Honigman Capitol Report

Alert

Whitmer Announces Budget Proposal


Governor Gretchen Whitmer revealed a $79 billion budget proposal on Wednesday focused on investments in education, infrastructure, the environment and economic development. The proposal is up from the $76 billion spending plan signed last year, buoyed by an estimated $9 billion state surplus. Much of the surplus is linked to one-time funding due to circumstances caused by the COVID-19 pandemic. At least $1.1 billion of proposed spending would be allocated to savings accounts, $200 million for the rainy day fund and $900 million for a new school aid rainy day fund. The budget plan follows a tax deal announced last week that would give every state tax filer a onetime $180 check, expand the Earned Income Tax Credit and rollback the so-called pension tax on retirement income.

   

Education


Education was the big winner in Whitmer’s proposal, with several major expenditures directed to school programs. Notably, $724.4 million was proposed for literacy grants and coaches, math intervention programs, tutoring and other measures designed to address learning loss during the pandemic. In addition, a $614 million increase for basic school aid operations, $500 million for school infrastructure, $300 million to address health and safety issues in schools and $160 million to provide universal free breakfasts and lunches at K-12 public schools were included in the proposal. These expenditures are on top of the $224 million proposed to expand the Great Start Readiness Program.

Whitmer also called for expanding the Great Start Readiness Program so that all 4 year olds have access to Preschool. Currently the program is available to children whose family household income is up to 250 percent of the federal poverty level.

Infrastructure


Another focus of Whitmer’s proposed budget was drinking water improvements. Whitmer has proposed a total of $523 million to improve drinking water infrastructure throughout the state. This includes a $226 million investment to remove and replace 40,000 lead service pipes, $122.5 million for water filter distribution and faucet and plumbing replacement and $100 million to create an environmental justice cleanup fund for contaminated sites. Whitmer also wants to set aside $350 million to match federal government infrastructure grants and $200 million more for the Michigan Bridge Building initiative to replace 30 more state and local bridges.

Environment


The Governor is also proposing investment into the environment through promotion of electric vehicles. The proposed budget includes $170 million to support this purpose with $48.4 million of that going towards temporarily exempting the first $40,000 of the purchase price of an electric vehicle from the state’s 6 percent sales tax. The plan also includes $10 million for the state to buy new electric vehicles and another $45 million for grants to help local governments, airports and other agencies buy climate-friendly vehicles and convert existing fleets to zero-emissions.

Economic Development


Whitmer’s proposed budget includes $500 million per year to the Strategic Outreach and Attraction Reserve (“SOAR”) Fund. The Governor wants to provide a permanent funding mechanism for the SOAR fund which is a business incentive program credited for helping with projects like the General Motors expansion into Lansing, Ford’s electric vehicle production in metro Detroit and Hemlock Semiconductor’s investment in Saginaw County.

 

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