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Michigan Legislative Update

Week of August 27, 2015

by Judy Augenstein

Disagreement over the uncertain future of a state assessment on health care claims was the latest reason a $1.2 billion road funding deal fell apart last week.  The deal breaker was the insistence by Governor Rick Snyder to have House Republicans include a fix for the Health Insurance Claims Assessment in the road deal lawmakers were pursuing.  The assessment at its current rate has not produced the revenue needed to match federal Medicaid dollars, creating problems for the state's budget going forward. 

But, many House Republicans did not want to go along with the administration's request.  The disagreement played a major role in why the House adjourned last Thursday without passing a long sought after plan to fix the state's crumbling roads.   The HICA shortfall will create a $120 million to $200 million gap in the state's budget.  Snyder's team wanted a fix for the shortfall included in the roads deal as a way to alleviate concerns about dedicating $600 million in existing state revenues to roads.  The Governor contended that without the HICA fix, the HICA shortfall and the roads plan would overly strain the state's budget going forward. Snyder preferred the portion of new revenue be bumped to $800 million to cover the HICA fix and roads.

House Appropriations Committee Chair Rep. Al Pscholka, R-Stevensville said he believed he and Speaker Kevin Cotter, R-Mt Pleasant had just enough votes for the $600 million/$600 million plan the House Republicans were pursuing.  The House GOP plan was for a 5 cent gas tax increase and registration fee changes to produce the $600 million in new revenue and $600 million more in budget cuts.  At the last minute when the Governor insisted on increasing revenues to include the HICA fix and roads to $800 million, many Republicans who were hard pressed to vote for any revenue increase dropped their support of the proposed plan. 

The Legislature will return on September 9 to continue debate on the thorny road budget plan.

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