state budget director john j. walsh - michigan.gov€¦ · february 7, 2018. governor rick snyder....

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February 7, 2018 Governor Rick Snyder Lt. Governor Brian Calley State Budget Director John J. Walsh

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February 7, 2018Governor Rick Snyder

Lt. Governor Brian CalleyState Budget Director John J. Walsh

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Michigan’s Momentum

• Added over 540,000 private-sector jobs• Ranked #1 in the Great Lakes Region• Ranked #6 nationally

• Unemployment has fallen by 10% since 2009• Lowest unemployment rate in 17 years

• Per capita income growth from 2010 through Sept. 2017 grew 28%

• #1 in the Great Lakes Region• #6 in nation

3

Michigan’s Momentum

• In 2017, more people moved into Michigan than moved out• #1 in the Great Lakes Region for inbound migration of people with a

bachelor’s degree

• #1 in the creation of manufacturing jobs in the country • 76% of U.S. R&D in the auto industry is done in Michigan• World’s leader in Mobility – Planet M Initiative

• The second most diverse agriculture industry in the nation• Grown to over a $100 billion dollar industry• Value added processors expanding and coming to Michigan

4

FY19 Budget Plan:

Almost three quarters of the total spending is dedicated to education and health and human services.

Health andHuman Services

45%

Jobs11%Education

29%

Government Services

7%

Environment2%

Public Safety6%

Total FY 2019 Gross Spending is $56.8B, up only 0.6%

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FY19 Budget Plan:

Interdepartmental Grants

1%

Federal Revenues40%

Local and Private

Revenues1%

State Restricted Revenues

40%

GF/GP18%

Only 18% of gross spending is General Fund revenue.

Total FY 2019 gross spending is $56.8B, General Fund spending is flat at $10B

Maximizing Our Momentum

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• Providing for a wide scope of tax relief • Increasing K-12 and higher education funding• Accelerating support for roads and transportation• Prioritizing safety for Michiganders• Making strategic one-time investments

2019 Budget • Total budget $56.8B, up 0.6 percent • General Fund $10B, no change from 2018• Projected inflation rate for 2019 is 1.9 percent

Tax Relief for Michiganders

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• Increased Homestead Property Tax Credit

• Increased maximum credit by $300

• Increasing income cap by $10,000

• Total for FY2019 is $205.6M

• Phase out of Sales Tax on the Difference for trade in vehicles, total

benefit for FY2019 is $42M

• Personal Property Tax reform, total for FY2019 is $438M

• Total Tax Relief for FY2019 is $685.6M

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2019 Ongoing General Fund Reductions $5 Million & Above New Investments $5 Million & Above

IT Investment Fund, $25M Indigent Defense Commission, $46M

Corrections facility closure, $18.8M Prisoner Food Service, $13.7DHHS Managed Care Rule savings, $21.2M

Rural Hospital payments, $7M

Restoring cost share for foster care, $8M PFAS contaminant response, $8MBusiness Attraction/Community Revitalization, $5.1M

Reduce various Corrections items, $6M

Medicaid pharmaceutical savings, $5MAll others totaling $40.3M All others totaling $36MTotal GF Reductions, $129.4M Total GF Investments, $110.7M 8

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2019 Ongoing School Aid Fund Reductions $5 Million & Above New Investments $5 Million & Above

Shared Time reforms, $67.9M Foundation allowance increase, $312M

Cyber School reduction, $25M CTE per-pupil payment, $5M

University operations, $28.6M

Early On funding, $5M

All others totaling $0.3M All others totaling $0.5MTotal SAF Reductions, $93.2M Total SAF Investments, $351.1M

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2019 One-time investmentsOne-time Investments $5 Million and Above (Combined GF & SAF; FY18 + FY19)

Accelerated roads investment, $175M

Pre-pay capital outlay projects, $112.1M

Flint investments, $25.9M

Statewide Broadband $20M total ($13.6M GF and $6.4M Restricted)

Going Pro funding, $10M

Corrections custody staff training, $9.3M

State Police trooper schools $6.1M (plus $3.8M ongoing)

All Other, $30.7M

Total One-time Investments, $382.7M 10

Educating Michigan’s Tomorrow Today

11*FY 18 includes an additional $200 million for one-time MPSERS liability paydown**Does not include federal funding, adult education funding, or preschool funding

$12.6 Billion*

$6.5 billion

$7.5 billion

$8.5 billion

$9.5 billion

$10.5 billion

$11.5 billion

$12.5 billion

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

$10.7 billion

$11.7 billion

$11.0 billion$10.8 billion

$12.0 billion

$11.6 billion$11.3 billion

$12.4 billion $12.6 billion

Educating Michigan’s Tomorrow Today• Foundation allowance, $312M ($120-$240/per-pupil increase)

• Largest increase in minimum foundation allowance in 15 years• Equity gap closed by 54% since 2011-2012

• Career and technical training (CTE), up to an additional $50 per enrolled high school student, $5M

• New Early on Funding, $5M

• This funding from SAF growth and Shared Time and Cyber-Schools, $92.9M

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Education Foundation Allowance

13

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

2012 2013 2014 2015 2016 2017 2018 2019

Minimum State Foundation Allowance Maximum State Foundation Allowance

$6,8

46

$8,0

19

$6,9

66

$8,0

19

$7,0

76

$8,0

49

$7,2

51

$8,0

99

$7,3

91

$8,1

69

$7,5

11

$8,2

29

$7,6

31

$8,2

89

$7,8

31

$8,3

89

$1,1

73 G

ap

$1,0

53 G

ap

$973

Gap

$848

Gap

$778

Gap

$718

Gap

$658

Gap

$558

Gap

Total Pre-K to 12 Funding Per Student

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$7,067 $7,285 $7,560 $7,874 $8,006 $8,266 $8,661 $8,734

$2,190 $2,173 $2,144 $2,252 $2,340 $2,341 $2,409 $2,488 $1,070 $1,109 $1,193

$1,200 $1,189 $1,161 $1,164 $1,167

0

2,000

4,000

6,000

8,000

10,000

12,000

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Exec Rec

Stat

e Do

llars

Per

Pup

il

Fiscal Year

State Funds Local Funds Federal Funds

$10,567 $10,897$11,326 $11,535 $11,768 $12,234 $12,389

$10,327

On Track to Pay Liabilities off by 2038

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$(10)

$-

$10

$20

$30

$40

$50

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

Billi

ons

MPSERS Unfunded Liabilities 2006-2038

*Uptick in 2016 is the result of lowering assumed rate of return to 7.5%, thereby lowering long-term risk.

Pre-reform

Post-reformProjected

Higher Education Funding

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• University operations increase of $28.6M ongoing• Total funding to $1.5B• 2 percent increase

• Tuition Restraint • 3.8 percent (2x inflation)

• MSU AgBioResearch, increase of $679K

• MSU Extension operations, increase of $585K

Transportation Funding

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Accelerating to nearly $1 billion in new transportation revenues 2017 - 2019.

$483$627 $632 $637 $641

$150$325

$600$175

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Fuel & Registration Income Tax General Fund Acceleration

$0.5B

$0.6B

$1.0B

$1.2B

(in

mill

ions

)

$1.0B

Transportation Funding

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Over 60 percent of state road and bridge funding supports local roads.

Cities & Villages22%

County Road Commissions

40%

State Roads38%

TOTAL: $2.7 billion

Prioritizing Michigan’s Safety

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• Funding 50 additional troopers; $3.8M ongoing, $3.1M one-time

• Funding 80 troopers for the state’s attrition school, $3M one-time

• Replacement of outdated technology (car cameras), $1.25M ongoing

• State Police recruitment and outreach, $1M (FY18 supplemental)

• Train over 350 new corrections officers to fill department vacancies, $9.2M one-time

• Funding 10 Conservation Officers, $1.5M ongoing

• Campus Sexual Assault Prevention & Education Initiative, $600K one-time; additional requests in process

Responsible Use of Lapsed Funds

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• Nearly $300M in FY17 lapsed funding needs to go to one-time uses.

• $175M for Roads and Infrastructure

• $112M to pre-pay already approved Capital Outlay projects: Capitol Building and new veterans homes

• Avoids $48M in long-term interest costs

Strategic One-Time Investments

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• Statewide Broadband, $20M

• Next Generation Technologies/Mobility Pilot, $20M (included in state share of $175M road acceleration)

• Michigan Israel Business Accelerator, $2.5M total for 5 years

• Project Rising Tide, $2M

• Employment First Program, $500K

Additional Budget Related Items

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• One time funding of upcoming Marshall Plan for Talent –rollout later this month

• Two environmental infrastructure programs• Renew Michigan Initiative

• Water Infrastructure Investment

• Equitable sharing of excess PPT distributions

• Indigent defense statutory reforms

• Revise tax refund allocation between GF and SAF

Two Environmental Infrastructure Initiatives

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• Renew Michigan investment of $79M to replace bond funds that have been depleted, to clean up contaminated sites, improve solid waste management and recycling, provide water quality monitoring and improve state park infrastructure. Average cost of $4.75 yr per family

• Water Infrastructure Investment of $110M to fund integrated asset management, grant and loan funds for water and sewer infrastructure in communities, and have a fund for water and sewer emergencies. Phased in maximum cost of $5 per person for water systems of 1,000 users or more.

Excess PPT Distribution

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• Proposing to distribute nearly $150 million in a simpler and more predictable method.

• Dedicate a portion to Fire Protection Grants (guaranteeing $15M per year)

• Balance allocated to groups as follows (estimates based on FY 2018):

• Counties, $44M• Cities, $70M• Villages, $3M• Townships, $7M• Community Colleges, $23M

• Provides additional resources to all communities and colleges in each group.

Rainy Day Fund Approaching $1 Billion

25Fiscal Year

Mill

ions

*2019 Projected. Plus 25% of FY2018 lapsed funds.

$1,254

$994

$145

$0 $81

$2 $2 $2 $2 $2 $2 $2

$365

$506

$386

$498

$612$710

$889 $922

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Budget Stabilization Fund

Questions?

Thank you.

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