Legislative Report May 2021
As the roll-out of COVID-19 vaccines continues, Governor Whitmer announced last week that pandemic restrictions will be lifted based on percentages of Michiganders who have been fully vaccinated. The plan, dubbed “Vacc to Normal,” will gradually eliminate limitations on gatherings, in-person work, mask usage and other restrictions based on milestones of vaccine distribution. This is the first indication that there is hopefully light at the end of the tunnel, though it comes at a time when much of Michigan is experiencing another wave of infection.
The Michigan Legislature is devoting most of its attention to the 2022 budget process, while at the same time preparing to pass supplemental bills for the current year that would appropriate federal COVID-relief funds. Over $1 billion in relief funds passed in Washington last December remain unspent, and that is in addition to the over $5 billion the state received recently as part of the American Rescue Plan federal legislation. Michigan lawmakers find themselves in a strange position of having to distribute huge amounts of one-time federal funds while at the same time having to balance long-term projections for state revenues.
More on these issues below.
Legislature and Governor Wrestle Over Pandemic, Quarterly Budgets
The running battle between the Whitmer administration and Republican Legislative leaders in Michigan over pandemic policies has dominated Lansing politics for over a year. Democratic Governor Whitmer’s use of executive orders and the powers of the Michigan Department of Health and Human Services to implement restrictions on gatherings, require the use of personal protective equipment and shutter schools, youth sports and businesses has sparked a backlash among GOP leaders. Over the past 12 months, the Michigan House and Senate have continuously attempted to reduce the Governor’s executive authority, using their power over the state’s purse strings and their ability to launch legal challenges as their main tools.
The latest battle centers on the 2022 budget process, as well as the appropriation of federal COVID-19 relief funds. In February, the House and Senate passed supplemental budget bills to spend federal pandemic relief dollars that were approved in Washington last December. The Legislature conditioned nearly half of the approximately $2 billion targeted for schools on Governor Whitmer signing companion legislation that would remove the ability of the Michigan Department of Health and Human Services to issue pandemic-related orders. Governor Whitmer vetoed that companion bill, which resulted in just over $800 million in school aid funding going unappropriated. Those funds can still be spent in Michigan, and the Legislature is as of this writing putting together another supplemental bill to appropriate it.
The fight over executive powers is also being carried out during budget discussions regarding the 2022 fiscal year. Governor Whitmer released her budget proposal for the next fiscal year in February, and the House and Senate have recently begun voting on their first drafts. The Senate proposals so far are fairly typical with the historic budget process – they agree with the Governor on some funding issues and differ with her on others. The House, however, is adding numerous unprecedented concepts into their budget proposals centered on the theme of legislative oversight.
The most unusual proposal that is contained in several of the House budgets would move the process to a quarterly procedure instead of an annual one. The House is proposing to issue state funds in three-month increments, which would require the budgeting process to be, for all practical purposes, nonstop for the next year. Proponents of the change argue that the Legislature’s primary role is oversight of state government, and that dividing appropriations into three-month chunks will strengthen that role.
Other changes being included in most House and Senate departmental budgets would drastically reduce staffing funds for unclassified personnel. Every department has a small number of officials that fall outside the state Civil Service system and are therefore “unclassified.” These positions include leadership and deputies appointed by the Governor or hired directly by department heads. Again, proponents of the change justify the staffing cuts by stating that it will provide greater oversight by forcing each department to appear before the Legislature to justify each unclassified position.
While these items in the budget proposals are unprecedented, they are not beyond the purview of the Legislative branch. The Legislature has proposed and even passed unusual budget iterations in the past. During the Snyder administration, the Legislature took the opposite tack and actually passed multi-year budgets with the idea that it would provide better long-term clarity for those receiving the funds. During the Granholm administration, the Legislature adopted an approach based on a book titled “The Price of Government” that attempted to reassess state funding from top to bottom. Both of those concepts ended up being fleeting, but it is not unusual for lawmakers to experiment with new ways of budgeting, especially when it has the added benefit of putting pressure on the executive branch on items of disagreement.
The latest movement in the budget process occurred on May 5 when the House and Senate Appropriations Committees adopted their first drafts of the 2022 budget. The House maintained the quarterly budget process for most budgets (notable exceptions being MDHHS, K-12 School Aid and Higher Education funding). House and Senate versions of the budget generally provided increased between 1% to 3% for each department, although the final numbers will not be decided until after the upcoming Revenue Estimating Conference on May 21. The House and Senate will pass each of their own budget versions next week, and then the more detailed negotiating will begin between the two chambers and the Governor’s office.
In terms of moving to a quarterly budget process, most observers feel that the odds are still slim. The reaction to the proposal has been almost universally negative, and so far it is unknown if the Senate will sign on. Still, it would not be surprising if, as the two Legislative chambers and the Governor try to work out a final budget, greater oversight tools are inserted into the final version. Whether that budget process is completed by July (as is hoped by all parties involved), or drags on into the summer or later, is still an open question, but recent movement makes it more likely that the process will be completed sooner rather than later.
LEO Training Program Under Scrutiny
Recently, as part of an ongoing series of webinars about worker rights, the Department of Labor and Economic Opportunity included a session informing workers of their rights to form a union. The program also instructed workers on the legal requirements for organizing. This program sparked outrage among Republican legislators. In particular, Senator Ken Horn (R-Frankenmuth), the chair of the budget subcommittee that determines appropriations for LEO, was unhappy enough to hold a special meeting just to bring the department before the committee to explain the program.
Interim Director Susan Corbin and Deputy Director Sean Egan testified to the committee and explained that the webinar on unionization was a small part of a much broader educational program aimed at informing workers of their rights under various state and federal laws. These programs ranged from instruction on health and safety laws, wage and hour issues, discrimination and other rights afforded to employees. Because the right to form and join a union is protected under both state and federal law, it was not unreasonable to include it within the larger program.
Senator Horn was not convinced, and he made it clear that he believed that the state should never use resources to instruct workers about their collective bargaining rights. Senator Horn stated that his intent would be to offer amendments to the LEO budget that would strip funding in response to this webinar, likely with the intent to discourage the department from doing anything similar in the future. The House version of the budget that was reported from the Appropriations Committee on May 5 also included language that prohibited the department from expending funds to promote unionization.
The Michigan AFL-CIO released a statement in response to the controversy supporting the actions of LEO. Part of the statement read, “Lawmakers should support the education of Michigan workers about any and all laws that were passed to protect them, whether they concern discrimination or unionization.” It further stated that, “We are proud to support the Department of Labor and Economic Opportunity in its efforts to create educational programming for Michigan workers and employers so that they know their rights and responsibilities under state and federal law. We hope that Michigan Legislature will also support these efforts.”
The Legislature is still working to pass appropriations for LEO and all other departments, so it is too early to tell how severe a cut LEO will receive in response to this education program.
Supplemental Budget Bill Includes Premium Pay for Some State Workers
House Bill 4420 seeks to distribute approximately $2.5 billion in federal relief funding authorized through the Coronavirus Response and Relief Supplemental Appropriations Act (the second round of federal relief funds that was passed in Washington last December). The bill seeks to use a portion of those funds (approximately $110 million) to provide premium pay grants to frontline state workers in the Departments of Corrections, Health and Human Services, Military and Veterans Affairs, Natural Resources, and State Police. The bulk of these funds would go to the Department of Corrections ($68.5 million).
The bill did not spell out how these payments would be processed, and in what amounts. However, the bill did tie any premium pay for state workers to another bill – House Bill 4082 – that would restrict the ability of the governor to make administrative transfers of appropriations in state departments. This is another example of the Legislature seeking to limit executive authority by connecting it to something that would otherwise be supported by Governor Whitmer – in this case, premium pay for state workers.
The bill moved out of the House Appropriations Committee, and is awaiting action on the floor of the House of Representatives.