What Will State, Federal Budgets Mean for TC?

After months of contentious debate, Michigan legislators have finally approved a state budget. Lawmakers from both parties – including Rep. Betsy Coffia, Rep. John Roth, and State Sen. John Damoose – described the nearly $81 billion package as an imperfect but hard-fought compromise. The Ticker looks at what the budget means for northern Michigan, plus the latest on the federal shutdown and its local impacts.

Schools and roads both fared well in the budget, which Governor Gretchen Whitmer is expected to sign this week. Lawmakers increased per-pupil funding to a record $10,050, a 4.6 percent increase. Roughly $201.6 million was included to continue universal free breakfast and lunch for students, which Whitmer said saves parents an average of $1,000 per child. Funding for at-risk students increased by 25 percent, while $321 million was allocated for school mental health and safety.

Traverse City Area Public Schools (TCAPS) Superintendent Dr. John VanWagoner cites those as positives and praises local legislators for fighting for key initiatives. Those include transportation – amounting to nearly $1 million for TCAPS – and isolated districts funding, just under $500,000 for TCAPS. Those line items tend to be more important for northern Michigan than other regions, and legislators “went to bat” to keep them in the final budget, VanWagoner says.

However, the budget contains a “significant cut” for retirement legacy costs – a burden public schools bear disproportionately compared to private and charter schools, VanWagoner says. “In the end, when you add it all up, the budget for me is a seven on a scale of one to ten,” he says. “Retirement is something we’ll go after next year…but overall, our projections were pretty spot-on. It’s a Chevrolet budget, not a Cadillac budget. But you know what? It’s still great to drive a Chevrolet.”

Colleges and universities also held steady, particularly compared to early budget drafts that called for steep cuts. Northwestern Michigan College’s 2.3 percent operational funding increase “doesn't quite cover inflation, yet exceeds expectations based on recent budget developments we heard from Lansing,” says NMC Vice President for Finance & Administration Troy Kierczynski. Financial aid programs like Michigan Reconnect, Michigan Achievement Scholarship, and Community College Guarantee were preserved, and Kierczynski says NMC is hopeful legislators will “still consider potential supplemental funding for its capital programs.”

One organization was blindsided by new budget cuts. The Great Start Collaborative Grand Traverse Bay said in a letter to supporters that funding for literacy and the Great Start Collaboratives and Family Coalitions was fully eliminated from the state budget. Great Start Collaborative's local annual budget is $280,000, including $68,000 for early literacy work. 

Great Start Collaborative Coordinator Robin Hornkohl tells The Ticker the group was “taken by total surprise at this elimination. There was no advance warning from the proposed budgets that came from the governor, Senate, or House.” Hornkohl says the organization is working to regroup and keep the network alive for local families. “Currently, statewide efforts are aimed at securing supplemental funding,” she says. “We are also working to ensure the Great Start Collaboratives and Family Coalitions are re-established in the next budget cycle.”

Roads were a budget centerpiece, with lawmakers agreeing to put nearly $2 billion into road funding – thanks in part to a new 24 percent wholesale marijuana tax along with corporate income taxes. The current six percent gas sales tax will be replaced with a 20-cent increase on the existing 31-cent gas tax. Grand Traverse County Road Commission Manager Dat Watkins says the county is still “waiting for the final numbers to come in,” but cautions that funding increases can be smaller when scaled down to the local level. “There’s still going to be a shortfall; we’re not going to be able to redo all the roads,” he says. “There could be a bit of an increase…it may help offset inflation and possibly do an extra project or two a year.”

The budget includes more than $12 million for the arts. Numerous local organizations rely on Michigan Arts and Culture Council grants for funding. Pure Michigan funding took a significant hit, however, dropping from $26 million to $17 million. Trevor Tkach of Traverse City Tourism calls the cut “disappointing,” noting that the Pure Michigan budget at one time stood at $36 million. “Other states are upping their game and implementing our game plan, and now we’re backing off that game plan, so it puts us in a tricky spot,” he says. “But the budget isn’t zero. It could’ve been worse.”

Meanwhile, the federal government shutdown hit its sixth day Monday. As reported in the Leelanau Ticker, the shutdown means a pause in visitor services at Sleeping Bear Dunes National Lakeshore. Aspire North REALTORS in Traverse City distributed a one-sheet to members from the National Association of REALTORS highlighting potential impacts ranging from lapses in issuing new National Flood Insurance Program policies to delays in IRS income verification, FHA and VA loan processing, and federal housing program funding.

Large concentrations of federal employees can be found locally at Cherry Capital Airport (about 100) and the U.S. Coast Guard Air Station Traverse City (about 125). Employees haven’t missed any paychecks yet, but that could change quickly if the shutdown continues. Cherry Capital Airport CEO Kevin Klein says no service interruptions are expected at TVC. However, impacts on aviation are expected to be felt sooner rather than later – with sickouts by air traffic controllers being one of the key reasons the 2019 shutdown ended. “Once 30 days or more go by, you might see some of those activities,” says Klein. “However, even when that happened the last time, we had no impact at the airport here.”

U.S. Coast Guard Air Station Traverse City Commander Ryan Hawn cites the furloughing of an employee responsible for ground support equipment as an example of shutdown impacts. However, staff generally are “still flying, still training, and still conducting the mission of the Coast Guard,” he says. While there’s no “anticipated interruption of our urgent ongoing mission,” Hawn says, the last prolonged shutdown prompted community fundraisers to support Coast Guard employees working without pay.

“Especially for our junior members, some of them run paycheck to paycheck,” Hawn acknowledges. “It’s expensive to live in this area. Having ways to support them if this is ongoing is going to be essential. This is the most supportive community I’ve ever been to, so we know they’ll keep supporting our folks. But we hope it doesn’t have to come to that.”