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March 04, 2009 3:01 AM
Battle brewing over state stimulus funds
By Amy Lane
Crain's Detroit Business
Crain's Detroit Business
LANSING -- Game on. The fight in Washington over the federal stimulus package is over.
Now the battle moves to Michigan as state spending bills are crafted to authorize disbursing Michigan’s share of the $787 billion American Recovery and Reinvestment Act.
Some funds coming to Michigan will be distributed under existing formulas for Medicaid, unemployment insurance and at-risk and special education funds for K-12 schools.
Nearly $1 billion in formula funding for transportation will be prioritized and distributed through regional planning agencies in collaboration with the state.
But lawmakers and the governor’s office are now studying what discretion they’ll have in spending stimulus money, and business leaders are gearing up for legislative action.
“Optimistically, we’re trying to hope they’ll work together. Realistically, when you have that kind of money, people are going to have different priorities and there will be some real battles,” said Jim Holcomb, vice president of business advocacy at the Michigan Chamber of Commerce.
“We’re still trying to figure out how best we can engage … to have the best impact for Michigan businesses.”
A core value in the business community is that stimulus money should not be used to plug budget holes or bulk up government.
In the state House, Speaker Andy Dillon, D-Redford Twp., has set up 10 work groups — currently all composed of Democrats — to study the best ways to allocate stimulus funds.
In the Senate, Majority Leader Mike Bishop, R-Rochester, has assembled a committee of Senate Republican caucus members to review the stimulus package. Bishop said Republicans also are watching how other states are enacting the stimulus package.
And in March, Gov. Jennifer Granholm plans to outline her specific priorities for discretionary spending.
“Once we have a firm handle on the total dollars that are coming to Michigan, and the guidelines on how those dollars can be spent, and how they will flow to the state, we will be in a better position” to outline priorities, said Liz Boyd, Granholm’s press secretary.
A 1,152-page wish list, posted last week on a new state Web site, contains more than 16,000 proposed projects. State agencies will use the list to look at what projects could be funded.
But Boyd said the ultimate payout will be determined based on criteria in federal law, formulas and processes that already exist under federal programs.
The state Web site, www.michigan.gov/recovery, will serve as an online source on the stimulus package, eventually including programs and projects that will receive funding and information on the distribution process.
The governor’s office last week didn’t disclose the total amount that Michigan will have available to spend. Dillon has cited a $7.1 billion figure, and Bishop said he has heard estimates from $5.5 billion to $7 billion.
Dillon has instructed House work groups to determine how funds must be appropriated and a time frame for doing so.
Granholm plans to use some stimulus money to offset her proposed $59-per-pupil cut to K-12 schools and a 3 percent cut to universities.
Michigan’s stimulus share includes an estimated $1.3 billion for K-12 education, universities and community colleges; $163.5 million in education grants and $293.1 million that Michigan can use for any purpose, according to an analysis by the Senate Fiscal Agency.
As the stimulus action plays out in the Legislature, business leaders say they will watch to see how the money is used.
“There are two levels of our concerns about how the stimulus is used: One, that it will plug holes and provide legislators with opportunity to delay real structural reform for at least another year … and secondly, that it might be used to create new programs that have no dedicated source of ongoing funding,” said Sarah Hubbard, vice president at the Detroit Regional Chamber.
“It’s just the natural tendency of the Legislature to spend money like this without keeping an eye on future needs.”
Subject to legislative approval, the Granholm administration already plans to use $313 million in stimulus money to cover increased Medicaid costs and other areas in the current-year state budget, and $500 million toward Medicaid in fiscal 2010.
Bishop said Michigan’s first objective should be to balance its budget — without the stimulus money.
The Michigan chamber’s Holcomb said the money should not be used “as a one-time crutch.” He said budget cuts, government reform and efficiency measures are needed regardless of the federal money.
But Holcomb did say one question worth exploring is whether the stimulus money could be used to repay the state’s federal unemployment borrowing and thus avert the need for higher employer taxes. Or, he asked, is there a way to use the stimulus money to help pay to phase out the surcharge on the Michigan Business Tax?
Bishop said he would like to find a way to use stimulus money to provide MBT or other tax relief.
Senate Fiscal last week listed several potential one-time uses of excess federal stimulus funding.
The listed included providing grants to municipalities to help them balance their budgets, rebuilding state reserves, paying down state debt, helping the state meet its retirement system obligations and buying buildings that the state is currently leasing.
Now the battle moves to Michigan as state spending bills are crafted to authorize disbursing Michigan’s share of the $787 billion American Recovery and Reinvestment Act.
Some funds coming to Michigan will be distributed under existing formulas for Medicaid, unemployment insurance and at-risk and special education funds for K-12 schools.
Nearly $1 billion in formula funding for transportation will be prioritized and distributed through regional planning agencies in collaboration with the state.
But lawmakers and the governor’s office are now studying what discretion they’ll have in spending stimulus money, and business leaders are gearing up for legislative action.
“Optimistically, we’re trying to hope they’ll work together. Realistically, when you have that kind of money, people are going to have different priorities and there will be some real battles,” said Jim Holcomb, vice president of business advocacy at the Michigan Chamber of Commerce.
“We’re still trying to figure out how best we can engage … to have the best impact for Michigan businesses.”
A core value in the business community is that stimulus money should not be used to plug budget holes or bulk up government.
In the state House, Speaker Andy Dillon, D-Redford Twp., has set up 10 work groups — currently all composed of Democrats — to study the best ways to allocate stimulus funds.
In the Senate, Majority Leader Mike Bishop, R-Rochester, has assembled a committee of Senate Republican caucus members to review the stimulus package. Bishop said Republicans also are watching how other states are enacting the stimulus package.
And in March, Gov. Jennifer Granholm plans to outline her specific priorities for discretionary spending.
“Once we have a firm handle on the total dollars that are coming to Michigan, and the guidelines on how those dollars can be spent, and how they will flow to the state, we will be in a better position” to outline priorities, said Liz Boyd, Granholm’s press secretary.
A 1,152-page wish list, posted last week on a new state Web site, contains more than 16,000 proposed projects. State agencies will use the list to look at what projects could be funded.
But Boyd said the ultimate payout will be determined based on criteria in federal law, formulas and processes that already exist under federal programs.
The state Web site, www.michigan.gov/recovery, will serve as an online source on the stimulus package, eventually including programs and projects that will receive funding and information on the distribution process.
The governor’s office last week didn’t disclose the total amount that Michigan will have available to spend. Dillon has cited a $7.1 billion figure, and Bishop said he has heard estimates from $5.5 billion to $7 billion.
Dillon has instructed House work groups to determine how funds must be appropriated and a time frame for doing so.
Granholm plans to use some stimulus money to offset her proposed $59-per-pupil cut to K-12 schools and a 3 percent cut to universities.
Michigan’s stimulus share includes an estimated $1.3 billion for K-12 education, universities and community colleges; $163.5 million in education grants and $293.1 million that Michigan can use for any purpose, according to an analysis by the Senate Fiscal Agency.
As the stimulus action plays out in the Legislature, business leaders say they will watch to see how the money is used.
“There are two levels of our concerns about how the stimulus is used: One, that it will plug holes and provide legislators with opportunity to delay real structural reform for at least another year … and secondly, that it might be used to create new programs that have no dedicated source of ongoing funding,” said Sarah Hubbard, vice president at the Detroit Regional Chamber.
“It’s just the natural tendency of the Legislature to spend money like this without keeping an eye on future needs.”
Subject to legislative approval, the Granholm administration already plans to use $313 million in stimulus money to cover increased Medicaid costs and other areas in the current-year state budget, and $500 million toward Medicaid in fiscal 2010.
Bishop said Michigan’s first objective should be to balance its budget — without the stimulus money.
The Michigan chamber’s Holcomb said the money should not be used “as a one-time crutch.” He said budget cuts, government reform and efficiency measures are needed regardless of the federal money.
But Holcomb did say one question worth exploring is whether the stimulus money could be used to repay the state’s federal unemployment borrowing and thus avert the need for higher employer taxes. Or, he asked, is there a way to use the stimulus money to help pay to phase out the surcharge on the Michigan Business Tax?
Bishop said he would like to find a way to use stimulus money to provide MBT or other tax relief.
Senate Fiscal last week listed several potential one-time uses of excess federal stimulus funding.
The listed included providing grants to municipalities to help them balance their budgets, rebuilding state reserves, paying down state debt, helping the state meet its retirement system obligations and buying buildings that the state is currently leasing.
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