State budget turns back on vital federal dollars

From the First Tuesday newsletter
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Here at the League, the state budget is always one of our top priorities. State funding for important programs has one of the biggest impacts on Michiganians in need. We talk a lot about how the budget is a statement of our values as a state. But much like your family budget and mine, dealing with money issues is also about “value” in the traditional sense—how can we best stretch our dollars and get the most bang for our buck. This includes leveraging federal funds as much as possible.

This is more important now than ever. In January, it looked like state revenues were in a good position. But things changed in the next five months, and May revenue estimates were significantly down, meaning the budget was going to have to be adjusted—or cut—accordingly.

Michigan clearly has a revenue problem, and it needs to be addressed in a broader sense. It is due in large part to our tax structure, both how much the state gives away each year in tax credits, deductions and exemptions and how much the state has cut in business taxes in recent years. Michigan’s tax system and revenue stream need to be reevaluated, but there are more immediate fixes that can help with the 2017 state budget right now.

As we always do with the budget, League staff put together a series of budget briefs analyzing the different departmental budgets and making our recommendations. Based on our values at the League, we believe that these programs are vital and should be funded even in the midst of reduced revenues. But we are also realistic and knew that the Legislature was not likely to agree, with many of our suggestions for increased funding being left out of the budget bills that have already passed.

But there’s one area that lawmakers from both sides of the aisle should be able to come together on, and that is making sure Michigan gets every federal dollar it is entitled to, especially when the return on investment is nearly 50 times the state commitment in some cases. Unfortunately, these opportunities have also been overlooked in the 2017 budget.

The Department of Health and Human Services budget conference report was passed today and missed a major opportunity to bring in federal dollars to support state needs. The House-passed budget included an investment of $3.2 million in state funds to fix the Heat and Eat policy that reduced food assistance for approximately 150,000 households, including seniors and persons with disabilities. But this funding did not survive joint negotiations with the Senate.

This remedy would have brought in $138 million in federal dollars to help these residents. Since 2014, Michigan has been one of only a handful of states that did not provide the additional funds needed to comply with federal changes to the Heat and Eat program and maintain food benefits. The League has been working to fix this issue for years, and will keep up our commitment to tackle it in next year’s budget.

The School Aid and Department of Education budget conference reports have been finalized, and legislators missed a chance to secure an estimated $20 million in federal Child Care Development Fund (CCDF) dollars because they further reduced state match spending based on the Consensus Revenue Estimating Conference. We’ve already lost federal child care funding in the past and are at risk of losing more because of our stringent state child care policies that hurt parents’ ability to work and get out of poverty. We can’t afford to continue this trend.

This child care funding issue may still be resolved with a budget supplemental this year, and the League will keep working with the governor’s administration and legislators on this so we don’t miss this chance to leverage federal dollars.

There was some good news in the final budget bills, including the expansion of Healthy Kids Dental, much-needed funding for Flint to address the ongoing water crisis and an expansion of the state’s child care eligibility from 121% of the federal poverty level to 125% of the federal poverty level. But the Heat and Eat fix and state child care spending were two major opportunities for lawmakers to bring in federal funding when our state needed it the most, and for programs that particularly help families in need. We will fight for these and other issues now and in next year’s budget negotiations.

— Gilda Z. Jacobs