- Governor Gretchen Whitmer delivered her fourth state of the state address.

Focuses included tax cuts and raising the earned income tax credit.

The recently released $74.1 billion budget proposes more money for infrastructure, education, and tax relief.

We take a closer look on West Michigan Week.

Thank you for joining us on West Michigan Week.

Governor Gretchen Whitmer has released her 2023 budget.

It's a record amount, more than 74 billion, a combination of sales and income tax revenues, along with federal COVID recovery funding supports the budget plan.

It includes money for roads and bridges, additional money for colleges, universities, and K through 12 schools.

There are tax breaks for individuals, and funds for business.

Here to discuss the budget proposals are Dr. Leadriane Roby, superintendent of Grand Rapids Public Schools, and Andy Johnston, senior vice president of advocacy and strategic engagement with the Grand Rapids Chamber.

Thank you both for being here.

$74 billion.

Have we seen a budget like this?

I think we've come close, but not quite like this.

Just some facts here.

Beginning of the pandemic, Michigan projected in 2021, a $3 billion deficit, 2022, a $7 billion surplus.

For both of you, from your perspectives, what do you like in budget?

Dr. Roby?

- So I like that there are lots of things for schools.

As you know, school districts across our state have been underfunded for many, many years.

And I will say, hats off to Governor Whitmer for just finally closing some equity gaps around the per pupil allowance.

This historic increase helps us look at gaps for our special needs students, as well as our students who need additional supports around in special support services, special languages, and such as that.

And so, this allows us to have some parity around the per pupil funding amount.

We want to just applaud her for her event investment in economically disadvantaged students.

I've never had this happen in my career where we have resources to really address the things that we say are our priority, which is our scholars.

- I know that it's going to be some crossover in this discussion about retention and talent.

Andrew, from your perspective, looking at the dollar amounts that are out there, and some of the projections, we talk about the tax breaks, but just when it comes to the business environment, what's in this plan that you like?

- Yeah, well, I mean, first, on its face, you have to say holy cow.

In 2009, the budget was $48 billion, and now we're sitting at $74, $75 billion.

It's really once in a generation opportunity to spend these federal stimulus dollars.

So when you talk about creating an environment that supports business success, the things we're gonna be able to do around infrastructure to set us up for the long term, things that almost the greatest generation did that we still enjoy.

I think about the highway system, all these other things.

We're gonna be able to make some really smart, hopefully focused one time investments using these federal stimulus dollars that are gonna pay dividends for a long time.

There's a lot in here about talent.

Dr. Roby talked about the historic investment in K12.

We got resources to support childcare, which has been a big issue for the business community, just communities in general, through the pandemic.

And then the earned income tracks credit is a conversation we want to have.

It's one of the most effective tools of helping working people get out of poverty.

So a lot to work on, a lot to discuss with the legislature.

- When you look at this, you said this is a once in a lifetime generational kind of funding here.

You get caught up in the politics.

I know you're in Lansing.

You see what happens down in the mosh pit, we'll call it that.

Do you see Democrats, Republicans coming together on a lot of these proposals?

Is there a lot of common ground here?

- Yeah, there's a lot of proposals out there.

I think there is a lot of common ground to be had, but it's no secret that Lansing's been divisive between the governor and the legislature, particularly over the budget.

So the governor has some big ticket items that on her agenda, the legislature has some on theirs.

So it's gonna be interesting to see how they all come together.

The governor has really proposed spending most of the money that's in access, and all of the federal dollars.

And I know that's something the legislature is gonna be hesitant to do.

There's certain timelines we have to spend these federal dollars, and I think they're gonna want to take a, maybe a slower approach than the governor.

- I was gonna say, it's kind of a use it or lose it when it comes to those federal dollars.

- Well, we still have another year up to the end of 2023 to at least appropriate them, and they don't have to be spent till 2026.

So I know the legislature is gonna have an eye on that.

- All right, let's switch back to the education piece of this.

I want to get Dr. Roby back in the conversation here.

Governor Whitmer's fiscal year 23 budget, Putting Michigan Students First.

At the top of the list, $18.4 billion investment in education.

Per student funding, $9,135 for every kid in every district.

And then $2,000 bonus for every school employee that's teacher, aides, parapros, custodians, administration, bus drivers, cafeteria workers, this fall, and then another $2,000 bonus for staff that come back to their districts in 2023.

How encouraging is that considering the environment that we are in?

- It's extremely encouraging.

And again, I want to applaud Governor Whitmer for her vision around this.

Because the reality is, our schools, just like the businesses in the private sector, have been absolutely drowning due to staff shortages, coupled by the COVID crisis and close contacts.

Right now, in Grand Rapids Public Schools, we have about 240 vacancies that we are struggling to fill.

And it's not that we're not working and being creative to try to get and recruit people.

It's hard.

People are sick, people are afraid.

And I think about the number of teaching positions.

70 of our 240 are teaching positions, 38 custodial positions, 22 food service, 43 special education itinerate care.

We have 33 administrators, and it goes on and on and on.

And so, as we have worked to keep schools open, we need staff to do that, and we need to incentivize it.

I think those who have worked, those such as myself who have worked in the public education for all of my career know that educators have constantly been beat up upon for societal ills.

And so, I love that we're recognizing that educators do a lot.

And when I say educators, I'm talking about our bus drivers, our food service, our classroom teachers, our administrators, our parapros.

All of those folks help make up a school, and they do a lot of things behind the scenes so that teachers can teach.

And so, I applaud this initiative, and I hope that it does come to fruition for all of our public school employees.

- And there's more.

But wait, there's more.

$11,000 in total bonuses for teachers and certified school staff, 1 billion for school construction and renovations, and grants to make school safer for students and staff in the classroom.

So there's a lot of money that's just being spread around.

In all of your years, to have this kind of an investment.

And you talked about the environment itself and making sure you can bring teachers in.

Of course, there's all kinds of competition out there for bodies.

But that investment in the, just the construction and renovations alone has got to be huge.

- It is.

One of our schools here in the district is the oldest school in the state.

It's 150 years old.

It's a beautiful building.

But if you can imagine, 150 year old building does not have all the bells and whistles as a newer building.

And so, the fact that we are recommitting to our infrastructure helps schools look more appealing and attractive.

And again, it's all the things that make school successful.

Having nice buildings, having access to technology, making sure that we have resources, both of staffing, and then other kind of those tactile consumable resources so that we're able to support students with computers and technology so that learning takes place not just in the school building, but also, outside of the school building.

So if we do continue to have this pandemic go forward, and we have to, at some point, look at going online, which we've done a couple of times to make sure that learning still occurs for our schools.

And I think that's really, really important.

And one of our legislative priorities for our district is making sure that we are part of that comprehensive statewide education, education support system that includes recruitment, retention, and a development plan for the infrastructure of all of our schools.

- And, of course, the bottom line in this investment is having an educated workforce, ultimately.

I mean, we want to see our kids achieve, move on, and then return to our community.

Andrew, as you look at this and you look at the money, money is one thing, it's the results that matter.

How crucial is this?

- No, I think the investment in K12 education, we're hoping really pays off in improving the outcome so that we're a top 10 state when it comes to growing our own talent.

There's a lot of work we can definitely do there to increase reading and math scores, and that'll pay dividends for our long term competitiveness.

We're really excited to see in the budget as well, support for existing workers through opportunities, like Futures for Frontliners, reconnect and the going pro training fund.

And then on the front end, they can't forget either on the daycare part.

The fully funding for the Great Start Readiness Program, which is something that carry over from the Snyder administration.

Working to fully fund that to make sure all eligible four year olds have access to high quality childcare so that they're getting the right start on their K12 journey.

So it's really for funding for that whole talent pipeline, because at the end of the day, where you can connect people with really good paying jobs, that's what life's all about, right?

You and take care of your family, maybe go on that vacation to someplace in Michigan to spend those tourist dollars here.

So a great opportunity for key investments that'll pay dividends.

- Related to that, Andy, to that point, one of the things that we've done with our scholars, we have a senior summit, and we are drilling those three Es.

Either enrolled in college, enlisted in the service, or employed.

And we want all of our students as they matriculate through our system to have one of those three Es.

They might have multiples, but it's about making sure that they are prepared so that they do feel successful and are able to contribute right back into the Grand Rapids area or wherever they choose to go, but we certainly want them here in our own community.

- A piece of this too is having students who also know that the investment is there.

There's that psychology of knowing.

Same for parents and parents being involved in knowing, hey, the state is making this investment.

That's something that I think students need to feel in the classroom too.

They need to know that they feel value, and that they are being supported on their journey.

- Yeah.

And I think that goes along with what the superintendent was saying about teachers too, is making sure that you're appreciating teachers.

I mean, for teachers when kids came back and they were eating lunch in the classroom, I know that drove some teachers almost to the breaking point.

It's like, "Oh, now I'm the janitor and the lunch lady too on top of everything else?"

And so, that's why these dollars that we've been talking about are so helpful.

It sends that message with money.

And then as a community, we can do that for both the folks.

As superintendent was saying, from the bus driver, all the way up.

And then communicating to the students.

I mean, this is an incredible opportunity.

This is the first time in my lifetime that employees have really had the upper hand when it comes to either kind of pick of where they want to work and what kind of careers they want to go to.

And with this talent crisis, it's not looking like it's ending anytime soon, at least for this coming decade.

So it's a great chance to take advantage of this opportunity for them.

- I agree.

- It's encouraging I mean, if you get that message across to high school, seniors, juniors who are moving on, they need to know this.

They need to be aware that the support systems are in place.

We'll wrap up on the education here.

A couple more loose ends.

Resources to hire and train 10,000 new teachers, hundreds of on campus mental health professionals.

I know that mental health is a big part of this budget.

Also open 40 school based health clinics to serve 20,000 students.

So again, those are the support systems that are being put in place.

- Absolutely.

And if you think about it, COVID has certainly shown us as we've had to shelter in place and be socially isolated, the mental health needs of our community, the long term effects, I don't think that we fully understood, and we're starting to see the results of it as we have gone back into in-person instruction where our young scholars are having to relearn how to do school.

And we've always needed counselors, and social workers, and those within our school communities for that mental health and also, mental wellness.

So it's not just about having something wrong, but it's about making sure that we protect that sense of positive wellbeing.

Just really quickly, I want to make sure that people know that the teacher prep, Michigan teacher prep enrollment has dropped by 70% since 2006.

So there is an urgent need around, as our teachers are maturing out and deciding to do other things, either through retirement or deciding to leave the profession, we have not been able to adequately and appropriately continue with that pipeline.

And so, one of the things that we are also ensuring that we support is scholarships for our high school seniors who enroll in colleges of education.

We support tuition reimbursement and teacher internships, stipends for current college students, grants for every district to grow your own, so that we do have staff members, and colleagues, and community members who may want to be a part of the education system, but don't necessarily have the resources and access to do so.

And I think that's really important that we support that, so that if we're talking about building it, we have to make sure that we give people an on-ramp for it.

Paid teach student teaching and internships, loan repayment for college students who graduate with a commitment to education and go into a public education system.

And then easing restrictions for accepting teachers' licenses from out of state.

Sometimes as teachers get their certification in other places, we make them do additional coursework in the state of Michigan.

And if they've been certified in one of the other continuous states, it's important that we don't make it a hurdle so that people want to come to Michigan and teach.

- We're gonna quickly switch gears here, 'cause Andrew, I know wants to talk about tax breaks.

So this is part of the FY23 budget, Growing Michigan's Economy, Creating Jobs, Supporting Small Businesses.

Top of the list, for seniors, a rollback of the retirement tax, which would save half a million households an average of $1,000 a year.

And then for hardworking families, tripling the Michigan entered income tax credit to pull 22,000 Michiganders out of working poverty and delivering 730,000 households an average combined tax refund of $3,000.

Money that can make a difference.

- Yeah, we're really excited about the earned income tax credit.

That was something that, unfortunately, had to be cut during the rough budget times during the great recession.

And the EITC, as it's referred to, is explicitly designed to encourage greater participation in the workforce.

Again, any tool, any policy, any incentive we can create to increase labor force participation is just gonna be so critical.

And it's available to families that work.

It's actually a policy that was signed into law federally by Gerald R. Ford when he was president.

And since then, has been a really effective tool, a cornerstone of anti-poverty policy in the United States.

And it's really been a program that meets its goals by increasing employment, particularly among targeted women by successfully raising their annual income.

And again, has lifted millions out of poverty.

So we're excited to continue that discussion.

It's one we're having with the legislature.

I think from a political perspective, the retirement tax, maybe a little bit politically difficult for the governor to see pass, but I think there could be some exemption changes when it comes to how a retirement income is treated to address this issue for retired citizens.

And I think there's some tax ideas that the governor didn't propose that the legislature wants to have a discussion on, whether it's the income tax for all Michigan citizens that pay that, or the corporate income tax.

The one we want to discuss is the commercial personal property tax to help out small businesses, particularly in retail.

So as it goes with budgets, the governor proposes, and the legislature disposes.

And so, this is a nice opening offer in the first round of negotiations here from the governor.

- You say first round of negotiations, how long can this go?

- They want to wrap it up, typically, by the beginning of June.

But remember, the fiscal year doesn't officially end or start till September 30.

So with the body government, it tends to go a little bit longer than the June, July targets.

But I think given that it's an election year, we could see the budget wrapped up by June, probably without everybody being happy, which is the way it kind of is supposed to work.

- So there was a big development prior, really, prior to the state of the state and then also, the budget proposal.

And that was the investment from the economic development fund that helped Michigan land GM's $7 billion investment in January, 2022.

This fund, amazing how money talks in business.

- Yeah.

The funding with the economic development package, it helped support the electronic battery plan that was announced recently.

And additionally, I think people also need to know that there was $409 million for afflicted businesses.

As part of this economic development package, those funds are gonna start going out the door at the beginning of March.

So if you're a gym, or a personal trainer, or run a nail salon, or a movie theater, or a restaurant, there's gonna be another round of resources to help.

Because while it seems like we all want to be over with the pandemic, it's not over with us or what it's done to our small businesses.

So they still need our help and our support, and this business assistance grant funding is gonna go a long way.

- We all watched the Super Bowl recently.

A lot of electric cars and trucks.

I don't think there was one internal combustion engine ad to be seen.

A $2,500 rebate for electric vehicles, $2,000 for the car, and 500 for in-home charging equipment.

This will build on the $7,500 federal electric vehicle tax credit, knocking nearly $10,000 off the price of an electric vehicle.

I don't know if we want to get into the infrastructure issues of all of this.

- Well, in addition to the incentives they're creating for consumers, they're also throwing a bunch of money at the infrastructure side of it, because you're right.

The two things go hand in hand.

We need to build the infrastructure that's gonna support it, along with the incentives to purchase it.

But this is the future.

I mean, you talked to the head of our MEDC, Quentin Messer.

I mean, it's all about the move from internal combustion engines over to EV.

And if we want to continue to lead the world, continue to have the brain power that's driving this, we also need to be the ones driving it, consuming it too.

It definitely helps.

So I think it's a good strategy.

I think we'll see investments along these lines make it through the legislature.

- Dr. Roby, electric buses.

- You know, I'm for it.

I'm for it.

And here's the thing, you think about how we're preparing our scholars for.

And it always troubles me when people say, "Oh, we're preparing the kids for the 21st century."

It's like, well, no, we're 22 years into the 21st century.

They have only lived in this century.

We've lived in, straddled two different centuries.

And so, we have to always think innovation, and always be forward facing for our young people.

- We're in a TikTok generation now.

I'm finding this out.

It's crazy.

- It turns out there's other things we can do with our technology other than great memes or ways to share funny videos.

We can also revolutionize the car industry too.

- I believe we're using TikTok and marketing here.

Growing the number of students in Michigan Reconnect program established to put Michiganders who are 25 and up on a tuition free path to higher education or skills training.

And then funding for the Office of Rural Development focused on economic prosperity of rural counties and communities.

That's big here in West and Southwest Michigan.

- With the numbers from the Michigan Reconnect program, getting people access to community college have been outstanding.

I love that we're doubling down on investments and programs at work.

And if you qualify, if you're under that 25 year, that 25 age threshold, I definitely recommend doing that.

- Rural development, a big part of this too, Andy.

- Oh, yeah.

I mean, that's the thing, is we really want to make sure with all this money, that we're spreading the wealth where it's absolutely needed.

And when we look at concentrations of poverty, it's not just urban centers, it's our rural communities.

We talk about treating all students, and helping all students.

This is the kind of thing that's gonna make Michigan a top 10 state.

But I think the other thing we need to to make sure is that when we're spending one time dollars, that it's done effectively, we're not creating long term obligations.

And I think that that's a big focus that we're gonna see from the legislature.

- Philosophically, concerns about all this spending.

We've been through so many deficit cycles in this state.

We've had rainy day funds in the past.

Is there a balance that needs to be struck here?

I mean, are there concerns in the way that this is structured?

- That's what we hear a lot from the legislature about the budget, is that they they're calling it a spending spree, is what they they're saying it is.

So I think we're gonna see a bit of that restraint from the legislature, what they proposed back to the governor in terms of that negotiation.

That being said, the governor's budget has a historic record, down payments in the rainy day fund.

The last budget had more investment in the rainy day fund.

So they're just gonna have that negotiation, and finding the right a balance between what we need to spend now and what we can save for later.

We also got to recognize that money continues to get more expensive with inflation, so what should we be purchasing now?

What should we be putting down payments on versus what we should save and spend late later?

I know that the leaders in both the House and the Senate are laser focused on these kind of questions to make sure we're not creating a budget that's unsustainable, and that we have to cut programs in the future.

Because talking about the earned income tax credit, I'm talking to senators who had to vote to cut that in the early 2010s, 2011s, 2012s, and that's not fun.

And so, they want to avoid that at all costs.

- If I can add with respect to kind of this windfall, part of it has been, we've been in a desert for years.

And so, to be able to finally say, "Okay, here's some water and we want to plant it to feed fertile soil so that we can continue to grow and blossom," I agree with Andy from the standpoint of being really thoughtful and intentional about how we're building programs that are sustainable.

Because if you just spend for the sake of spending, and then once that money is gone, then you've got to figure out how are you able to continue these programs for schools and in other other parts of our communities.

- Dr. Leadriane Roby, superintendent, Grand Rapids Public Schools, and Andy Johnston with the Grand Rapids Chamber.

Thank you both so much.

- Thank you.

- And thank you for joining us.

We'll see you again soon.