By: Dylan Wegela
The following statement was originally posted to social media on October 3rd by State Representative for Michigan’s 26th District, Dylan Wegela.
Last night, after a marathon session, the Michigan Legislature passed its General and School Aid Budgets. These budgets were tied to a road funding plan. I ultimately decided to vote no on both budgets, and I hope to outline why in this post. This post is going to be detailed, and I am going to do my best to explain the complexities involved. I urge you to read this entire post, as it is necessary to fully understand why I voted the way I did.
I want to first try and explain our undemocratic and non-transparent budget process. The way we do budgets in Michigan always stinks, but this year was particularly bad.
The Process:
Normally, budgets are passed before July 1st, but this year, Republican Speaker Matt Hall intentionally dragged the budget process out to the October 1st deadline. The deadline approached, and we were facing a shutdown.
It was announced last week that leadership in both parties agreed to a budget deal, and even though they knew all of the details of the budget, they intentionally chose not to share this information with us rank and file legislators. This was done to prevent the public, the press, lobby groups, and legislators from advocating for changes that might blow up the deal.
Several days ago, we were briefed on the toplines of the budget, with some essential information being withheld, and with no way to verify the accuracy of the information.
Yesterday’s session started at 10 am and ended this morning at 4:30 am. I sit here writing this at 1 pm the day after. Exhausted, frustrated, and disappointed.
In the House, we ended up voting on the General Budget around 9:30 pm. It wasn’t until 6 pm that I received the House Fiscal non-partisan summary of the General budget. A 240 page document that is simply impossible to review with any real scrutiny in 3.5 hours. We actually didn’t get the actual line-by-line budget until around 9pm.
We were then forced to vote on this budget almost none of us had seen, with less than 30 minutes to review. This is obviously an intentional tactic used to force votes on a budget. More time to review means more questions to answer. Republican Speaker Matt Hall is the only one with the power to call the vote, and he did.
Call me a radical, but I think that the press and public should have time to look over the budget, provide scrutiny, and ask questions before the vote. At the bare minimum, we should expect that elected representatives should have time to review. To be blunt and honest, I would be surprised if even 1/3 of Reps. even opened the House fiscal analysis to review before voting.
GOVERNMENT SHOULDN’T WORK LIKE THIS.
It is the next day, and I still don’t know everything that is in the budget. I will be analyzing it over the next several days.
I want to stress that both of these budgets and the roads package are interconnected. One doesn’t work without the other. I am going to outline why, despite the shell games played to move money around, this budget simply doesn’t work. I first want to start with the budget implementation bills that make this budget possible.
Budget Implementation Bills:
- Decoupling of the Corporate Income and No Tax on Tips and Over Time:
I voted yes on this bill, and it is one of the most important bills in this equation.
First. “What is decoupling?”
In tax policy, “decoupling” refers to a state choosing not to follow (or only partially follow) certain federal tax rules, even though state tax codes are often based on federal definitions. It’s a way for states to preserve revenue, maintain policy preferences, or avoid unintended consequences when federal tax law changes.
Before this bill, the Michigan Corporate Income Tax (CIT) was coupled with the Federal Government. So when the Big Beautiful Bill Tax cuts were passed, it triggered a tax cut for Michigan corporations. Passing this bill stopped that corporate tax cut from happening, freeing up revenue in the budget.
Additionally, this bill started coupling the state with the federal government for the purposes of removing taxes on tips and overtime, as well as social security. This was a revenue hit, but was offset by the CIT decoupling.
2. Sales Tax & Gas Tax Swap:
These bills exempted gas and several other fuels from sales tax on fuel. Instead, replace it with a gas tax. I voted against exempting these fuels from sales tax.
Here is a simple breakdown of where the constitutionally protected revenue from the Sales Tax goes in Michigan.
Michigan Sales Tax Allocation (6% total)
- School Aid Fund
- General Fund
- Local Revenue Sharing
Exempting fuel from the sales tax means these areas will lose funding. Moving it over to a gas tax ensures that revenue can be used for roads instead.
Schools were set to lose $700 million from this shift. This money was replaced in other parts of the budget (backfilled). Even with this maneuver, I still have major concerns with backfilling school funding from a non-constitutionally protected source.
The local revenue sharing hit is an estimated $64 million. This was not backfilled. Constitutional local revenue sharing is one of the pots of money that cities, counties, villages, and townships receive from the state. At the time of this writing, the amount of money local governments get in this budget is still unclear; it is a bit of a shell game, but more on this later.
24% Cannabis tax increase:
In order to raise money for roads, you need revenue. The road plan proposed a 24% Wholesale tax increase on Cannabis in Michigan. This is estimated to raise $420 Million (Yes that is the actual estimate…), and this money is to be directed into the newly created roads fund. I want to note that some believe that this hit of a tax increase on Cannabis might have devastating effects on the industry. Some also believe that this might force people onto the black market, which could lead to inaccurate revenue projections. Conversations that would have been nice to have, but this was another vote given on minimal notice.
It is also possible that this change will be ruled unconstitutional, due to the fact that the Cannabis ballot proposal that was passed by voters is constitutionally protected. Depending on interpretation, this might mean changes need a ¾ vote to change. (which this didn’t get).
I share these concerns as well, and if this is ruled to be the case or if this is tied up in court, preventing the tax from being collected, the math of the entire budget simply doesn’t work. This would mean local governments would get less road funding than projected under this budget.
I should also be clear that when we voted on this budget, those projections were not available for us to see how each city would be impacted. Even if they were, these projections would be merely speculative.
Even though I had some reservations, I ultimately voted yes on this. I have seen the State Legislature only reduce revenues since being elected. While I think it would be wise to find other sources of revenue, such as taxing the rich. We will never have the roads and schools we deserve if we don’t raise some type of revenue.
Saving Medicaid:
This was another change that was needed because of Trump’s Big Beautiful Bill. I voted yes on this. Here is my best simple explanation of what we did.
Michigan helps fund Medicaid using a tax on health insurance companies called the Insurance Provider Assessment (IPA), but new federal rules say the current setup doesn’t fully qualify anymore. To avoid losing federal money that supports healthcare for millions of residents, we passed changes that allow Michigan to temporarily keep using the IPA while it asks the federal government for permission and works on a new plan. If that permission is denied, Michigan will need to create a different funding system to replace the IPA. The state has up to about three years to make the transition.
Those are the major bills that were required to make the budget work functionally. Now, let’s look at the budgets. I want to start with the School Aid budget, because what they did to this is at the core of why I opposed both budgets.
School Aid Budget:
The Good Stuff!
- Per-Pupil Funding $10,050 ($442 Increase)
-- Note: You will see people calling this record funding. We have to stop doing that. Is it the highest it’s ever been? Yes. Does that account for inflation? No. Michigan schools are still severely underfunded. - Free Breakfast and Lunch Protected
-- It’s wild to think this would ever be on the chopping block…. - Mental Health and School Safety Funding increased.
- ELL, Special Education line items preserved.
- At Risk Funding Increased
Things that should never happen:
- An additional $400 million was raided from school aid for Higher Ed (aka a shell game to fund roads)
-- This was one of the largest raids on the School Aid fund in Michigan’s History
-- There is a bit of a shell game here, but this was done in order to free up more money for roads.
-- This isn’t complex. We shouldn’t steal from public schools to fund roads.
In 2018, I helped lead one of the largest teacher strikes in US history to secure $400 million for Arizona’s Public Schools. I refuse to steal that exact same amount from schools today. As I said, these budgets are intertwined. I refuse to support budgets propped up by stealing from our kids.
- $100 million was reduced from MPSERS reimbursement, raising costs for our school districts.
- Cyber Schools are getting the same Funding as traditional public Schools.
-- It simply doesn’t cost nearly as much to run online schools. This just pads the pockets of these “schools”. - Public Dollars funding private schools.
-- This budget allows private schools to access some public funds related to school lunch and school safety.
-- I am all for requiring private schools to feed kids and keep schools safe, but it is unacceptable to fund them with public school dollars. This is a slippery slope and brings us one step closer to vouchers and other ways for private schools to steal public funds.
Now onto the General Budget. It is important to note again that the General Budget cannot be funded without stealing an additional $400 million from the School Aid fund. This brings the total amount of School Aid dollars being raided from School Aid to $1.3 billion.
General Budget:
- Almost every Single Department in the State had its funding cut.
-- At a time when we are seeing federal efforts to cut departments across the government, I refuse to support a budget that makes significant cuts across the board for no good reason.
-- Republicans will claim they are cutting 2,000 ghost jobs, and Democrats will claim they are cutting no people currently in a position.
-- In reality, there are around 1,000 of these positions that our departments are actively trying to fill; in some cases, these are seasonal positions, subject to regular turnover. Now these positions will simply not be filled. Just because a position isn’t filled, it doesn’t mean there wasn’t work that needed to be done. We should not be cutting government jobs for the sake of cutting jobs. - The Local Revenue Sharing Shell Game
-- We are cutting 64 million from constitutional revenue sharing.
-- Some types of Local Governments are getting additional road funding
-- It was unclear at the time of the vote and of this writing, the exact breakdowns.
-- Estimates will be based on the assumption that the Cannabis tax holds up in court. If it doesn’t, the road funding would certainly be less than advertised.
-- Like with schools, it is usually a bad idea to cede constitutionally protected funding.
Huge Wins!
- The SOAR (Corporate Handout) Fund has sunsetted (Ended) and will not be funded moving forward.
- I have been fighting to eliminate this funding since being elected! I am happy to see it go.
- Medicaid and SNAP protected (For Now).
- Money for Lead Line Replacement.
Enhancement Grants:
As with every budget enhancement, grants are used to wrangle votes and drum up support for the budget.
Romulus received $1 million for a Fire Truck thanks to Rep. Reggie Miller.
Inkster received $500,000 for the Inkster Cultural Center thanks to Sen. Dayna Polehanki.
Not every rep/district received an enhancement grant. They were limited this year. While I am glad these were added to the budget, it doesn’t change the potential risks of limiting constitutional revenue sharing for all of the cities in District 26, and it didn’t fix the fact that this budget is propped up by questionable math, budget shell games, and, most unfortunately, by robbing even more from our public schools.
This isn’t an easy job, and this wasn’t an easy decision, but I center myself in always trying to do what is right for our District and the long-term health of the State. I am sure there are some who will disagree, and some who will have an honest disagreement with my assessment. There will be others who weaponize it for political victory.
We are in a split government, and things could have been worse. That could be true, but it is equally true that if we had an open and transparent budget process with journalistic and public discourse, it could have resulted in a better budget.
It would have been almost certainly easier for me to fall in line, plug my nose, and vote yes, but I think that is part of the problem right now. We have to stand up and demand better from leaders on both sides of the aisle. Demand better for the people of Michigan.** I will never stop fighting to ensure that we have the Public Schools and government we deserve**.
In Solidarity,
Dylan Wegela State Representative District 26