$370 million in work project spending to lapse into state funds as House, state departments settle

Political and legal sparring over $645 million in work project spending came to a close Friday night, as the Michigan House of Representatives reached a settlement with 31 state departments and department heads.

In December, Michigan House Republicans caught criticism from Democrats – and some of their fellow party members – for voting to cancel $645 million in allocated funds through a provision of the Management and Budget Act which allows either the House or Senate Appropriations Committee to block any requested projects.

Michigan House Speaker Matt Hall (R-Richland Township) and House Appropriations Committee Chair Ann Bollin (R-Brighton Township) stood by the vote, with Hall telling reporters at a Dec. 10 press conference the law allowed the committee to “to unilaterally kill hundreds of millions of dollars of Democrat pork and waste, fraud and abuse.”

In response, the Senate Appropriations Committee held a hearing looking at how nonprofits and local government entities who had been promised funds were impacted by their cancellation, where the leaders of several nonprofits and government leaders testified that the House had cut funding for efforts that were well underway and would be devastated by the loss of funds.

Michigan Senate committee hears details on negative impacts of House GOP work project cuts 

Senate Democrats also sent a letter to Attorney General Dana Nessel seeking an opinion to weigh in on whether the vote to cancel the work project funding violated the Michigan constitution. 

While Nessel determined the move was unconstitutional, the House quickly filed a suit with the Court of Claims to block the departments from spending the work project funds.

Out of the $645 million at issue, the settlement notes only $370 million was unencumbered, meaning it hadn’t been spent or committed. 

Under the conditions of Friday’s settlement, approved by Judge Michael Gadola, those funds will lapse into the segments of the budget where they originated.

In a post to social media, Hall declared victory, writing “Gov. Whitmer and MEDC just caved and agreed to return the $370 million in Democrat slush funds.”

“They tried to shove all this waste, fraud and abuse into slush funds, and I said no way. Our Budget committee took a stand and BLOCKED it. Then the Democrats tried to sneak it out the door illegally, and I sued them to stop that,” Hall said. “Now they finally agreed with my demand. That money is coming back to the state and we can find a much better use for it to protect the taxpayers and give them better value.”

In a statement, State Budget Director Jen Flood criticized the initial vote to cancel the funding, saying “this partisan, unprecedented action caused massive uncertainty for recipients and the Michiganders they serve.”

Flood said Friday’s settlement honors existing agreements with “schools, health centers, soup kitchens, police and fire departments, and many more organizations who rely on this funding to do important work.”

“At the same time, a settlement avoids a ruling that could have implicated billions of dollars already at work in our communities,” Flood continued. “Now, let’s move full steam ahead with finalizing a balanced, bipartisan budget that invests in kids and protects access to health care before the July 1 deadline.”