[00:00:00] Ryan Wrecker: Hello and welcome to Facts Matter, a podcast by Citizens Research Council of Michigan. I’m Ryan Recker. I work with WWJ here in Detroit, 9 50 a. m. And joining us today is Bob Schneider, senior research associate for state affairs at the Citizens Research Council. It’s good to be with you, Bob. It’s good to join you, Ryan.

Thanks. Is the day after the budget, is it like Christmas day for you to be able to comb through the budget and see what’s in there?

[00:00:28] Bob Schneider: It’s pretty exciting. This is kind of one of our things, right? One of our strengths, I guess. And so when we get the new budget, we like to dig in, we stay up late and look through budget books and tables.

And yeah

it keeps us busy.

[00:00:42] Ryan Wrecker: More appropriate. This is your Super Bowl, even though everyone else is watching football this week. This is your Super Bowl. But there’s a lot of things that go into this budget and just looking at it from the surface. E 3. 5 billion in spending representing about an extra billion dollars.

That’s about a 1. 2 percent increase over the existing levels and going into this legislative session. One of the big pushes by Republicans who took the house this year is we have to find a permanent fix for roads. So I think a lot of Republicans, when we’re looking at this is, well, if we want to play nice, then maybe we’ll try to find a permanent solution for road funding.

What ended up happening? Not that. So it’s proposed and it’s not in the budget.

[00:01:23] Bob Schneider: Yeah, so, you know, the governor announced last month at the Detroit auto show that she would be bringing a plan on the roads, but not as part of the budget.

We’re expecting to hear something next week. What I was interested in is to look at the budget. You mentioned the House Republican plans. Speaker Hall’s plan is to, basically focus on how can we redirect existing, not new tax revenue, but existing state revenue and move it over to the roads. And the governor’s signal was, well, we need some new revenue for maybe new taxes or what have you.

And we’re going to do some responsible budget cutting. In this budget that she just released, I was interested to see. Does she hold, you know, we know we have this much money to spend on new stuff. Does she hold anything back, particularly on our discretionary revenue in the state as our general fund?

Does she hold some money back that might signal, here’s some money I’m keeping aside for the roads as part of my future plan, and she really didn’t. So this budget does, there wasn’t a lot of money available on the general fund side, but what was available got spent. So unless there’s a cut plan coming from the governor, from the existing budget, there wasn’t any money kind of held back for the roads.

And a couple of Republican lawmakers made that point at yesterday’s, presentation, and that would signal to me, the governor, the governor’s plan will rely either on, or some combination of new revenue from taxes or to, Some budget cuts that she has not yet announced. That’s part of her responsible budget cutting in her message.

[00:03:04] Ryan Wrecker: And what I found interesting, too, is when you look at federally speaking, what we’re looking at on the federal government side is you have. Doge the department of government efficiency and they’re going through and they’re finding all of this. Oh, 10 million dollars to do this and 50 million dollars They’re uncovering a lot of these wasteful spending that we’re seeing on the federal side Now keep in mind the federal government’s budget is a lot bigger than michigan’s budget, but the trend is Find what is unnecessary and cut it because we can use that money in better ways You saw state representative cam cavett and a lot of other state representatives come out Republicans, I should probably point out criticizing the governor’s budget, talking about new hires in the state, 700 new employees, a billion dollars in new spending, but no additional funding to fix local roads.

So I almost look at it and say the national trends. Are hey, we need to cut and put the money where we need to prioritize it on the state level. I think a lot of republicans are probably looking at this and saying we got to put a priority on the road. So we got to cut somewhere to put the priority where it’s really necessary, but we’re not seeing that yet.

[00:04:10] Bob Schneider: I so I would agree with that. I mean, if roads are the number one priority for. For the state of Michigan, then, then something new has to come. Right? I mean, so if, if the governor has a plan to, the hall plan would, so two sides to this. The, the, the speaker hall plan, points to $3 billion or a little over $3 billion for roads.

At the same time, that would, that would require our, our analysis would suggest you need to cut the general fund. We only have a little bit of surplus. The governor just proposed her spending in that surplus. Republicans would need to grab that surplus and probably another couple billion dollars from the general fund.

And that’s really big. I mean, that’s a huge cut. It’s one that would mean you’d probably need to cut universities. Medicaid, social services, the corrections program. Those are the big users of that discretionary general fund. The Republicans now are in their deliberations are going to be aimed at that.

I would assume, and we’re going to find out where their cuts are coming from on the governor’s side, right? This budget has a small one time earmark for roads, about a hundred, over a hundred million dollars, and so something’s coming and presumably what the governor is going to propose is either all new revenue from tax increases, or after the fact, we’re going to learn what her plan is to cut into her existing budget, to make things work, if it’s some kind of balanced, we’re going to live with existing revenue and new revenue.

[00:05:40] Ryan Wrecker: I gotta say, there’s probably not enough lawsuits for the Attorney General Nessel to jump in on a federal level that could bring some additional, you see those press releases a lot, that, oh, there’s a new lawsuit and Michigan’s gonna get a million dollars from this, probably not enough lawsuits to bring

[00:05:53] Bob Schneider: No, it wouldn’t. Yeah, even, even a, you know, even a new tobacco settlement wouldn’t

[00:05:59] Ryan Wrecker: Right, it wouldn’t work. I noticed last budget, one of the big priorities was Michigan schools, you know, pre K for all and school lunches and there was a big, you know, Emphasis of making sure there’s enough money going to schools and then then some on top of that to expand schools in Michigan.

It seems like that trend continues into this budget, too. There’s even additional funds that will be coming in for schools and for per pupil spending. So that seems to be one of the top priorities for Governor Whitmer.

[00:06:25] Bob Schneider: It has. It’s the school budget has grown significantly over her tenure. I would say some of that has to do with very strong school aid fund revenues.

The dedicated the revenues that are generally dedicated to schools they’ve allowed that growth in the sales tax in particular, which has really been one of our strongest growing taxes allow for the, school appropriations to increase. This year, the biggest budget item for schools is what we call the foundation allowance basically the major discretionary grant to schools,

provides, for their operations. There was a 4 percent growth in that. It’s been higher in the past, but that’s a healthy growth rate. It’s above inflation. That’s a good, I would assume the schools are gonna be pleased with that. I would point out one thing that the schools, the school groups will not be pleased about, In my estimation, at least, and it’s something that hasn’t got a lot of attention yet, the school aid fund revenues were strong.

Growth was strong, less strong on the general fund side. One element of the governor’s budget that school groups may not like is that the proposal taps into an extra hundred million dollars in school aid fund revenue. Which traditionally is the K 12 stuff, and moves it over to universities.

That helps save a hundred, a hundred million in general fund that would have otherwise went to universities and freed that up for other things. That will eventually get attention. And I think K 12 groups will not be happy with it, but you are correct. This was, I think all in all, another good budget for K 12 schools.

[00:07:59] Ryan Wrecker: Some of the other things that, It was kind of interesting, the vaping tax, nicotine pouches, there’s been a lot of taxing on the vices lately. Of course, the legalization of sports gambling and just gambling in general in Michigan, relatively new. I mean, it’s something in the last couple of decades, but I think that you add that on top of the marijuana industry inside of Michigan, a lot of the taxing that goes onto that.

May not have reached maybe the levels they thought it would, but I think Michigan is like one of the, if not the largest state per capita when it comes to marijuana purchasing from the people there. So, finding the vices and taxing those, that seems to be a legitimate way to raise money in the state of Michigan as of late.

[00:08:41] Bob Schneider: Yeah, we have generated a lot of new money from, from the, the, the casino, sports betting, online, online casinos, you know, the marijuana, a lot of that, some of that goes to the general fund, but not a lot of it does actually, so some of that is dedicated, this vaping, just as background on the vaping proposal, yeah.

We currently, you know, we have our cigarette tax, it’s about 2 a pack. And we have a tax on, smokeless chewing tobacco, smokeless tobacco already. This basically takes vaping, e cigarettes, vape pouches and all that kind of stuff and applies the same tax that chewing tobacco and other nicotine related, products get and applies it now to this, to this new form of.

Vice if that’s if that’s the right word. And yeah, I think, what’s the number, that was there. I thought I saw 57 once they fully have a full year of revenue would be 57 million. Now, it’s probably important to say it. Half of this goes to cancer, smoking prevention, stuff like that. The other half goes to our Medicaid program.

Can’t go to anything. But it is, it’s, it’s a, it’s a lot of revenue. Michigan is not a good, is not a strong state in terms of our smoking prevention spending. This will at least move the needle and maybe move us up closer to what most states spend. That’s been a Criticism of our state budget for a long time as we get all the tobacco revenue and we have not used a lot of it for that, for that reason,

[00:10:12] Ryan Wrecker: I remember when this was proposed and this was a surprise to some because it’s a little bit different when you go to the DMV, the secretary of state and you register your plates, they ask, Oh, would you like to spend a little extra?

You get the little tag that you get to put on it and you get into the state parks, right? So it’s a nice little in fact, it’s a fantastic deal. It’s worth. Doing it every time you register your car and get the plates, but the opposite is going to happen this time. They’re just going to add it on unless you hopped out of it.

That’s a big change. It seems like this is an opt in something that you should. Voluntarily pay for if you want it as opposed to being forced to opt out of it if you don’t want it And that’s going to raise some money too.

[00:10:51] Bob Schneider: It will that that’s expected to raise about 20 million dollars again That go to state park improvements you know, it can be a great deal if you use the parks a lot some don’t I the question the numbers I saw, are about like We think maybe 35 percent or 30, 35 percent opt in now. And the thought is with, with the required opt out, you may kind of almost double that, and I don’t think we’ll really know until it, when and if this actually gets implemented.

~Um, but yeah, it’s a question of, um, you, ~you can still opt out and I think they’ll still make it. Clear enough where you can choose to opt out. A lot of people use the parks. I agree with you. They’re a great park system. Some don’t. And so the question for lawmakers will be, what’s the fair way to do it?

I think the hope here is we’re going to generate more revenue, improve our parks and, make them more attractive and maybe even improve use over time.

[00:11:45] Ryan Wrecker: And previewing the state budget, you had Governor Gretchen Whitmer on social media release a couple of videos. Here’s some of her priorities and she discussed.

Securing the state of Michigan’s security. Part of it was discussing selfridge and adding additional funds to that. And the other side of it was securing our food supply because we’re also seeing a lot of issues at farms being depopulated, which is a nice way of saying killing all of them that may be infected so it doesn’t get into the food supply.

So let’s start with the selfridge thing. I found it kind of interesting because some of the biggest proponents on the federal side, Gary Peters, is going to be retiring soon. And then, of course, You had, Debbie Stabenow just retired, so you had some high ranking officials that were senators for the state that were proponents, able to go to the federal side, secure funding for places like Selfridge in the state of Michigan.

With them off the scene, it made me wonder, are we going to have to pick up more of the bill if we don’t get the same cheerleaders for things like Selfridge in the state of Michigan? So when you see things like that in the budget, do you ask questions like that?

[00:12:51] Bob Schneider: We think about it, but the budget’s so large, it’s, you know, I’ll have to confess, we don’t always, have time to concentrate on all the elements of the budget, but you’re right.

There’s 25, 26. Million dollars. I think it’s all general fund. So this isn’t federal money that they’re appropriating. As you said, it’s general. It’s the state’s general fund money. My understanding that’s try to make some infrastructure type improvements to make, selfridge a more attractive place and help.

Help perhaps bring in new work and new jobs to Selfridge. It does the changing landscape of the federal government and Congress, impact our ability to leverage funds for whether it’s Selfridge or anything that we rely on federal money for, right now, it may well be, that’s always been a fact that, as we have changes in political leadership, and as we have a governor that is, or is not within the same party as the sitting president, certainly it could, I think, the governor’s budget, may be recognized.

We’re going to need to self fund some improvements at Selfridge. And, ~uh, uh, ~I don’t know for sure if that has to do with, any blockage at the federal level, but, it’s certainly something the state will need to continue to think about.

[00:13:57] Ryan Wrecker: Yeah, the food supply portion of it. Every time we turn around, there’s another press release out from the DNR, whoever it may be, to say, well, we’ve detected another thing of whatever.

It could be bovine, it could be chickens, it could be turkeys, but either way, the flocks get depopulated. Which is, you know, a nice term of saying gone, but you don’t want to risk infecting the food chain. So that’s just what you got to do. But it happens so often people are looking at that and saying, man, eggs are expensive.

A lot of things are expensive right now. Does it play a factor? And you know, there’s a lot of things that play factors into what reaches our table at home. But still, the governor in her budget puts out as a security. talking about it as securing the food chain, ways to help make sure we try to keep these diseases out of our flocks and our cows and turkeys and whatever it may be.

So the importance of trying to spend more money on that, that’s probably something, I don’t recall seeing an importance to it as much as we’ve seen in recent times.

[00:14:58] Bob Schneider: Yeah, I mean, I think we have developed developments such as the, with, with our chicken flags that are new and that have maybe brought more attention to it, you know, just generally inflation and pocketbook issues, with the recent spike in inflation that we’ve seen have drawn, I think all of those, you know, the chicken problem Is, as you said, bumped up the cost of eggs and things that affect cost of living and pocketbooks are drawing more attention, than they typically have, you know, we had two decades worth of fairly low and stable inflation, and it’s very clear from polling That those pocketbook concerns are an increasingly important issue to residents.

Having seen this inflation over several years. So not surprising, I suppose, that they’re drawing more attention in the budget as well. Both with the governor and with lawmakers in their budget deliberations.

[00:15:51] Ryan Wrecker: Something else you noticed, trash fees to curb out of state garbage.

Is this in relation to the toxic waste? Debacles, you know, taking in nuclear waste in storing it like we saw the problems in other states like Ohio when there’s a derailment and what that can cause for a community, then all of a sudden people are saying, well, why are we storing this stuff in our landfills from out of state?

Is this in you think direct relation to that to make sure a stuff we’re importing in when it comes to garbage? Maybe we don’t want those things hitting our water supply.

[00:16:24] Bob Schneider: Yeah, not so much the toxic waste, at least not the direct, impetus of this, but, the solid waste in general, just the regular garbage, that comes into Michigan.

This is not a new issue. It’s not a new proposal, even goes back to the Governor Snyder era where there were discussions of doing this. Michigan has, I think everyone would agree, a very low, tipping fee, the charges to bring garbage to landfills in Michigan, and deposit that waste, most of which would be general garbage, but it causes public policy issues with where do we go once the landfills are full and we need new landfills.

And two, there are the, you know, There’s some evidence, and I’m not going to pretend to be an expert on it, that the solid waste that we put in landfills also has greenhouse emissions issues that, that, that are, climate change, concern. And so the idea, is to take our very low fee, I think, bring it up to what sort of a, Midwest average would be so that our fee looks a lot more like our neighboring states.

And as you said, hopefully, curtail some of the, well, Michigan’s the best place to dump your garbage. So all it there for the low tipping fees, and help with those, you know, both from, climate change perspective and just, Look, we only have so many landfills right now, and we’re going to need to find new places for landfills if we continue to bring in waste, but it’s been a political challenge to get that past.

It’s not been. It’s been proposed and rejected in the past. And we’ll see if that if that’s changed at all this year.

[00:17:55] Ryan Wrecker: Is there anything else in this budget that stands out to you, that we haven’t discussed yet?

[00:18:00] Bob Schneider: I think the two things that grabbed my eye the most were, we opened with roads.

The first thing I looked for was, did the governor build in a reserve? Did the governor keep some money on spent on the side? That wasn’t the case. Unless there’s something coming down the road, there’s no money set aside and available. The other was, the governor and the K 12 groups have generally been friendly the last couple of years.

There’s been some jostling. Last year the school groups, did not get an increase in their foundation allowance. Had some alternative, extra money from not making ’em contribute as much for retirement and, but that was dis for the K 12 schools.

And now this year, the a hundred million dollars that the universities are getting. From what the K 12 groups consider their school aid fund, will probably, be a thorn in the side of K 12, school interests, and maybe again, hit the governor and, make them at odds a little bit. But it’s a pretty normal budget, actually.

We’re kind of back to least on the general fund side, back to normal.

[00:19:02] Ryan Wrecker: You know, one last question. We saw the. Last decade plus transparency. They’ve been trying to make things more transparent. In Lansing, you want to be able to open up some requests. So the governor and the legislature, you’d be able to see these things and, and you find out there’s not even an office, like if you were to request and try to get some government records, it would go to no one, like, no one would be able to fulfill these things.

So there’s been pushes for the past decade that seem to go nowhere. But it seems like there’s, I mean, a legitimate effort to try to get some more transparency in government from the state Senate side on the House side, Speaker Hall said, that’s not our top priority for the most part. He said that, OK, we understand this is something that’s good, but we got these other things we want to get done.

What do you think about? The sudden interest in transparency. And do you think this could be the year that everyone finally gets on board and we’ll be able to see the things that every other state organization in the United States, practically besides Michigan, we’ll get their hands on. We’ll finally be able to see it here in Michigan.

[00:20:06] Bob Schneider: Well, I think the house actually took the lead on, on one element of it, that we’ve talked about in the past and that’s the budgets, the last several budgets, particularly maybe a couple, two, three years ago, massive amounts of what you would call pork barrel earmarking.

That’s always been part of the budget, but it’s been much larger in recent budgets because state revenues have been so, so, so hi, we, you know, coming out of COVID and all the stimulus that, that occurred at that time, the house actually proposed a very sane and, good step forward, with the reporting on those earmarks.

So who’s sponsoring this? Where’s it going? Why are we putting state dollars towards this? Advanced reporting on that, which in general I think is a good thing. We’re, we’re, we’re about to release, a piece on that. That’s going to suggest, maybe that belongs in state law, not in house rules as the house has proposed so far.

But that’s good. I think the other, the other. Points you bring up is foia FOIA exemptions. I, I probably was part of your reference too. There’s been a long debate about extending those to the legislature. Exte, if I wanna FOIA the Department of State, I can, but if I wanna FOIA the legislature, if I wanna FOIA the governor’s office, we don’t have, good, sunshine, in the fo eggs, foia.

It does not apply in the same way to the governor’s office and to the legislature and the Senate has pushed for changes there that I think would also be a positive, hopefully I am hopeful that this session you may get both those things and, and, there have been some good steps forward in that regard.

[00:21:41] Ryan Wrecker: That’s a fantastic topic, which I can’t wait to hear more about. How many years have you been watching the state of Michigan?

[00:21:48] Bob Schneider: Well, we’re 106 years old. Oh, amazing. So we’re proud to have past our hundredth birthday.

There was a time very early in our organization where we were a Detroit, think tank and focused on Detroit. But our statewide focus has been, 70 years plus. ~I, I ~

[00:22:04] Ryan Wrecker: ~think. ~Wow. Don’t look a day over 70. I’ll tell you, but I

[00:22:08] Bob Schneider: I was happy to be a founding member of the council.

[00:22:13] Ryan Wrecker: Well, I got to say you guys do fantastic work. And I know that a lot of people take interest when you do the research but you guys do and you have become such a great resource for people in Michigan because there’s just not a lot of people doing what you do.

And if it wasn’t for the Citizens Research Council, there would be a lot of things that would just sit in the dark forever. So I really do applaud your work.

[00:22:37] Bob Schneider: Oh, we appreciate it.

[00:22:39] Ryan Wrecker: And in podcasts like this are very important videos like this. Make sure to share them. I’m Ryan record with WWJ chatting with Bob Schneider.

Thanks again for listening. It would be great if you were to like this video, share this video, send it to your friends. If they don’t pay close attention, this is, you just say, Hey, just take a half hour to learn about the budget. You’ll feel like an expert after watching. Podcasts and video casts like this one on Twitter at CRC MISH.

This is the Facts Matter podcast, a presentation of the Citizens Research Council. Thanks for watching and listening.