JACK SPENCER: Linkage; the Rubik’s Cube of the legislative process
This past week, the Michigan House passed a $48.9 billion budget plan for Fiscal Year (FY) 2014. That's roughly $2 billion less than Gov. Rick Snyder wanted and is about the same spending level as the 2013 budget.
What the House passed is not the final version of what will come to be the state's 2014 budget. Basically it reflects the budget plan upon which House Republicans were able to agree. Think of it as the opening offer they have now put on the table for the bartering, arguing and politicking process that will eventually lead to a final budget.
Conspicuously absent from the House budget was the $1.2 billion in new funding for road and bridge maintenance and $1.5 billion in federal dollars the state would get if it expands Medicaid.
All along it was known that Snyder was going to have trouble getting his way on these two big ticket issues — road funding and Medicaid expansion. Now, with only a few weeks remaining before the Governor's self-imposed deadline for finishing the budget, it is quite possible neither item will be part of it.
However, that doesn't mean the issues are dead — they're not. There's a better than even chance they'll be pursued outside of the budget. What's more, it's very possible, perhaps probable, that the two are strategically linked.
According to reports out of Lansing, a behind-closed-door meeting between legislative leaders and Snyder last week included heated discussions. A reasonable assumption is that House Speaker Jase Bolger, R-Marshall is on the hot seat. That's because at the moment Bolger appears to be holding the linchpin that might give the Governor a chance of getting his policy goals. In this case there should be an extra emphasis placed on the word “might.”
At the heart of the dilemma is that Snyder needs votes from legislative Democrats to pass Medicaid expansion and most likely he needs them to at least make a run at getting additional road funding dollars.
At this point, if Medicaid expansion moves it probably won't be Snyder's plan — it would be a hybrid plan that would still qualify for the federal dollars. Legislatively, Medicaid expansion is a straight forward proposition. If the House and Senate both pass it, Snyder will have it.
That's not the case with road funding, which legislatively-speaking has several moving parts. Medicaid expansion is probably one of those parts.
It appears that the most likely road funding scheme to pass would be the one that exempts fuel purchases from the 6 percent sales tax and changes the fuel tax calculation to one based on a percentage at the wholesale level. It's estimated that these changes would basically cancel each other out. The price motorists pay at the pump would remain relatively unchanged.
The additional road funding dollars Snyder wants would come from the second stage of the plan. That would be to increase the state sales tax on every other purchase – probably by one or two percent. Approval of voters through a statewide ballot proposal would be needed to do that. Putting a sales tax hike on the ballot requires a two-thirds vote of both the House and Senate. In the Senate that could potentially be achieved without the Democrats. But to do it in the House, a whole lot of Democrat votes would be needed.
Democrats can't like the idea of exempting fuel purchases from the sales tax, because most of the revenues from that at-the-pump tax go to K-12 schools and local governments. However, in both chambers the Republicans could pass that part of the plan without Democratic votes. If that happened, the Democrats would be likely to go along with putting the sales tax hike on the ballot — to at least have a chance of getting the revenue dollars back.
But it is doubtful that the Democrats would commit to providing those votes ahead of time. Instead, they're likely to try to extract as much as possible from the situation. One of the legislative items they want very badly is Medicaid expansion. On that issue their interests parallel those of the Governor.
With Medicaid expansion tossed into an overall deal that includes the road funding issue, even if the voters turned down the sales tax hike (and there's better than 50 percent chance they would) the Democrats could at least get something they wanted as a result of “playing ball” with the Republicans.
If anyone doubts that the administration, and lawmakers who are in its corner, are courting the Democrats, they're just not paying attention. Last week, Senate Appropriations Committee Chair Roger Kahn, R-Saginaw announced that repealing the state's prevailing wage law has now been taken off the table.
That was an announcement virtually all the legislative Democrats were sure to cheer. It was also a warning shot aimed at legislative Republicans who are refusing to give Snyder what he wants on Medicaid expansion and road funding.
It appears that the only way Medicaid expansion could pass in the House is if Bolger was willing to bring it up as a supplementary appropriations bill, so the Democrats could supply most of the needed votes for it. Undoubtedly, Bolger is feeling tremendous pressure to do that. This is why he is currently on the hot seat.
Much of the pressure on Bolger is coming from Snyder, but possibly even more is coming from the majority of business groups that want the road funding dollars and some that also want Medicaid expansion.
Arrayed against this pressure are just as many factors that could convince Bolger not to bring up a Medicaid expansion bill, so it could be passed mostly by Democrats.
First, there is that fact that bringing such a bill up would be pitting Bolger against his own caucus. That's something a caucus leader can never take lightly. Generally their actions are supposed to reflect the will of their caucus.
Also, consider that earlier this year Bolger let a vote take place that allowed the Democrats to provide the bulk of the votes needed to pass the Obamacare exchange bill. His willingness to do that resulted in an outcry from about two-thirds of the conservative groups in Michigan.
Keep in mind that the exchange isn't even the top issue concerning Obamacare at the state level in 2013 – Medicaid expansion is. If Bolger were to do the same thing regarding Medicaid expansion, the negative reaction from the conservative base would be much greater than it was when he allowed the vote to be taken on the exchange.
Even more intimidating is the fact that after going out on a limb to allow the exchange vote, the Senate voted against the exchange bill. That means Bolger went out on a limb for nothing. And there is absolutely no guarantee that the Senate wouldn't do the same thing with Medicaid expansion.
Putting it another way, Bolger might seem to be holding the linchpin on any chance of Medicaid expansion passing and thereby possibly also on road funding – but it's just the first linchpin in a chain of linchpins. He’ll have little or no control over most of the other ones.
Meantime; one has to wonder whether Senate Majority Leader Randy Richardville, R-Monroe, is rooting for Bolger to give in to the pressure from the Governor. After all, if Bolger does so, Richardville would probably be the next one on the hot seat.
As an aside, it should be mentioned that if a sales tax hike is put on the ballot the campaign for it might be tempted to try a little trickery. Don't be surprised if supporters of the hike argue that the increase is just a trade-off for exempting the sales tax from fuel purchases. As stated above, this wouldn't be true, because the switch to the wholesale percentage cancels out the exemption. Hiking the sales tax would simply be a tax increase for road funding.
Jack Spencer is Capitol Affairs Specialist for Capitol Confidential, an online newsletter associated with the Mackinac Center for Public Policy (MCPP). MCPP provides policy analysis. The political analysis represented in this column does not necessarily reflect the views of the Mackinac Center.