On March 25, the Michigan Senate narrowly approved its first proposal for a fiscal year 2009 budget to fund the state's Department of Community Health. As passed that day, Senate Bill 1094 would have appropriated just under $12.5 billion. This was $2 million less than what the governor requested and $434 million more than what was budgeted for public health in fiscal 2008.

It could have been higher. During consideration of the bill, Senate Democrats requested seven amendments that totaled more than $90.5 million worth of additional spending. Each was narrowly defeated, despite receiving unanimous approval from the minority Democratic caucus, with five amendments receiving one Republican vote each. Two Republican senators voted in favor of least $36 million from this proposed extra spending.

Extra funding for minority health, dental coverage, govern-ment smoking prevention programs, mental health courts and senior citizen home health programs were among the many spending proposals contained within the rejected amendments. Sen. Tom George, R-Kalamazoo, one of two physicians in the Michigan Senate, voted against all of the amendments and argued that supporting Senate Bill 1094 with comparatively less spending represented a preferable course of action:

"I would just point out that this budget shows an increase [of $434] million, almost a half-[billion] dollars over the current budget. It is rising f5rom $12 billion to nearly $12.5 billion, and yet, it is never enough."

Sen. Nancy Cassis, R-Novi, asserted that those who voted for the amendments were endorsing a "spending spree" and asked whether they would "dare to increase taxes" again as a means of paying for their spending increases.

After the spending amendments failed, every Democratic senator but one voted against sending the Senate draft of the public health budget to the House of Representatives. Sen. Martha Scott, D-Detroit, explained that "there are some amendments that we did not pass today that I think are very, very important." She added that "until we get a real grasp on who it is we need to be taking care of, then I will continue to vote ‘no' on these kinds of bills."

On May 16, the official state tax revenue estimate for fiscal 2009 was downgraded, with the new analysis projecting $393 million less than had been anticipated in January 2008. Nonetheless on July 17, the Legislature and the governor agreed to a 2009 funding level of $12.5 billion for the Department of Community Health. This is $485 million above the amount appropriated for fiscal 2008 and the largest budget of its kind in state history.

The amount of additional public health spending that each state senator supported among the $90.5 million in budget amendments is displayed in the table below.

For additional information and an opportunity to comment on this issue, please see www.mackinac.org/9615.

Discrepancies between what policymakers think they can spend and how much money is actually available have been a recurring pattern in Michigan government since fiscal year 2002. Michigan lawmakers were again confronted with this familiar story in May when the revenue estimating conference announced that the official Jan. 11 estimate of tax revenues for the upcoming fiscal year had been too optimistic. Forecasters said that there would be another gap between desired spending and projected income, also known as a "deficit."

The projected shortfall for the fiscal year that begins on Oct. 1 is $393 million. Because the rosier January scenario had been the basis for pending budget bills, as well as for the governor's 2009
Executive Budget Recommendation, the lower estimate will require a spending course correction.

State Sen. John Pappageorge, R-Troy, is a member of the
Senate's budget-writing Appropriations Committee and was
arguably the lawmaker least in need of a course correction. When the initial, larger revenue projection was announced in January, he tried to persuade the governor and Legislature to craft budgets that assumed only 96 percent of the money would be available. At the time, State Treasurer Robert Kleine dismissed this suggestion, saying that budgeting 4 percent beneath the estimate would require slicing $800 million from what the administration would like to spend.

Had Pappageorge's advice been heeded, policymakers would likely have gotten through the May revision with a substantial and still intact surplus between anticipated tax receipts and desired spending.

To help break this destructive pattern of deficit spending, Pappageorge introduced a proposed amendment to the state constitu-
tion — Senate Joint Resolution E — that would prevent future legislatures from appropriating in advance more than 96 percent of projected revenues for the next fiscal year. Any surplus revenue would go into the state's rainy day fund. To be placed on the ballot for voter approval, this proposal would require a two-thirds
majority vote in both the House and Senate, but neither chamber had done so as of press time. The Michigan Chamber of Commerce has endorsed a similar concept. SJR E is awaiting action in the Senate Appropriations Committee chaired by Sen. Ron Jelinek, R-Three Oaks.

The need for restraint was demonstrated on June 10 when the House of Representatives wrestled over funding levels for K-12 public school districts. Of the $393 million downward revenue revision, $186 million was the result of a decline in School Aid Fund tax receipts — the primary funding source for schools. Yet the House voted 61-48 to spend $32.2 million more than the latest estimate of available funding. Five Republicans voted in favor, along with 56 Democrats.

"Are we nuts, or what?" asked Rep. Chuck Moss, R-Birmingham, who cast one of the dissenting votes. "How in heavens do we propose to pay for all this stuff?"

Rep. Marsha Cheeks, D-Detroit, portrayed the overspending as a matter of virtue and resolve. "This overage says to me that we have made the commitment to find the money to fund schools in our coffers throughout the year," she said. Cheeks defined her fiscal priorities as the following: "I say fund education by any means necessary." 

The next morning, the House version of the school aid budget was rejected by the Senate, forcing both chambers to meet in a conference committee and attempt to compromise on a budget that — presumably — will also conform to the balanced budget requirements of the state constitution. The deadline is Oct. 1.

Had it been enacted, the House version of Senate Bill 1107 would have spent more than $13.4 billion, exceeding the highest previous school aid budget by half a billion dollars. The governor's recommendation was $600 million above that benchmark, and the Senate proposed breaking the record by $400 million (but not overspending expected revenue).

According to official state estimates, the public school population will decline by 25,000 pupils between 2008 and 2009. The largest-ever state public school population was recorded in 2003; the estimate for 2009 is 86,000 fewer students than that peak.  To put these declines in perspective, the combined student counts in the second-largest through fifth-largest Michigan school districts was 88,606. And only the second largest district — Utica Community Schools — had more than 25,000 pupils.

The MichiganVotes.org vote tally for the House version of Senate Bill 1107 is below. The contact information for members of the House of Representatives may be found at www.mackinac.org/9313.

For additional information and an opportunity to comment on this issue, please see www.mackinac.org/9615.