Honigman Capitol Report

Alert

May 5, 2023


Budget Status Budget bills are now sitting on the floor of the House and Senate with both chambers recommending spending more than the Governor proposal. Next week, the Senate is expected to vote on a series of bills containing $79.5 billion in spending - slightly higher than Governor Gretchen Whitmer’s proposed budget of $79.4 billion. However, the House and Senate bills propose lower use of General Funds than the Governor. Notably the Governor proposed $19.09 for the School Aid Fund while the Senate Appropriations Committee has proposed slightly less at $19.06 billion. Both the House and the Senate Appropriations Committees reported budget bills to the floor this week, setting up continued negotiations between the Legislature and Governor Whitmer’s office. Republicans put nearly 100 amendments forward during the House committee meeting, but all failed.		School Grading System Legislation to drop Michigan’s A-F school quality ranking system was approved in the Senate by a party-line 20-18 vote. Republicans criticized the change, claiming that removing the report-card style assessment tool would weaken transparency and accountability in the education system. Senator Ruth Johnson (Republican), a member of the Senate Education Committee, provided the following comment: "[o]ur state's students get graded A-F on their report cards so that their parents know how they're doing in every subject. Yet, we stand here today, poised in this body, to pass a bill that says our schools, (that teach our state's children), that are paid for by state tax dollars, cannot be subjected to the same type of scrutiny." However, members of the public education community have criticized the A-F school ranking system since it was signed into law in December 2018.


House Bill 4084 The House passed HB 4084 on Wednesday with bipartisan support that would allow for a one-time late filing for an industrial personal property tax exemption, where timely filing was missed due to circumstances arising from the COVID-19 pandemic. Sponsored by Representative Nate Shannon (Democrat), the bill would allow qualified Michigan businesses to file a one-time retroactive exemption for the 2021 tax year only. The exemption would only apply to personal property that would have been otherwise eligible for the exemption in the 2021 tax year as part of the gradual phase out approved by voters in 2014. Honigman LLP’s Brian Kandler has been working to help shepherd the issue through the legislative process on behalf of firm client J. G. Kern Enterprises, an automotive supplier based in Sterling Heights, Michigan. The bill now heads to the Senate for further action.		Senate Budget Proposed for Highland Park Water Debt Senator Sylvia Santana (Democrat), chair of the Senate DHHS Appropriations Subcommittee, included $20.3 million from the state’s General Fund in the proposed DHHS budget for FY’24 to make a payment to the Great Lakes Water Authority (GLWA) on behalf of Highland Park. The Highland Park City Council called on Governor Whitmer to begin proceedings for U.S Chapter 9 bankruptcy recently. However, some groups, including the Citizens Research Council of Michigan (CRC) have questioned whether Highland Park can continue as its own city or if it should be absorbed into Detroit.


Looking Ahead The legislature will continue to position budget bills for future negotiations. Final decisions will not be made until after the upcoming Consensus Revenue Estimating Conference sets updated revenue forecasts for the coming year. Projections for weakened collections and a near term economic lull may lead policymakers to cut back on the nearly $80 billion budget proposals.