Whitmer SOTU response

Gov. Gretchen Whitmer on Feb. 4 responding to the State of The Union Address.

Gov. Gretchen Whitmer’s recommended 2021 budget totals $61.9 billion, focusing on education, health care and the environment.

If approved, the budget would increase state spending by 3.9 percent above the current 2020 fiscal year budget.

The proposed budget includes a general fund total of $11 billion, up 5.8 percent, and a school aid fund of $15.9 billion, up 4.9 percent.

“Our future depends on making strong investments in these core priorities, and while we cannot correct decades of underfunding overnight, particularly in the area of education, this budget builds on last year’s budget to provide additional funding in these critical areas,” Whitmer said in a statement.

State Budget Director Chris Kolb presented the proposed budget on Thursday.

“This is a strong budget recommendation with some key investments in needed areas,” Kolb said. “There’s more work to do to address the large structural problems and we have to change the mentality that led to hundreds of millions in spending on the last day of a lame duck legislature.”

Kolb said general fund revenue remained relatively flat over the last two decades and that almost $2 billion will be diverted from it in the fiscal year 2021 for purposes listed below:

•$600 million for roads, a function historically supported solely by dedicated fuel taxes and user fees

•$553 million for MEGA tax credits to manufacturers/companies that have promised to retain or expand jobs

•$492 million to reimburse local governments for the cost of reducing personal property taxes levied on businesses

•$206 million for an expansion of the Homestead Property Tax Credit as part of the previous road funding package

Kolb said the 2021 budget shows a “perfect storm” of more than $600 million in baseline cost increases from inflation, federal policy changes and Medicaid costs.

The 2021 budget plans to fund some of the changes through reduced general fund spending without cutting critical services, estimated at $178 million, limiting investments to critical needs to $118 million, and limiting one-time dollars for initiative that bring long-term health, safety, and education benefits for the state’s residents, at $283 million.

The budget didn’t include Whitmer’s 2018 campaign promise to repeal the state income tax on pension income.

The budget would increase higher education funding by $46.2 million, or 2.5 percent.

About $35 million would fund the Reconnect Program to provide free tuition for associate degrees or in-demand industry certificates for those ages 25 and above, aiming for a goal of 60 percent of Michiganders receiving a higher education by 2030.

The Michigan Student Loan Refinance Program would receive $10 million for qualified residents who’ve made on-time payments for three years.

The budget also includes $15 million to fund Pure Michigan, a tourism marketing program that was zeroed-out from the 2020 budget by Whitmer's veto last September.

The Legislature must hand its budget plan to Whitmer by July 1.

House Appropriations Chair Shane Hernandez, R-Port Huron, said the budget renews conversations about education, roads, health care and protecting the Great Lakes.

“Our roads plan should work for the entire state – not just parts of it,” Hernandez said. “More must be done for local roads and rural areas, not just state highways and heavily populated areas.”

Hernandez said that common goals should be reached without additional debt or tax hikes by funneling gas pump taxes to repairing roads.

“All of this can and should be done without asking Michigan taxpayers to pay more money," Hernandez said. "As always, my focus is on using existing resources as efficiently and effectively as possible to make all of Michigan an even better place to live. I am hopeful the governor will come to the table in the months ahead with that same goal in mind.”

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.