February 09, 2006
February 9, 2006
Funding Increased for Education; Infrastructure Projects to Create Jobs
LANSING – State Budget Director Mary A. Lannoye today presented Governor Jennifer M. Granholm’s 2007 Executive Budget to a joint session of the Senate and House Appropriations Committees. The Governor’s budget proposal demonstrates once again her commitment to fiscal integrity and provides a solid foundation for her comprehensive plan to create jobs and diversify the economy.
“I am once again proud to offer a balanced budget that proves we can live within our means while investing in our future,” said Granholm. “My budget proposal invests in our shared priorities – schools that set high standards and give our kids the tools to success, protecting the jobs we have and attracting new jobs, expanding access to affordable health care, and protecting our families – all without raising general taxes.”
Since taking office in 2003, Governor Granholm has resolved more than $4 billion in budget shortfalls – more than any other governor in the state’s history. To balance the fiscal year 2007 budget, the Governor closed an additional $408 million funding gap. She once again balanced the budget using a responsible mix of solutions, including spending cuts, restricted revenue shifts, and closure of tax loopholes.
Highlights of Governor Granholm’s 2007 budget include:
• An increase for the foundation allowance for K-12 schools by $200 per pupil. The Governor’s overall budget for schools represents an increase of $362 million for the coming year. This increase will be directed to classroom spending.
• An increase of $34 million, or 2 percent, for the state’s colleges, universities, and community colleges. This brings overall spending for higher education to $2 billion in the coming year.
• $15 million for a new after school program for middle school students to focus on math, science, and computer technology.
• $125.1 million for Great Start preschool programs – an increase of $36.5 million.
• Nearly $230 million for scholarships and student financial aid programs.
• $100 million in capital outlay funding as an incentive for local units of government to partner with the private sector, state government and other units of government on significant economic development projects that foster job creation.
• $194.3 million in state support building projects at institutions of higher learning throughout the state. Not only will this mean an immediate infusion of jobs in the state, but it will expand capacity to help move towards the Governor’s goal of doubling the number of college graduates in Michigan.
• Over $532 million invested in employment and training services, including adult and vocational education, welfare-to-work, payments to local workforce agencies, and career and technical education assistance.
• $20 million ($9 million general fund) for a wage increase for home health care workers who provide critical care for the elderly and disabled persons in their own homes.
• $10.8 million for the MI Opportunity Partnership to continue matching unemployed citizens with existing job vacancies.
• $1.5 million to fund the Regional Skills Alliances to help job seekers get the skills necessary to find jobs in their local community. This represents a $650,000 increase.
• $47.9 million to continue the MIChild program which provides low-cost health-care coverage for 34,000 children in the state.
• 51 new child protective services workers to help ensure that children are safe from abuse and neglect.
• A $33.4 million increase in funding for public transportation to improve the mobility of Michigan citizens – to strengthen our economy and our quality of life.
• An additional $22 million to improve the state’s parks – one of the state’s largest tourist attractions.
The overall budget totals $42.6 billion and includes $9 billion in general fund spending, $13.1 billion from the School Aid Fund, $1.1 billion for revenue sharing payments to local units of government, $3.6 billion for transportation needs, and recognizes $13.4 billion in federal revenues.
Once again, the Governor’s budget focuses the state’s spending in six priority areas: improving student achievement; sustaining and creating business investment and jobs in Michigan; making Michigan’s people healthier and our families stronger; making government in Michigan more cost-effective and efficient; protecting citizens and making our communities safer; and enhancing the quality of Michigan’s natural environment.
Improve Student Achievement
Governor Granholm knows that to compete in the 21st century economy, we must prepare our children with the tools they need to compete. In total, the Governor’s recommended budget for improving student achievement is $15.9 billion, of which $2.2 billion is general fund. The School Aid Fund recommendation totals $13.1 billion, an increase of $362 million over the current year. Reflecting the Governor’s priority to spend more money in the classroom, she has proposed a $200 per pupil increase in the foundation allowance. This increase would bring the minimum allowance to $7,075 per pupil – the highest ever in the state’s history.
The Governor also proposes $50 million to address problems experienced by districts with declining enrollment by smoothing the funding formula and preventing steep declines in school funding. Over 40 percent of the state’s school districts will benefit from these payments.
The budget recommendation includes $15 million for an after school program for middle school students to focus on math, science, and computer technology to help students meet higher standards and prepare them for more rigorous high school curriculum expectations.
Governor Granholm also calls for an increase in funding for the state’s system of higher education. The Governor proposes an increase for all institutions, totaling $34 million. The budget calls for a two percent increase for the state’s three major research universities – Michigan State University, Wayne State University, and the University of Michigan. For the other 12 state universities, the Governor calls for a one percent across the board increase, with an additional one percent increase to be distributed through a formula that rewards degree completion, accessibility, affordability, and outreach to low-income students. A two percent across the board increase is recommended for all of the state’s community colleges. The overall budget for higher education is $1.7 billion and $287.1 million for community colleges.
“In order to strengthen our economy and ensure that our children are prepared for the 21st century economy, we must invest in our schools and direct those dollars directly into improving learning in the classroom,” said Governor Granholm.
Sustain and Create Business Investment and Jobs in Michigan
As a part of Governor Granholm’s continuing commitment to “go anywhere and do anything” to protect the jobs we have and create new jobs, her 2007 budget commits $100 million in capital outlay spending as an incentive to partner with local units of government on significant economic development projects that foster regional collaboration and create good-paying jobs.
The 2007 capital outlay budget also includes $194.3 million for projects at 19 universities and community colleges throughout the state. With this commitment, every institution of higher learning that requested state support for a Jobs Today, Jobs Tomorrow project will have received it in the past year.
Job training is a critical component of the Governor’s economic plan. Welfare-to-work programs, which provide job training and placement services to over 100,000 citizens, are funded at $113.8 million for the coming year. In addition, the Department of Labor and Economic Growth (DLEG) will collaborate with the Department of Human Services (DHS) and local workforce boards on a new Jobs, Employment and Training (JET) pilot to provide services to long-term recipients in order to reduce poverty and welfare dependency later this year. The JET pilot is expected to save the state about $11 million in the coming year.
The Governor’s budget also includes: $10.1 million for arts and economic development grants; $135 million for housing and rental assistance; and $291.5 million for public transportation – an increase of $34.8 million. The overall funding for DLEG is $1.2 billion while funding for the Department of Transportation totals $3.4 billion.
“I will go anywhere and do anything to bring good jobs to Michigan,” said Governor Granholm. “That’s why we have the most aggressive, far-reaching economic plan of any state in the country. And this budget proposal helps implement critical job training and economic development programs that will help make our plan a success.”
Make Michigan’s People Healthier and Our Families Stronger
For Michigan to be a great place to live, work, and do business, we must improve the health of our citizens and strengthen our families. The Governor’s budget for fiscal year 2007 proposes health and human services funding of $15.5 billion, of which $4.2 billion is general fund.
As the Governor announced in her State of the State address, the Michigan First Health Care Plan will provide access to affordable insurance coverage to 550,000 people. The plan will help small business employees, the self-employed, and the working poor who do not have access to employer-based insurance and who do not qualify for government programs. Upon federal approval, the state will gain $200 million in new federal funding to use with existing state and local dollars as a new match. Other services will not be affected by this new proposal.
The Governor’s budget includes over $7.3 billion to support the state’s Medicaid program which provides health care services to over 1.5 million people in Michigan. Of that funding, $2.1 billion is state spending. The Governor’s budget protects critical Medicaid services to the most vulnerable citizens of this state despite the challenging economic times.
To protect children from abuse and neglect, the Governor proposes an additional $3.7 million to hire 51 new children’s protective service staff. The budget includes $374 million for the Family Independence Program which provides basic cash assistance for nearly 78,000 low-income families. Also included in the budget proposal is: $2.7 billion for mental health and substance abuse services, $1.2 billion for food assistance to over 526,000 families, $136.6 million for energy and weatherization assistance, $265 million for the child support program, $207 million for foster care, and $94 million for programs for senior citizens.
In total, the fiscal year 2007 budget for the Department of Community Health is $11.3 billion, with $3 billion of general fund. The Governor’s budget for the DHS is $4.5 billion, of which $1.2 billion is general fund.
“In every budget I have presented, we have taken the critical steps toward reducing the cost and expanding access to vital health care services for the state’s citizens,” said Governor Granholm. “This budget is no different. We continue to find efficiencies in our health care system that allow us to provide effective service in the most cost-effective way we can.”
Make Government in Michigan More Cost Effective and Efficient
Better government means keeping the budget balanced, providing fast and friendly service to all citizens, cutting red tape, and wisely managing state government. This budget contains $2.4 billion, $392 million of general fund, to achieve these goals.
This funding includes: $1.1 billion in revenue sharing payments to local units of government, $171.1 million to administer and maintain the state’s tax system, $14 million to investigate and resolve discrimination complaints, and $378.4 million to streamline and consolidate computer operations and technology for the state.
Protect Our Citizens and Make Michigan’s Communities Safer
The protection of Michigan families and communities is a top priority for Governor Granholm. To protect and keep communities safer, the Governor’s budget for hometown security includes $2.9 billion, of which $2.3 billion is general fund. Of this total, the Department of Corrections budget for the coming fiscal year is $1.3 billion to operate a safe and secure prison system, currently housing 49,300 inmates.
The budget also includes $128.9 million to support nearly 1,110 state troopers, $27.9 million in the Michigan State Police forensic science program, $12 million for the Prisoner Re-entry Program, $138.4 million in federal homeland security funding, $12.4 million for the Michigan Commission on Law Enforcement Standards ($1.9 million in general fund), and $10.9 million for fire protection grants to local communities.
The budget for the Department of Corrections totals $1.95 billion, while the 2007 budget for the Michigan State Police is $578.5 million.
Enhance the Quality of Michigan’s Natural Environment
Strengthening our economy and our quality of life requires protection of our precious natural resources. The Governor’s budget to enhance the quality of Michigan’s environment comes to $851.6 million, of which $140.2 million is general fund.
The Governor has proposed $22 million in capital outlay funding to improve state parks and increase tourism in the state. This investment will enhance our state park system through improvements at campsites, nature centers, and camp stores.
The Governor’s recommended budget also includes: $61.2 million for environmental cleanup activities, $45.1 million for water quality monitoring, $81.1 million to manage the state park system, $42.8 million to support forest management, $7.6 million for bovine TB monitoring, and $61.8 million to support agricultural programs at Michigan State University.
The Department of Natural Resources is funded at $287 million, and the 2007 budget for the Department of Environmental Quality totals $370.2 million.
Tax Expenditures
Tax expenditures represent spending made through the tax system, rather than through the traditional budget process.
This budget recommends the elimination of 15 tax expenditures, because these expenditures no longer reflect the priorities of Michigan citizens. Of the expenditures proposed for elimination, 10 were agreed to as a part of a bipartisan agreement last November and adopted by the Legislature.
The Governor’s budget includes eliminating $111 million in tax expenditures in order to continue providing critical health care, education, and public safety programs. A complete list of the recommended tax expenditures for elimination is available in the budget document.
Fiscal Year 2006 Supplemental
Along with the fiscal year 2007 budget recommendation, the Governor is also recommending a supplemental for 2006. The supplemental appropriation request totals $33.2 million general fund. Of that, $32.1 million will go toward solving a projected shortfall of federal funds at DHS and $500,000 for anticipated redistricting costs. The supplemental non-general fund items reflect increases in available federal and restricted funds.
“This budget proposal continues to find efficiencies in state government and lives within our means,” said Governor Granholm. “At the same time, we are investing in the things that matter most to the people and to the future of our state.”
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A copy of the Governor’s recommended budget and related materials are available on the state’s website at www.michigan.gov/budget
