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Agreement on budget targets signals positive 'culture shift' in Lansing

Thursday, May 19, 2011

Contact: Sara Wurfel
Office: 517-335-6397

LANSING, Mich.- An agreement on spending targets by the governor and legislative leaders paves the way for the earliest completion date of the state budget in years.

Gov. Rick Snyder, Senate Majority Leader Randy Richardville and House Speaker Jase Bolger emphasized that while much work remains, the setting of spending targets at this point in the year is a welcome change that will prevent the budget process from dragging into the fall.

"It's a new day in Michigan," Snyder said. "We're leaving gridlock and negativity in the past. Michigan has not been well served by the annual budget dramas that have taken government to the brink of shutdown. We will have a timely, balanced budget in place so that our municipal and school partners can accurately plan for the coming year, avoiding the chaos that too often has been foisted upon them due to Lansing's inaction.

"The budget we are working toward is a solid building block for Michigan's future. Coupled with the recent tax overhaul, this fiscally disciplined, structurally balanced budget will let investors and job providers know that Michigan's house is in order. Restoring this fiscal integrity creates an economic environment that leads to more jobs for Michigan workers. While healthy discussion will continue in the coming days, there's no doubt that the culture change in Lansing is providing Michigan families with the responsive government they expect and deserve."

The work done to balance this year's budget means that the 2013 budget is balanced as well, which is a significant achievement.

"We cannot continue funding a status quo in Michigan that isn't working for Michigan families," said Bolger, R-Marshall. "Voters sent us to Lansing with a sense of urgency to focus on jobs and balance the budget by containing spending. We are righting the state's fiscal ship through responsible spending in a structurally balanced budget that no longer uses one-time funding for ongoing spending. The ways of the past have created deficits year after year with the burden of continuing debt falling to our kids and grandkids. The House Republicans vowed this year would be different and we have stuck to that commitment."

The proposed spending plan includes revised targets for areas such as K-12 education, revenue sharing for cities and counties, and state employee concessions.

"Each step in the process has been an improvement over the last and I commend my colleagues in the Senate, the Speaker and the governor for their hard work," said Richardville, R-Monroe. "Together, we have resolved the budget deficit and passed structural reforms that will put our state on sound financial footing and help spur economic growth. Job creation has been the goal from day one and this budget agreement is one more step in the direction toward putting our citizens back to work."

Highlights include:

  • An extra $310 million in funding for K-12 schools. Of that total, $150 million will be distributed on a per-pupil basis to districts that meet specified financial best practice measures as defined in the K-12 appropriations bill; and one-time funding of $160 million to help defray local school district costs related to the Michigan Public School Employees Retirement System. This effectively reduces the per-pupil cut to less than $100.
  • Reducing the state employee concessions being sought from $180 million to $145 million. 
  • $30 million in additional funding for local units of government, half of which goes to cities, villages and townships as part of the Economic Vitality Incentive grants, and the other half going for county revenue sharing.
  • $50 million added to the Michigan Strategic Fund for economic development activities, including brownfield redevelopment and historic preservation incentives. 
  • Continuing a commitment to Michigan's film industry with a $25 million appropriation, providing the ability to fund projects with the primary goal of creating jobs and supporting a sustainable film industry. 
  • Prudently putting nearly $400 million in "savings accounts." The balanced budget allows Michigan to pay down its long-term liabilities, making it possible to add $255 million the Budget Stabilization Fund and $133 million to a School Aid Fund reserve account for future retirement liabilities. This is in stark contrast to Michigan's past behavior of overspending.

The budget will eliminate Michigan's $1.5 billion deficit. Unlike budgets of previous years, this one contains no one-time fixes or accounting gimmicks. These sound principles will help Michigan get back on the path to an AAA bond rating status, a key indicator of a state's credit quality and financial strength that also saves millions of dollars in borrowing costs. Also, for the first time, state spending will be tied to measured outcomes through the use of performance metrics. 

Snyder has asked his legislative partners to finalize the budget by May 31.