placed on a permanent absent voter list. The bill is tie-barred to SB 339 .
HB 4701, sponsored by Rep. Jason Morgan (D-Ann Arbor), would provide sentencing guidelines for Michigan Election Law violations and cannot go into effect unless HB 4700 is passed.
The final bill in the package, HB 4702, also sponsored by Tsernoglou, would increase the maximum number of electors in a precinct from 2,999 to 5,000.
"This is an important bill, and we have been asking for this since the passage of Proposal 3 of 2018 with the large increase of the number of people who are voting by mail," said Lansing Clerk Chris Swope. "It has decreased the turnout in the precincts, and now, with the addition of the nine days of early voting, it’s important that we have this, and that we have it enacted soon."
Rep. Dylan Wegela (D-Garden City) questioned if the bill would negatively impact voter turnout by increasing lines to vote, but Swope said the decision would be left up to local clerks who would make decisions in data driven ways.
Smit spoke in support of the bill and emphasized the importance of making decisions that helped voters have timely access to the polls.
"It’s just extremely important to make sure that all of our voters have accessibility in a reasonable amount of time," she said.
Several clerks testified in support of the bills in the package, urging the Legislature to act quickly so that they could begin preparing for 2024 elections.
No further action was taken on the bills.
"This work, with these work groups and having all the stakeholders on the same page, and the House and Senate in complete alignment on these bills is a very collaborative effort that I hope we can continue," Tsernoglou said.
DCD OUT AND ABOUT:
DCD was happy to again be a sponsor at the Spectrum Human Services annual golf outing last week. Jake German serves on the Spectrum Board of Directors and works hard to support their company’s great work in the areas of child welfare, family preservation, and mental health human services organizations.
Senator Mat Dunaskiss was happy to attend the re-election campaign kickoff for Madison Heights Mayor Roslyn Grafstein last week where he was able to catch up with his old legislative colleague Sheriff Mike Bouchard.
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