Legislative Report as of July 3, 2019

For the last eight years, the Michigan Legislature has been able to finish the upcoming fiscal year budget by June or July.  However, for the first time in 8 years we have split partisan power between the Legislature and the Governor.  Therefore, House and Senate leaders have decided to hold off before presenting a budget to Governor Whitmer.  The deadline for having a budget in place is the beginning of the next fiscal year:  October 1, 2019.  Because it seems likely that a budgetary showdown will occur between the Legislature and the Governor this year, it is possible that Legislative leaders feel that their hand is strengthened by delaying completion of the budget for as long as possible.
 
In other news, the debate over the future of the Caro Psychiatric Hospital continues; the Attorney General dismissed legal actions against state employees over the Flint water crisis (although future action is expected); and the Marijuana Regulatory Agency in the Department of Licensing and Regulatory Affairs is preparing to expand its staff in preparation for implementation of recreational marijuana laws passed on the ballot last November.  More on these stories below.
 
 
Legislature Puts Hold on Budget Completion
 
It was clear from the moment Governor Whitmer presented her 2020 budget plan (which was based on a $.45 per gallon tax increase) that the Legislature would be sending her a vastly different proposal.   However, it was surprising to see the Legislature leave for the summer recess without even completing their own appropriation alternative to the Governor’s plan.  Governor Whitmer expressed disappointment that the House and Senate would leave Lansing without sending her a budget, but they likely had a strategic reason for doing so.
 
Both the Democratic Governor and the Republican leaders of the House and Senate have stated that their main goal is improving the condition of the state’s roadways.  While the Governor came out early with a plan to raise the necessary $2.5 billion that engineering experts agree is needed to bring Michigan roads back to acceptable condition, House and Senate Republicans declared her gas tax proposal dead on arrival.  Instead, they have labored over the past few months attempting to find something – anything – that could be cut in order to generate road dollars without raising taxes.  Frankly, their proposals (e.g. toll roads, borrowing against state pension systems, cutting school funding and selling off state assets) have been even less well-received than Governor Whitmer’s tax increase.
 
The scuttlebutt coming from inside the capitol building is that eventually the two sides will reach some sort of compromise to achieve the needed road funding.  As of today, neither side has a popular plan.  The gas tax increase is very unpopular among the voting public despite months of town hall meetings attempting to convince voters that it’s the best alternative.  Similarly, the House and Senate have not yet found a hidden pot of money in state coffers that comes close to providing the long-term sustainable funding required to improve Michigan’s roads and bridges. 
 
Instead of sending a budget bill to the Governor that would invite a veto, House and Senate leaders decided to go home for the summer without completing the 2020 budget.  This gives them time to continue negotiating with the Governor’s office.  More importantly, the closer we get to the beginning of the next fiscal year (October 1), the harder it would be for the Governor to veto a legislative proposal without risking a government shutdown.  It could be that the Republican House and Senate leaders plan to wait until the last possible moment to present a 2020 budget to the Governor in the hope that she will have no choice but to sign it.  If that is the case, we are playing a dangerous game of chicken in Lansing.  We have already passed the point where K-12 schools could plan for the next school year knowing what their funding would be.  Every day of delay creates more problems for the millions of Michigan residents who depend on the dollars in the state budget.
 
 
Marijuana Regulatory Agency Prepares for Recreational Marijuana
 
On July 3, the state released Emergency Rules designed to begin the licensing process for marijuana establishments in the new recreational marijuana industry.  Growers, processors and distributors have been licensed for years under the Medical Marijuana rules, but since passage of an initiated law on last November’s ballot, the state has been readying for regulation of the recreational industry.  Earlier this year, the Marijuana Board was abolished and those powers were placed in the newly created Marijuana Regulatory Agency within the Department of Licensing and Regulatory Affairs with Andrew Brisbo as the director.
 
The state is preparing to add staff and space to house the new agents required to regulate what is expected to be a large pool of new licensees.  One of the problems with the delayed budget process (see above article) is that the department likely will not know for certain just how much funding it will have, and therefore how much staffing capacity it can add.  It is reasonable to assume, however, that there will be a substantial increase in FTE’s to handle the new responsibilities. 
 
 
New Study Initiated on Caro Facility
 
Late last year, the Legislature and Governor Snyder finalized appropriations language to authorize the construction of a new psychiatric facility on the grounds of the current Caro Psychiatric Hospital.  The new facility would take the place of the existing, dilapidated structure.  Early in 2019, contractors had been selected and preparations were made to begin construction by early spring.  Governor Whitmer, however, put a hold on the new construction citing concerns from the Department of Health and Human Services about the viability of that location. 
 
This move prompted a firestorm of protest from local officials, residents of the Caro area, construction unions, and hospital employees who supported the construction of the new facility in Caro.  Over the past few months, it became clear that leaders in DHHS have had concerns about keeping the facility in Caro for several years.  These concerns ranged from the difficulty in recruiting certain types of staff and the geographic appropriateness of the Caro region as a hub for psychiatric patients.  These concerns apparently stretch back into the Snyder administration, and are one of the reasons the agreement to keep the facility in Caro was not finalized until only weeks before former Governor Snyder left office.
 
The Department of Health and Human Services has contracted with the independent firm Myers and Stauffer to evaluate the decision to keep the facility in Caro and the process by which it was made.  The study is supposed to be completed sometime in July.  Meanwhile, local officials from Caro and Tuscola and Saginaw counties warn that moving the facility would be economically devastating to the region. 
 
Attorney General Drops Prosecution of State Officials on Flint Water…For Now
 
In mid-June, Attorney General Dana Nessel announced that all pending cases against state officials regarding criminal liability for the Flint water crisis were being dismissed.  She stated that there were large concerns as to the methods and legal theories pursued by the previous Office of Special Counsel created by former Attorney General Bill Schuette.  Instead, a new investigation would be launched headed by State Solicitor General Fadma Hammoud and Wayne County Prosecutor Kym Worthy.
 
Potential problems in the investigation began to surface earlier this year when thousands of previously undisclosed documents related to the case were unearthed.  There have also been renewed efforts to review cell phone and other communication data from former state officials, including Governor Snyder himself.  Specific details of the concerns with the previous prosecution were not given.
 
The decision left many Flint residents outraged as the move was interpreted by some as a vindication of state officials.  However, the Attorney General made it clear that the charges could be reinstated in the future should the new investigation warrant that.