Amid GOP pushback, Michigan Legislature OKs $1B spending plan targeting biz incentives

Lansing ― The Michigan Legislature approved a $1 billion spending plan Wednesday that mostly replenishes a state fund aimed at attracting large economic development projects, a move that drew criticism from some key Republicans who disagreed with the strategy.

The majority of the money, $846 million, would be deposited into the state's Strategic Outreach and Attraction Reserve (SOAR) Fund, including reauthorizing for the next fiscal year $206 million previously put into the account used for doling out cash grants to companies looking to expand or locate in Michigan.

The GOP-run Senate voted 33-0 in favor of a small education spending plan and 25-8 on the roughly $1 billion supplemental budget bill negotiated with Democratic Gov. Gretchen Whitmer that includes money to prepare land for new manufacturing facilities.

The Republican-led House passed the education budget bill 78-26, with 25 Republicans opposing; and the chamber passed the $1 billion spending bill 76-28, with 26 Republicans opposing.

The spending plan created significant division among Republicans, with House Appropriations Chairman Thomas Albert, R-Lowell, resigning from his leadership position Wednesday morning over the proposal and Republican gubernatorial nominee Tudor Dixon praising Albert for standing up to the bill.

Albert said his opposition stemmed from a belief that Michigan is on the verge of an economic recession and other lawmakers speaking Wednesday decried money routed from taxpayers to businesses.

"What we're doing today is immoral," said Rep. Steve Johnson, R-Wayland. "We are stealing money from the people of Michigan to give to a well-connected few."

But other lawmakers defended the spending plan as a way to increase economic activity and job opportunities in Michigan.

"A portion of it is for things that are already in the pipeline," Rep. Ben Frederick, R-Owosso, told reporters. "And a portion of it is contingent on what may come. We have negotiations that are provisional where we have conversations with companies looking to locate."

"I think it was important for us to set a tone of anticipation, where we have in effect allocated funds contingent on further legislative oversight ... for what may come."

Senate Appropriations Chairman Jim Stamas, R-Midland, argued the spending plan was a wise use of the state's $7 billion in surplus tax dollars.

“Economic development is critical to our future," Stamas said in a statement. "As our economy faces the challenges of high inflation, labor shortages and supply-chain issues, we must help our state remain competitive for long-term, high-wage jobs."

Whitmer praised the spending deal, which secures funding for economic development projects, college student scholarships and support for first responders.

"The supplemental is a testament to what we are capable of when we work together," the governor said in a statement. "Let’s keep putting Michiganders first and moving our state forward.”  

Spending plan approved

Of the $846 million in the $1 billion spending plan, $100 million would go to grants for improvements to "strategic sites," $75 million would go for the assessment and development of "mega-strategic sites" and $100 million would be dedicated to grants to "remediate or redevelop" landfill facilities, according to an analysis by the non-partisan House Fiscal Agency.

The bill also included about $25 million to supplement and increase rates at institutions caring for children with mental health, behavioral or developmental challenges. It also allocated another $15 million to the Detroit Wayne Integrated Health Network psychiatric campus, after giving the project $45 million in the 2023 fiscal year budget that goes into effect Saturday.

Another $7.5 million would go to first responder and public safety staff mental health programs, $20 million to settle a lawsuit over false fraud claims by the Unemployment Insurance Agency and several targeted grants for select Michigan communities

A separate spending bill also up for a vote Wednesday would contribute roughly $12 million to a literacy tutoring program and activate about $250 million set aside in July for a post-secondary scholarship fund.

The allocation to the scholarship fund is ongoing, meaning it is meant to continue year-over-year and will increase by $50 million each year "until deposits match the fully implemented costs of the scholarship," according to a House Fiscal Agency analysis.

The scholarship program would be applicable to graduating high school seniors starting with the 2023 graduating class whose family contribution as determined in their federal aid application is less than $25,000.

Applicants would have to be a full-time Michigan resident for at least a year and maintain "satisfactory academic progress" to qualify for a maximum of $5,500 per year at public universities for up to five years, $4,000 a year at private non-profit universities for up to five years or $2,750 a year for three years at communities colleges, according to the bill.

Albert steps down from chairmanship

Albert announced he was stepping down as chairman of the House Appropriations Committee on Wednesday morning, citing his opposition to the supplemental spending proposal.

"I'm very proud of what we've achieved. ... We've done a lot of good," Albert said. "It's time for a chair who is more aligned with the direction of leadership."

His announcement was quickly followed by a tweet from Dixon, who thanked Albert "for standing up for Michigan taxpayers." Michigan Republican Party co-chair Meshawn Maddock and her husband, Rep. Matt Maddock of Milford, also praised Albert's protest of the spending bill.

Rep. Joe Tate, D-Detroit, the top House Democrat on the Appropriations Committee, also expressed some discomfort with the proposed plan earlier Wednesday and said he was contemplating voting no on the proposal. Tate eventually voted in support.

Albert's opposition dates back to a statement he released earlier this month indicating he would not advance a supplemental spending plan. House Speaker Jason Wentworth, R-Farwell continued to participate in negotiations with Senate leadership and Whitmer's administration regarding how the state would spend Michigan's remaining $7 billion surplus —negotiations that ultimately led to Wednesday's passage of the $1 billion spending plan.

“Increased government spending has fueled inflation and played a major part in the economic struggles we face today," Albert said. "Additional spending would just make things worse. The measure the Legislature is considering today is reckless and irresponsible to taxpayers, and I will be voting against it."

Wentworth appointed Rep. Mary Whiteford, a Casco Township Republican who currently serves as the committee's vice chairwoman, to take over as chairwoman for the remainder of the year.

In a statement, Wentworth said Albert "did a great job" in ensuring the state's financial stability "for decades to come."

“Under Thomas's leadership, we approved two state budgets that passed with broad bipartisan support, raised funding for schools and roads to the highest levels in state history without tax increases, and paid down billions of dollars in long-term debt that would have otherwise meant a bleak future for our children and grandchildren. It is an outstanding record," Wentworth said Wednesday.

Whiteford thanked Albert in a Wednesday statement for his leadership and "exemplary" stewardship of public funds. She noted that, with the annual budget already passed and going into effect Saturday, her own tenure leading the committee over the few months remaining in the current session would largely focus on "any necessary budget supplementals that may arise."

Spending history

Wednesday's session comes 89 days after the House and Senate approved a record $76 billion state budget for the fiscal year that begins Saturday. That spending plan included $1 billion for special projects.

A Detroit News investigation earlier this month found that the spending spree was orchestrated largely behind closed doors with taxpayer money being directed to benefit private real estate developers and other businesses, campaign donors and political interest groups, such as unions.

Stamas defended the Legislature's spending process in an interview on Wednesday morning. A proposed spending bill will be discussed within the four legislative caucuses and there would be a public conference committee hearing, Stamas said.

Lawmakers established the SOAR Fund in December 2021 to chase large economic development deals. Before money can move out of SOAR to specific projects, the House and Senate must authorize the transfer.

After allocations for General Motors Co.'s electric vehicle investments and upgrades to Ford Motor Co. plants, there's about $200 million remaining in the program with more job-creation projects on the horizon.

It's possible some of the money in the SOAR fund could go to the Big Rapids project by Gotion Inc., which plans to invest about $2.4 billion in private money to construct a manufacturing facility that sprawls across two townships and 19 parcels of land.

The Chinese battery parts company has said it intends to create 2,350 jobs by 2031. On Tuesday, Dixon expressed her opposition to using taxpayer money from the SOAR fund to subsidize the economic development project in Mecosta County.

Whitmer's administration has not revealed how much money from the state's SOAR Fund might support the effort. The Michigan Economic Development Corp. declined a request from The News on Wednesday to publicly release how much taxpayer money is being offered to Gotion from the SOAR fund for the project.

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