Updates About Legislation

Shortly after the new year, Michigan Attorney General Dana Nessel issued her formal opinion that the mechanism used by the Michigan House Appropriations Committee to eliminate over $644 million in work project funding is unconstitutional. The disapproval mechanism used, MCL.18.1451a(3), can be found in the Management and Budget Act and allows for previously approved funding from the last fiscal year to continue to be used for its direct purpose in the new fiscal year. The funds are approved by the State Budget Director and are known as work projects. According to the law, either the Senate or House Appropriations Committee can then decide to approve or disapprove the work project funding. Historically in Michigan this funding has typically been approved by both chambers.

In her opinion, AG Nessel deemed MCL.18.1451a(3) unconstitutional. She argues that the mechanism violates Separation of Powers because it allows a single legislative committee to effectively have authority over the executive’s law implementation powers. Continuing her argument, she laid out that since the action was not approved by the Senate, and subsequently by the Governor, it violates the Bicameralism and Presentment requirements. Lastly, Nessel concluded that the veto disapproval mechanism is separate from the rest of the statute, so the remaining portions, such as the State Budget Director’s authority, can remain.

Two weeks after the Attorney General’s formal opinion was published, Court of Claims Judge Michael Gadola issued a preliminary injunction that preserves the status quo of the law. This injunction temporarily prohibits state departments from spending any remaining work project funds until the courts have made a final decision on the constitutionality of the House Republican Appropriations Committee’s actions.

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 recently approved SB 723 with bipartisan support. If successful, this bill would increase the total tax capture cap from $1.6 billion to $3.5 billion, set new limits on individual projects, and update eligibility criteria under the Brownfield Redevelopment Financing Act. It also adds new transparency requirements, including enhanced reporting and a searchable database of approved projects, and directs a portion of additional tax capture toward housing, child care, small business, and placemaking programs. The legislation passed 20–13 and has been transmitted to the House for consideration.

The Senate also passed two related bills aimed at strengthening long-term economic planning in the state. SB 213 and SB 214 would create a Strategic Advisory Board within the Michigan Strategic Fund. The board will take on the task of developing a 10-year statewide economic development plan. Once completed, the plan would be updated annually by the Michigan Economic Development Corporation (MEDC). Both bills similarly passed the Senate 20–13 vote before being received by the House.

Separate legislation to revive a modified version of the Good Jobs for Michigan program has also been proposed by Sen. Sam Singh (D-East Lansing). SB 472 and SB 473 were reported unanimously by the Senate Regulatory Affairs Committee and would restart the incentive program, which expired in 2019, with updated requirements related to job creation and wage standards. The bills include additional eligibility and compliance provisions and are intended to help the state’s economic development strategy. Discussion between the House and the Senate on the bills are expected to continue into the new year.