LANSING, Mich. – Gov. Rick Snyder on Tuesday signed mid-budget year bills to finalize a plan to tackle Michigan's projected $412 million shortfall in two primary funds that receive about $21 billion annually in tax revenue.
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The hole — $532 million in the general fund — is offset partially with a $120 million surplus in the school aid account, according to the Senate Fiscal Agency. The deficit is being blamed primarily on companies redeeming business tax credits for more than was expected.
Here's how the Republican governor and GOP-led Legislature addressed the problem:
Snyder last month issued an order cutting or shifting $106 million from the general fund, which was quickly OK'd by legislative budget committees. It includes a 9 percent cut in funding for teaching hospitals along with reductions in payments to rural hospitals. There also are cuts in programs that train prisoners and the disabled for employment, support for a trail from Detroit to the Upper Peninsula, a reduction in the size of a new state trooper class, and a delay in the replacement of outdated radios for first responders.
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EDUCATION FUND SHIFT
The legislation shifts all spending on community colleges from the depleted general fund to the fatter school aid fund, saving $167 million. Democrats who criticize the move say that money could have gone to K-12 districts in the next budget, while Republicans say the shift prevents further cuts this year. Another $88 million is saved by forgoing a payment to the Public School Employees Retirement System. Snyder says it would have been well above the amount needed to fully fund the state's share toward unfunded pension and health care liabilities.
Enrollment in Michigan's version of the expansion of Medicaid is surpassing expectations, and the U.S. government is picking up the entire cost. Caseloads in the traditional joint state-federal government health insurance program, however, are down. They dropped by about 90,000 late last year, saving the state $100 million. Caseloads also are lower in welfare, food and disability assistance programs.
The legislation moves $3 million from a fund that helps health insurers offset the cost of covering autism benefits and directs it to autism centers at Michigan State, Eastern Michigan and Western Michigan universities. The move saves the general fund but Democrats criticize it, saying a third of the $26 million autism fund set up in 2012 will have gone to other autism programs instead of directly toward treatment costs. "We've hit a tipping point where I think we've gone too far," said Sen. Rebekah Warren of Ann Arbor.
Snyder's executive order includes a $12 million, or 24 percent, cut in the state's $50 million Film and Digital Media Production Assistance Program. House Republicans may vote as early as this week to eliminate the incentives in the next budget, but Snyder said Tuesday that "turning it off" immediately wouldn't be appropriate. "People have been relying on it, been making decisions based on it. So you do it in some gradual fashion because the industry should be self-sufficient at some point in the future," Snyder told reporters.
NO MORE LAPTOPS
Executives in the Department of Human Services who have both a tablet and a laptop will have to turn in their laptop, saving about $16,000.
The legislation allocates $10 million to hold the May 5 special election on raising the state sales tax to trigger $1.3 billion a year more for transportation infrastructure and more than $300 million for education and local governments.
NO EDUCATION STUDY
The Legislature rejected Snyder's request for $1 million for a study determining the sufficient per-pupil cost to enable students to satisfy high school graduation requirements and if funding is distributed so all children have an equal opportunity to succeed. Democrats insisted in December that the study be conducted as part of a deal to help put the road funding measure before voters. The status of the study, required by law, is now unclear.
Public Act 5: http://1.usa.gov/1FHpl51
Public Act 6: http://1.usa.gov/1AedzeN
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