Governor Whitmer and legislative leaders announced their 2021 fiscal year budget agreement this week. In what has been one of the most secretive budget processes in recent memory, expectations are that final passage will be quick through the Legislature and on to the Governor’s desk for signature. The Legislature and Governor are constitutionally required to pass a balanced budget each year by October 1, which marks the beginning of the state’s fiscal year.
Most transportation revenues are constitutionally dedicated and can’t be used for different areas of the state budget. However, the 2015 road funding package that passed included $600 million annually redirected from the General Fund to transportation. Lawmakers are able to redirect that money to other priorities in the state’s budget if they so choose.
This is why MITA continues to advocate for constitutionally dedicated funding sources and increases to those when vying for increased road funding rather than general fund allocations. Traditionally, those revenues come from motor fuel taxes and vehicle registration fees.
The budget contains $250 million in spending reductions, mostly coming from the Department of Corrections. Revenues have been significantly down for 2020, and earlier in the year it was projected that the state would have over a $3 billion shortfall for the 2021 budget. Fortunately, the budget shortfall was significantly less than the earlier projection, which made budget negotiations much easier between the Governor and legislative leaders.
This continues the good news for the upcoming years for transportation funding. With the state transportation budget relatively flat from the previous year, the addition of the Governor’s bonding program ($3.5 billion over 5 years) will bring an increase in work for the industry.