Legislative Report October 2020

The last month has seen a budget agreement reached between Governor Whitmer and the Michigan Legislature, the Michigan Supreme Court ruling that the law upon which the Governor based her emergency powers was unconstitutional, and a frantic effort to reinstate certain Executive Orders that protected things ranging from unemployment benefits to the ability of public bodies to meet remotely.  It is a lot to process. 
 
Although the Legislature has a handful of session days scheduled between now and the election, it is widely presumed that little legislating will take place in the days leading up to the election.  The “Lame Duck” session, in which many lawmakers who will be leaving office on December 31 still have a chance to make laws, will begin soon after the election and run through mid-December.
 
More on these issues below. 
 
 
Governor and Legislature Agree on FY 2020-21 Budget
 
In one of the most unusual budget processes in recent memory, the House and Senate presented a pre-approved budget document to Governor Whitmer in late September, prior to the October 1 deadline.  Last year, the process was marred by battles over road funding and public education, and led to one of the most contentious budget battles of the century where the Governor set a state record for line-item vetoes.  This year, the process was shaped by a global pandemic that made the normal businesses of putting together the state budget all but impossible. 
 
The first hurdle was trying to determine just how much in tax revenues the state would have to spend for the 2020-21 fiscal year.  Early in the pandemic, forecasters predicted massive losses in revenues that would require cuts nearing $3 billion.  In August, however, those early forecasts turned out to be more dire than reality, and the state economy surprisingly fared better than most – especially considering how hard Michigan was hit by COVID-19 in March and April.  Moreover, an influx of approximately $3 billion in federal assistance helped to narrow the budget gap even further. 
 
The next hurdle was trying to work with lawmakers and stakeholders at a time when in-person gatherings were severely limited.  The normal subcommittee hearings where legislators would receive testimony from the public and private sector were shut down after March, and even private meetings with constituents and special interests were curtailed.  Most of the major budget decisions were made by a handful of legislative leaders in each chamber, and representatives from the Governor’s office and the budget office.  Even legislators who chaired key appropriations subcommittees had much less leeway over the departments they oversaw, and some had just a few days to tinker with their respective budget numbers.  Once the framework had been agreed upon by the Governor and top legislative leadership, it was essentially a done deal.
 
Another item that caused the final budget to be adopted in September was uncertainly surrounding possible federal aid.  After the Legislature presented Governor Whitmer a budget in late September last year, they resolved to finish their work on the 2021 budget no later than July, 2020.  However, Coronavirus had other ideas, and the possibility that federal aid to states beyond the $3 billion issued in the spring could be coming made it prudent to forestall final budget decisions until late summer.  That federal aid never came, but the improved economic news made up for the cuts most state legislators dreaded making. 
 
In the end, the FY 2020-21 budget was essentially flat with few major changes from the previous year.  Total gross appropriations (including federal funds) will be $62.7 billion for the fiscal year that began October 1, 2020.  That number is subject to change should economic conditions change, but there was great relief that the kinds of cuts that had been previously contemplated in the spring did not come to pass. 
 
Most departmental budgets stayed relatively the same.  Some notable changes include:
 
Department of Agriculture received $5 million to match federal funds for the Conservation Reserve Enhancement Program – a program to incentivize landowners to implement conservation practices.
 
Department of Corrections received $4 million to train new staff.  However, the department also made several cuts via closures and program terminations.  These include closure of the Detroit Reentry Center (scheduled for January 2021);  the relocation of the Special Alternative Incarceration Program from Camp Cassidy Lake in Chelsea to the Cooper Street Correctional Facility in Jackson; and the elimination of the Lake County Residential Reentry Program.
 
Department of Education is essentially flat, although it includes an additional $27 million to expand eligibility for child care assistance. 
 
Department of Environment, Great Lakes and Energy saw the elimination of $120 million in one-time funding for safe drinking water initiatives.
 
Department of Labor and Economic Opportunity received a large boost in state and federal funding to accommodate increased usage of the Unemployment Agency.  It also received $25 million to restart the Pure Michigan program, $30 million for the Reconnect Grant Program, and $28 million for the Going Pro program – the latter two which are aimed at helping workers obtain necessary skills or college degrees.
 
Department of Health and Human Services received large increases for health services and public assistance, many of which stemmed from the pandemic.  The budget also included $5 million to increase staffing levels at state psychiatric hospitals.  Governor Whitmer also won approval from the Legislature for a $23 million program to promote maternal and infant health called Healthy Moms, Healthy Babies.
 
Department of Licensing and Regulatory Affairs received $36 million in additional funds for Michigan Indigent Defense Commission grants. 
 
Department of Military and Veterans Affairs received $18 million for a new National Guard Readiness Center to be built at Grayling Army Airfield. 
 
Department of Natural Resources received $8 million in federal funds for timber market development, as well as smaller amounts of funding for various other projects related to forest management, fish hatcheries and wetlands restoration.
 
Department of State Police received funding for a new trooper school with the goal of training 120 new troopers in 2021.
 
Department of Transportation was basically a flat budget with various minor adjustments. 
 
Department of Technology Management and Budget received $15 million for deferred maintenance projects at each of the five in-patient state psychiatric hospitals.  It also received $14 million for a broadband expansion program for underserved communities. 
 
Department of Treasury received an additional $73 million to be distributed as one-time hazard pay for K-12 teachers and support staff.
 
 
Supreme Court rules in favor of Legislature on State of Emergency Declarations
 
Earlier this year when the COVID-19 pandemic became a crisis in Michigan, Governor Whitmer declared a state of emergency.  This allowed her to take several executive actions without approval from the Michigan Legislature, ranging from school and business closures, workplace safety requirements, exemptions to licensing renewals, and numerous other areas.  Her original declaration used the Emergency Management law passed in the 1970s.  This law requires that any state of emergency must have the approval of the Michigan Legislature to be extended beyond 30 days.
 
It became clear in April that leaders in the Michigan House and Senate strongly disagreed with the Governor’s orders regarding shutdowns of schools, public agencies and private businesses.  It was highly unlikely that they would have agreed to an extension of the declaration of emergency unless the Governor agreed to rescind orders of which they did not approve.  Instead, the Governor’s legal team reached back in time to a separate state law that allowed the Governor to declare a state of emergency.  The Emergency Powers of the Governor Act of 1945 also allows the Governor to declare a state of emergency, but it does not have a time limit on how long that declaration may continue.  It also has no oversight requirements from the Legislature.  Therefore, all executive orders pertaining to the state of emergency since April 30 are based on the 1945 law. 
 
The Michigan Legislature filed a lawsuit claiming that the 1945 law was being improperly used, and that it violated the Michigan Constitution’s separation of powers requirements.  The case wound its way through lower courts over the summer, with judges siding with the Governor in each case.  However, when the case finally got to the Supreme Court, it decided on a 4-3 ruling to agree with the Legislature’s arguments and declare the Emergency Powers of the Governor Act unconstitutional.  This had the effect of making every executive order issued based on that law null and void.
 
In response, MDHHS director Robert Gordon issued orders under the auspices of the Michigan Public Health Code that replaced many of the Governor’s orders that pertained to mask usage, social distancing and limits on gatherings.  The Department of Labor and Economic Opportunity then issued emergency rules that replaced executive orders on issues of workplace safety.  The Legislature also held a marathon session to pass statutory changes that extend some of the Governor’s executive orders such as those covering unemployment eligibility, the Open Meetings Act, and remote witnessing and notarization of legal documents.  These statutory changes only extend to December 31, so there will likely be more work to be done since the pandemic will likely be with us well into 2021.