Michigan Legislature Approves $81.7 Billion State Budget Plan for 2024

Michigan Legislature Approves $81.7 Billion State Budget Plan for 2024

LANSING — The Michigan Legislature has passed an $81.7 billion state budget plan for 2024, which is now headed to the desk of Democratic Governor Gretchen Whitmer. The budget, approved by both the Senate and the House, aims to utilize a record surplus to address various infrastructure needs, invest in low-income housing, and combat learning loss among K-12 students caused by the pandemic. Additionally, the plan includes tax cuts and provisions to bolster state reserve funds.

The Senate voted 26-10 in favor of the $57.4 billion omnibus budget to fund state departments, easily meeting the two-thirds requirement for immediate effect. The House also approved the bill with a vote of 61-47. Furthermore, the Senate voted 29-8 to approve the $24.3 billion school aid budget, granting immediate effect. The House is yet to vote on this bill.

The budget details were outlined in conference reports for the fiscal year starting on October 1. The surplus, estimated at $9.2 billion in January, will largely be utilized to fund new and expanded programs. The spending will be accompanied by targeted and across-the-board tax cuts.

The omnibus bill for state agency funding, House Bill 4437, also includes nearly $5.4 billion in new supplemental spending for the 2023 fiscal year.

This marks the first state budget developed under full Democratic control of the legislative and executive branches in 40 years. Democrats have shown unanimous support for the budget, with state Representative Felicia Brabec stating that it provides tangible opportunities to improve the lives of constituents.

However, some Republicans have criticized the bill, claiming it is bloated and filled with political pork. They argue that it does not allocate enough funds for road repairs and spreads the surplus too thin to effectively address any specific issue. State Representative Jaime Greene expressed concerns about the budget’s size, stating that it has grown out of control.

Notably, the school aid budget, Senate Bill 173, includes a 5% increase in per-pupil grants for K-12 education. The budget also introduces a $160 million program to provide free breakfasts and lunches to all students from pre-kindergarten through 12th grade, aiming to remove any stigma associated with receiving these meals. Additionally, the budget freezes funding for cyber schools and includes various grants for community enhancement, public safety, and public infrastructure projects.

Other highlights of the budget include statewide housing grants, funding for parkland improvements, a budget for the Michigan Department of Transportation, deposits into the state’s Budget Stabilization Fund, wage increases for direct care and long-term care workers, support for the restart of the Palisades nuclear power plant, and funding for body-worn cameras for Michigan corrections officers.

Governor Whitmer’s tax plan, which includes reductions in taxes on retirement income and a significant boost in the state Earned Income Tax Credit, was approved earlier this year. However, a cut in the personal income tax rate from 4.25% to 4.05% for the 2023 tax year, mandated by a law passed during Republican control in 2015, is not part of Whitmer’s plan. Republicans argue that the tax cut is permanent, while Democrats claim it applies for one year only, potentially leading to a legal dispute.

The approved budget plan reflects the state’s efforts to address various needs and stimulate economic recovery in the aftermath of the pandemic.

How does the inclusion of tax cuts in the budget align with the state’s goal of ensuring long-term fiscal stability?

Ticized the budget, arguing that it spends too much and relies on one-time surplus funds. They have expressed concerns about the long-term sustainability of the proposed tax cuts and the potential impact on the state’s budget in the future.

Governor Whitmer has not yet indicated whether she will sign the budget into law. However, she has praised certain aspects of the plan, including the investment in infrastructure and low-income housing. She has also acknowledged the need to address learning loss among students and has expressed support for investing in education.

If signed into law, the budget will provide significant funding for various areas of the state’s economy and infrastructure. It aims to address critical needs and support ongoing recovery efforts from the pandemic. The inclusion of tax cuts and provisions for state reserve funds indicates an effort to stimulate economic growth and ensure fiscal stability.