Updates About Budget

The Senate’s plan to finish the year with a strong focus on their economic development package was thrown off course last week when Republicans in the House Appropriations Committee disapproved nearly $645 million in previously appropriated work project funding ($351.5 million General Fund). Work projects are requests by the State Budget Office to carry forward funding from the previous fiscal year and allow those dollars to be utilized for the original purpose over a 48-month period. In previous years, work project appropriations generally continued until completion or lapse of funds. This year, however, the House Appropriations Committee unexpectedly disapproved of a number of work projects, allowing the funds to lapse back into the state’s General Fund. The unprecedented move was almost entirely along party lines, with just one committee Republican, Representative Ron Robinson (R-Utica), joining Democrats in voting no. The resulting vote was 16-9 in favor of the decision.

The Senate responded by holding a two-hour committee hearing in the Senate Appropriations Committee, where testimony was heard by affected recipients. Following the hearing, the Senate introduced a substitute into House Bill 4576, adding a $633 million supplemental spending bill that would restore much of the work project funding. The bill passed 23-15, with five Republican Senators joining the Democrats in voting in favor of the supplemental. The five Republicans include Jon Bumstead (North Muskegon), John Damoose (Harbor Springs), Mark Huizenga (Walker), Ed McBroom (Waucedah Township), and Michael Webber (Rochester Hills).

HB 4576 is now available to be voted on by members of the House. If the House does decide to place the bill on its agenda, it will not be until January at the earliest, when the legislature reconvenes for session in the new year.

The Michigan Senate voted unanimously, 35-0, to pass earmark transparency bills SB 596 and HB 4420. The House and Senate equivalent bills would require all legislative earmarks to be submitted at least 45 days prior to being voted on. Earmarks are requested by legislators and are directed to an organization through grant funding in the state budget for a specific project.

House Speaker Matt Hall (R-Richland Township) previously led the charge to set the period at 60 days after the Senate had passed the bill with a 10-day period prior to voting. In addition to the 45-day compromise, SB 596 also specifies that any earmark proposal done in the first year of a two year legislative session can be funded in both fiscal years. Earmarks proposed in the second year would still only apply to the final fiscal year of the budget cycle.

Both bills passed the House with a 101-0 vote before being presented to the governor. On November 18th, both bills were signed by Governor Whitmer with immediate effect.

This week, members of the Senate Appropriations Committee reported on SB 596 (Anthony, D-Lansing) and HB 4420 (Kunse, R-Clare), legislation that would apply transparency measures for budget earmarks into state statute. In a unanimous vote, HB 4420 which outlines the requirements for the earmark request form, was approved by members. All but one legislator voted for SB 596, which would enact certain transparency requirements for legislative earmarks.

Both bills were substituted before being reported, with the S-1 substitute for SB 596 including several changes. The bill defines a “legislatively directed spending item” (LDSI) as an appropriation that provides a specific amount of money to a particular entity, local government, or project. It excludes funds tied to declared emergencies, formula-based programs, or services that are already required by law.

Earmarks would need to be reviewed by the originating chamber’s appropriations committee before inclusion in any bill or conference report. For-profit organizations would be ineligible for earmarks, while nonprofits must have operated in Michigan for at least three years, maintained a Michigan office for one year, and have a board of directors. The House and Senate would also be required to post earmark requests online within five business days of submission.

A second substitute was adopted for SB 596 to require that an earmark be submitted at least 10 days prior to being voted on by the legislature. The substitute also included parameters for giving either chamber the authority to require an earlier deadline for submitting earmarks. While the bill passed in the Senate 31-5, Speaker of the House Matt Hall (R-Richland Township) criticized the brief 10-day deadline for submitting earmarks and instead suggested a 90 day deadline would be optimal.

HB 4420’s S-2 substitute would require the legislator making the earmark request, and any cosponsors, to attach their name to the earmark. The name of the recipient and their address would also have to be included. A confirmation for nonprofit requirements detailed in SB 596’s S-1 would also be required. Each request would also need to include a statement confirming no conflict of interest and verification of the recipient’s nonprofit status or a statement that it is not-for-profit.

SB 596 is currently awaiting a committee hearing in the House Appropriations committee. HB 4420 has been placed on third reading in the Senate.