Capital Catch-Up: July 11, 2022

Legislature and Governor Reach $76B State Budget Agreement; More Likely to Come After the Summer:

After weeks of negotiations that included discussions around large scale tax breaks and a gas tax holiday, the Michigan Legislature and the Governor reached bipartisan agreement on the FY 2023 state budget in early July. 

The budget, which totals $76 billion, notably lacks many of the large individual priorities of the Republican Legislature (income tax cuts) or the Governor (EV rebates and an Earned Income Tax Credit expansion), which are likely being saved for negotiations when the legislature returns from their summer break. However, the state budget does contain several important wins for Michigan’s land, air, and water, including:

• $130 million for an EV development center at the University of Michigan – Ann Arbor that will help keep Michigan a leader in electric vehicle technology, manufacturing, and workforce development/training.

Pictured: MCity at the University of Michigan – Ann Arbor. MCity is a test track where students can work with auto industry professionals to test electric and automated vehicle designs. Photo credit: The University of Michigan

• $120 million for the state water revolving fund. Projects funded by the state revolving fund include safe drinking water projects, including upgrading filters at water treatment plants and removing lead service lines, and wastewater projects. 
• $58 million for localized water projects, many of which are targeted to rural areas. This includes a wastewater system in Holland Township and drinking water system upgrades in Alpena and Reed City, among others.
• $83.9 million for contaminated site clean up and monitoring at state sites. This appropriation includes $42.8 million for orphaned oil and gas wells as well as $10 million for a clean up project along Lake Superior in the Keweenaw Peninsula.
• $33 million for river restoration projects in Ann Arbor and Battle Creek.
  Pictured above: a side by side showing the current, concrete lining along the Kalamazoo River in Battle Creek next to one of the many proposals that river conservation advocates have proposed for the naturalization of the riverfront. To learn more about this project, click here.
• $29.2 million for energy efficiency grants to local governments, businesses, and homeowners.
• $5 million for private drinking water well testing.
• $934,000 for the DNR’s Conservation Corps, which employs at-risk youths and returning combat veterans in jobs focused on ecological restoration and other DNR-related conservation projects. 

$7B Left on the Table; Additional Supplemental Likely this Coming Fall

Due to multiple federal COVID relief packages (including the American Rescue Plan, the CARES Act, and the Infrastructure, Investment, and Jobs Act), Michigan has had billions of dollars in state budget surplus for the past year. Even with the FY 2023 budget completed, there is still roughly $7 billion ($3.8 billion general fund) on the table that lawmakers have yet to negotiate. 

In anticipation of potential budget action this fall, Michigan LCV is urging lawmakers to prioritize smart budgetary decisions that will set Michigan up for success during the next decade, despite political pressures to deliver on tax cuts in the midst of an election year. Looking ahead, Michigan LCV’s budget priorities include:

• $50 million for Electric Vehicle Rebates to provide a $2,000 rebate for the purchase of a new electric vehicle (EV) and a $500 rebate for at-home charging equipment for a new or used EV. These state rebates will complement existing federal and private EV incentives to help usher in the automotive future and make EVs more accessible to all Michiganders.
• $508M for the State Parks Endowment Fund to provide a stable funding source for Michigan’s parks and natural lands. Additionally, fully capitalizing the State Parks Endowment Fund will unlock oil and gas earnings to return to the Natural Resources Trust Fund (the crown jewel of Michigan conservation policies), in line with what voters passed in Proposal 1 of 2020.
• $1B for MI Healthy Homes to create a single program tasked with funding whole home deep-energy retrofits in low and middle income neighborhoods. Eligible upgrades could include: building insulation, windows, lighting, furnace replacement, mold and asbestos abatement, etc. Studies have shown that every dollar invested in energy efficiency measures like these results in over $3 of benefits.

At this time of transformational opportunity, investing in long term priorities like these will help improve quality of life for all Michiganders while creating good paying jobs in the clean energy industry and the tourism and recreation sectors. Stay tuned for future editions of the Capital Catch-Up to learn more about our budget priorities!