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Automotive Industry Takeaways From the New State Budget

July 6, 2023

Last week the Michigan legislature passed a historic state budget totaling $81.7 billion. New spending items important to the automotive and mobility industry include:

  • $500 million for the Make it in Michigan Fund, previously known as the SOAR fund, to continue competing with other states and nations to bring home advanced manufacturing projects.
  • $350 million for the Make it in Michigan Competitiveness Fund to win federal resources from the Bipartisan Infrastructure Law, the CHIPS and Sciences Act, and the Inflation Reduction Act.
  • $21 million for clean energy and EV infrastructure to allow the State’s Public Service Commission to grant funds for renewable natural gas facilities and electric vehicle fast-charging infrastructure.
  • $125 million to purchase electric school buses.
  • $5 million for Lake Michigan EV Circuit to build the best electrified road trip in the continent along Lake Michigan.
  • $5 million for a battery recycling research hub spurring cutting-edge research in mobility and electrification sector.
  • $35 million of additional funding for the Going PRO talent fund to further expand employer-based training grants.
  • $70 million to temporarily lower the age for Michigan Reconnect—tuition-free associate degrees or skills training—from 25 to 21, expanding eligibility to 350,000 people.

Read more about the budget below.

Detroit Free Press
June 28, 2023
Paul Egan

Michigan Legislature Sends $81.7B State Budget to Whitmer’s Desk

Lawmakers sent an $81.7 billion state budget plan for 2024 to the desk of Democratic Gov. Gretchen Whitmer on Wednesday.

The budget, which Whitmer is expected to sign, seeks to use a record surplus to replace water lines, fix roads and bridges, spruce up state parks and build low-income housing, all while cutting taxes, bolstering state reserve funds, and trying to reverse the significant learning loss Michigan K-12 students suffered during the pandemic.

Many Republicans denounced the budget as excessive, but it passed with bipartisan support in both chambers.

The Senate approved the $57.4 billion “omnibus” budget to fund state departments in a 26-10 vote, but only two Republicans voted against giving the bill immediate effect, meaning the two-thirds requirement was easily met. Earlier, the House approved the bill 61-47.

The Senate voted 29-8 to approve Senate Bill 173, the $24.3 billion school aid budget and again easily granted immediate effect. The House then voted 58-50 to approve the school funding before adjourning for summer break.

Conference reports released Wednesday afternoon set out spending details for the budget year that starts Oct. 1. The new and expanded programs detailed in the report are the result of a budget surplus calculated at $9.2 billion in January. The spending, which is expected to largely drain that surplus, is coupled with significant targeted and across-the-board tax cuts.

The omnibus bill for state agency funding, House Bill 4437, also included nearly $5.4 billion in new supplemental spending for the 2023 fiscal year.

It is the first state budget developed under full Democratic control of the legislative and executive branches in 40 years.

“I am so grateful to the new leadership in the Legislature for getting this done,” Whitmer said in a news release. “Let’s keep our foot on the accelerator.”

Democrats were united in support.

“This budget provides opportunities to change the lives of our constituents in important, real, tangible ways,” said state Rep. Felicia Brabec, D-Pittsfield Township.

But several Republicans said the bill was bloated, loaded with political pork, and made public only a few hours before lawmakers were expected to vote on it. Some complained it didn’t allocate enough money to road repairs and generally spread the surplus too thin to fix any one problem.

“The state budget has grown to astronomical proportions, spiraling out of control with reckless abandon,” said state Rep. Jaime Greene, R-Richmond.

House Republicans who voted for the omnibus bill were Rep. Gina Johnsen, R-Lake Odessa; Rep. Sara Lightner, R-Springport; Rep. Mike Mueller, R-Linden; Rep. Bill Schuette, R-Midland, and Rep. Mark Tisdel, R-Rochester Hills.

Among the highlights:

  • The school aid budget, Senate Bill 173, increases K-12 per-pupil grants by 5%. Whitmer had called for a 5% increase in her February budget presentation, while the Senate version of the budget called for a 6% bump and the House had OK’d only a 4% increase.
  • School meals for all. It’s a $160 million program to provide free breakfasts and lunches to all students from pre-kindergarten through 12th grade. Democratic lawmakers who pushed the program said making the meals universal, with the help of federal funds, will remove any stigma for students who receive them.
  • A freeze in funding for cyber schools. Whitmer had called for a 20% funding cut for cyber schools, saying they have lower costs for buildings, transportation, and other items. The House version of the budget called for a much smaller cut by freezing cyber school funding at the 2023 level. The conference report adopted the House version.
  • Dozens of grants totaling $122.2 million for “community enhancement,” $176.4 million in public safety grants, and dozens more “public infrastructure grants” totaling $234.4 million. They include $20 million for development in Detroit’s Greektown, $50 million to improve Pontiac’s downtown, and $10 million for “site readiness” for an economic development project on Five Mile Road in Wayne County. The public safety grants include $40 million for the Macomb County Jail, $10 million for the Dearborn Heights fire station, and $5 million to upgrade the Dearborn fire station.
  • Statewide housing grants totaling $39.3 million, including $1 million for the Orchard Village Apartments project in Detroit, in which Detroit Blight Busters is a partner.
  • Tens of millions of dollars in spending from the Natural Resources Trust Fund to add new parkland and improve existing parks, including a $600,000 project to improve a trail from MSU to Lake Lansing and a $400,000 project to renovate restrooms at Veterans Park in Hamtramck.
  • A $6.6 billion Michigan Department of Transportation budget, with $1.95 billion distributed to local road agencies.
  • A $100 million deposit into the state’s Budget Stabilization Fund, more commonly known as the Rainy Day Fund, and a $450 million deposit from the School Aid Fund into a newly created Budget Stabilization Fund for school funding.
  • In the Department of Health and Human Services, $140 million to support an 85-cent-per-hour wage increase for direct care workers and long-term care workers.
  • $150 million to support efforts to restart the Palisades nuclear power plant near South Haven, which ceased operations in 2022.
  • A $7.1 million expenditure for body-worn cameras for Michigan corrections officers, similar to those many police officers now wear.

Whitmer’s tax plan was approved earlier this year. It includes reductions in taxes on retirement income and a significant boost in the state Earned Income Tax Credit, to 30% of the federal credit, up from 6%.

Not part of Whitmer’s plan, but forced under a law passed during Republican control in 2015 that dictates an income tax rollback when state revenues surge, is a cut in the personal income tax rate, to 4.05% from 4.25%, for the 2023 tax year. Republicans interpret the 2015 law to say the tax cut is permanent; Democrats say it applies for one year only. The question may end up before the courts.