MIRS News Service
Friday, May 15th, 2015


Moments after fiscal experts estimated the state would bring in a combined $365.4 million more than originally expected this fiscal year and next, House Appropriations Committee Chair Al PSCHOLKA (R-Stevensville) was talking road funding.

The House passed a Fiscal Year (FY) 2016 spending plan last month that set aside $160 million in General Fund (GF) money for the $3.7 billion Michigan Department of Transportation (MDOT) budget. Pscholka said he sees that GF number moving to the $350 to $400 million range.

House Speaker Kevin COTTER (R-Mt. Pleasant) is pushing a road funding budget plan that dedicates about 50 percent of the annual General Fund revenue growth to transportation, which he envisioned as being $350 million for FY 2016.

“To all the folks who said this plan is a ‘fairy tale,’ maybe fairy tales come true,” said Pscholka in reference to some of the critiques of Cotter’s plan (See “Reactions To Cotter Roads Plan Vary,” 5/14/15).

Pscholka said he envisioned a piece of the General Fund spending plan going through the traditional P.A. 51 spending formula and another piece going directly to the three different buckets of money set aside for state, county and local roads.

Senate Appropriations Committee Chair Dave HILDENBRAND (R-Lowell) put the possible General Fund injection to the MDOT budget at between $400 and $500 million. The current FY ’15 budget has $285 million in GF going to roads.

“This is going to be above and beyond,” Hildenbrand said. “We’ll continue to see investment in our infrastructure, which is what our people are asking us to do.”

State Budget Director John ROBERTS said the administration is “not against using the money for transportation as long as we continue to work on a bigger solution” in regards to roads.

Gov. Rick SNYDER remains committed to putting recurring and dedicated dollars to roads. Taking money out of the General Fund for the MDOT budget, he said, is still a one-time expense.

“If this is part of a bigger deal, it’s something we’re interested in,” Roberts said.

The $365.4 million number came out of estimates approved today by the Consensus Revenue Estimating Conference (CREC).

The numbers agreed to by the administration and the Legislature’s two fiscal agencies show General Fund revenue estimates up $223.5 million for the current fiscal year and School Aid Fund revenue down $5.9 million for a combined growth of $217.6 million.

For FY ’16, which starts Oct. 1, the voting members of CREC agreed to a $168 million revenue boost for the General Fund and a $20.8 million decrease in the School Aid Fund, for a change since January of $147.8 million.

Looking ahead to FY ’17, General Fund revenue is up $120.9 million and School Aid Fund revenue is down $42.1 million, for a combined number of $78.8 million.

“This was good news today,” Roberts said. “The economy is continuing to improve. People should be happy with what they are seeing out of the state.”

The enactment of the new Internet sales tax made up $60 million of the improved revenue picture, but Roberts said a majority of it came from economic growth and not a tax rate increase.

Asked if he thought Snyder’s policies are working, Roberts responded, “We definitely think so.”

Does this mean the state can expect enough economic growth over the next four years to reach $700 million in new money for road funding?

Roberts said he can’t answer for the next four years, but the administration “feels good about the numbers.”

Another piece of good news was the payout in Michigan Economic Growth Authority (MEGA) tax credits was only $75 million, which is still a volatile number, but it’s better than the $250-$350 million number fiscal experts predicted in January (See “Biz Credits Trim State Funds $288.9M This Year, $526.5M Next,” 1/16/15).

As lawmakers and the Governor’s office begin crafting “target numbers” for individual department budgets, it’s presumed the road funding picture will join the K-12 funding and $72 million for Detroit Public Schools as the hot-button issues going into discussions, Roberts predicted.