Lawmakers took a breather this week.

So it's a correspondents edition of OTR.

The lead story is so how much money was really in the new state budget?

A controversy brewing.

Chuck Stokes, Cheyna Roth, Lauren Gibbons and Zachary Gorchow are on the panel.

So sitting with us as we get the inside out.

Off the Record.

Production of Off the Record is made possible in part by bellwethe public relations, a full service strategic communications agenc partnering with clients through public relations, digital marketing and issue advocacy.

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And now this edition of Off The Record.

With Tim Skubick.

Thank you very much.

Welcome back to Studio C. This is very dangerous.

We're going to talk about the budget first.

A lot of numbers.

Don't touch that dial.

We have a dispute as to how big the budget was.

The Rs have one story.

The Citizens Research Council has quite another.

For decades in this town under the dome, the drill has always been the new budget gets more money than the last budget.

But this past year, the House Republicans promised at the beginning of the budget battl that things would be different.

They predicted a smaller state budget.

And indeed, in October, in a news release, Speaker Matt Hall declared that government spending was beyond its means and, quote, It is time to rein it in.

He claimed that the budget was $81 billion compared to $81.5 billion last year.

But now entering the debate a widely respected think tank, the Citizens Research Council, begging to diffe with the speaker's conclusion.

After a deep dive into the numbers, they actually foun more spending rather than less.

According to this chart.

If you compare thi year's budget as it was enacted, which is which is the blue sections of these bars, you would see that it's actually a little bit bigger.

Researcher Mr.

Snyder discovered that over 9 billion in new spending was tucked away quietly in a portion of the budget that does not normally contain budget dollars, but this year it did.

So if you want to compare the amount, the amount of last year's budget to this year's budget, you really need to include those numbers.

And we'd say it's 84 billion compared to 81.5 billion last year.

The Speaker office claims, however, the CRC numbers were off by $4 billion.

The Republican chair of the budget Committee did slice about $800,00 out of the general fund budget, but still not enough according to the CRC, to lower the overall state figure.

The president of the CRC, Eric Looper, stands by his numbers and the House Republicans stand by theirs.

Call it a stand off.

All right, so, Z why are we talking about this?

Assuming there's anybody left in the audience.

You know, a billion here, a billion there.

What difference does it really make?

The House the reason we're talking about is the House Republicans and the speaker of the House, Matt Hall, really made this push that the budget is too big and they really stake their claim on this thing is going to be smaller than when we're done with it, even with a Democratic governor and a Democratic Senate.

And so that's why you know, Speaker Hall sees the Citizens Research Council put out this report.

The CRC is one of the most maybe the most respected studier of budgets in state government in the state.

Their word is trusted.

And so he sees this and he's concerned because he's been telling his members, the Republican members, he's been telling Republican voters, we did it.

Missio accomplished, budget is smaller.

But you can slice and dice these numbers a few different ways.

And, you know, I think the key here is if this $9 billion that was parked in a unusual part of the budget to fund Medicaid for reasons we are not going to attempt to explain here, but I think everybody expects that money will be spent.

And if it is all spent, this budget is bigger than last year.

What do you make of this, Lauren?

Yeah I think a lot of it just comes down to the overall uncertainty that we're facing due t some of the federal uncertainty, and that is part of the state budget process.

It was a big par throughout budget discussions.

There's just a big question mark when it comes to Medicaid, when it comes to federal funding at all.

We're still in the middle of a federal shutdown.

So it is it is kind of slicing and dicing it.

It remains to be seen exactl how much of that money is spent.

But, you know, if Medicaid is indeed the state needs to take on more of that spending, it very well could be.

Yeah but I think at the end of the day, what the lawmakers are concerned about is the upcoming election.

And while the CRC is a important institution to people like us, random people, random voters, they don't know what the CRC is and they're talking like billions and billions of dollars.

At some point it all starts to feel like monopoly money and nobody really knows what all of this means.

So I think at the end of the day, as long as Republicans hold on to that line of like, look, we made the budget last, we have cut down on spending and look at all these other cuts that we've made.

I think that that is probably the line that they're going to want t keep taking, whereas Democrats, they should be saying, look, we're trying to protect Medicaid we're trying to fund this, that And the other thing with this budget, I think maybe it might be in thei best interest for average voters to just kind of like try and shove this aside if they can.

But, Chuck, the sticky wicket here is normally spending on the budget goes above the line in the general fund.

What they did is they took thi 9 billion and some loose change and put it what they call and here we go, the boiler plate language.

This is normally where they explain how to spend the money, not put the money in there.

And that some people are saying, although they tried to hide that money so that they could say they had a smaller budget.

Well, you're right.

And it all gets into what Zach talked about in this provider tax and how that's going to be divvied u when everything is set and done.

And the federal government of course, as you've all said, is throwing a monkey wrench into this whole thing, but also agree with Cheyna that while this is good discussion for us journalistically and intellectually and here right down the street from the dome and everything, is that for the average person out there, even though the CRC is well respected, been around for over 100 years, Eric Luper knows how to drill those numbers.

They really don't get into all this and give a who.

What they care about is whether or not they don't care how that sausage is made up there in Lansing.

What they care about is when they sit down for breakfast in the morning, is there sausage and eggs on their plate?

Do they have a glass of milk and can they go to their good paying job or has their job been eliminated?

And how is this affecting the quality of life?

And there's also the political side of it that each side, the Dem and the Rs, the Ds and the Rs, they want to be able to go out and say what they want in this budget.

Yep.

And if they can each go out and say, I got this for you, Democrats and then Speaker Hall can say I got redundancy and I got, you know, transparency in all of this and the things that you all care about, then everybody's kind of a winner in that.

Well this becomes a messaging war.

Okay.

The Democrats maybe have the easier sell than simply say, the Republicans told you they would have a smaller budget and they did not do it.

Well, I mean, if you look at ongoing programing, the guts of what state government does this is a continuing on budget.

It's not like they, you know, took away corporate and said we're shutting down the Department of Environmen Great Lakes and Energy.

Thanks.

No, that's not happening the core state functions are all still there.

They got, you know, som additional money and so forth.

What the Republicans can say is the pick the term you want legislative directe spending one time grants, pork, this stuff, these one off projects, those were cut way back.

That's where the change was.

But those these were one off projects, not the basics of state government.

It's not lasting stuff.

Exactly.

The Republican can sa we cut down on all of this pork.

That is true.

But the Democrats can also say, look, we are expanding spending for the Rx kids program.

We kept the free school meals for all in the K-12 budget and go on and on down the list, insert state service here.

I think in general, this is a budget that I thin the Democrats can be happy with.

Matt Hall is doing a pretty good job of saying, look, we got some wins here, too.

We got a little bit of tax relief and we got rid of a lot of this pork.

Well, now the next question i they are talking in this budget.

They made a promise to one another, the governor and Mr.

Hall, that they would come up with a new economic development program and get rid of SOAR which is one of the Whitmer administration's things, and also MEGA which was John Engler's.

Let's take a look at that stor and have some comments, please.

Back in the day of former Governor John Engler, he helped to invent the MEGA job creation program.

Under Governor Gretchen Whitmer, she and the legislature developed the SOAR program.

Now comes House Speaker Mat Hall, working with the governor.

They want to wipe out both of those programs and replace it with a new economic development strategy before the end of the year.

Governor Whitmer has some ideas, and I've committed to working with her on those ideas to see if we can eliminate SOAR and MEGA.

What could we do moving forward?

The House Republican floor leader, meanwhile, is also working on two ways to brin and keep more jobs in the state.

Representative Bryan Posthumus argues rather than give companies a state incentive check before they come in, give them money afte they actually create the jobs.

Yes, that would be part of it.

However, one of his more radical ideas is to ask Midwestern states or every state in the nation to sign an agreement that officials would stop trying to poac or steal jobs from one another.

Ultimately, what I would lik to see is a universal cease fire around the country that like an interstate, maybe a pie in the sky, bu that's what I would like to see.

I think corporate welfare is not the way that our our stat or our country should be going.

In the budge the governor signed last week, there was specific language pledging to do a better job of creating jobs before the end of the year, but no language about a nationwide pact not to steal jobs.

But Mr.

Posthumus is not giving up on that.

And he also believes in Santa Claus.

You know the concept is good.

If we all agree not to steal jobs, everybody ends up winning, right?

You know, unilateral disarmament is an amazing concept that has never played out in the history of the world.

So I know it's not going to happen.

Every you know, all these states have these programs of some sort, often involves large bags of cash.

And, you know, it's a real challenge.

It's been a huge challeng for Michigan for four decades.

The pressure that is on governors and leaders of every state to get jobs, create jobs is so tough that that will never work, especially when you have states like Texas and some of the really big states where that's how they do business and they're big and they've got a lot of cash as Zach said to throw around.

They're not going to abandon that.

I agree with you.

It's a lofty ideal pie in the sky type of thing.

If it worked, it would be great, but it's not going to happen.

Well, and the thing is, is instead of trying so hard to focus on like what other states are doin and getting into their business, let' focus on what Michigan is doing and trying to make Michigan the most enticing state in which to work which I get is sort of the idea with getting rid of MEGA and getting rid of SOAR.

We're going to create a new thing.

What I don't understand and maybe somebody here can explain it to me you have two programs already.

Why not focus on making those work and re configuring those to make them better instead of saying we're going to get rid of all this and then start a new thing that feels like it would take longer and it would just cost more resources.

Well, they've already declared those programs ineffective.

Okay.

They gave them that.

Can you fix it?

Apparently not.

SOAR is done like it is defunded.

This is the bag of Michigan bag of cash system.

You know, it started in the Whitmer administration and it really lost all popularity.

I mean, the only person who may still support it is Governor Whitmer.

And General Motors.

Well, maybe.

But, you know, bipartisan opposition to this idea about handing out the cash at that level anymore.

MEGA you know, morphed through the years, started in the mid nineties.

You showed Governor Engler in your setup piece and it really got turbocharge in the Great Recession in 08-09.

And so, you know, Ford, GM now Stellantis, what was Chrysler have these you know, massive tax incentives that were provided to help keep them afloat.

They still run fo about another five or six years.

And Matt Hall, the speaker, has said he doesn't like them.

He wants to kill it now.

He wants to get rid of them.

And I think that seems to be his price to play ball on this discussion with the governor is if we're going to do something new, we're getting rid of these mega credits and coming up with something else.

And there's certainly other ideas out there.

There's the Hire Michigan idea where you let companies that are creating new job keep the income tax withholding.

So instead of remitting 4.5% of their employees income to the state of Michigan, they get to keep it.

That way you're not handing out money, but it is an incentive.

So that's out there and who knows what else is out there.

But I think there's a good chance that Governor Whitmer and Speaker Hall will come u with some kind of economic plan.

I think based upon the relationshi that they seem to have forged.

And, you know, they do this back and forth dance, but they're actually getting things done.

And it kind of like goes back to the old days o we saw where the D's and the R's still fuss and fight but they will get things done.

And there is a certain bipartisan workmanship that they've got going.

Those those Republicans who are running for her job, we already see where they're at.

They don't like the budget because it's not going to play well in the primary.

But Speaker Hall is in a position where I think he's worried about his legacy and be able to say at the end of my term, I got this, this, this, this done and Whitmer's in the same position.

And there's always been a push pull between folks who think, well, like let's attract the businesses, let's give the businesses an interest in coming to Michigan versus let's build up our communities to make Michigan a more attractive place.

And that conversation isn't going away.

I don't know that there's a right answer.

There are things that people are excited about.

Zach mentioned a few.

The research and development tax credits is something a lot of businesses are interested in and think could could add to the mix.

But also there are, you know some things that that Michigan that makes Michigan an attractive option.

We have a lot of access to water.

We have the built in manufacturing base.

And people over the age of 100.

We think we have an aging population.

Sure.

So there's definitely some pros and cons here, but there's there's stuff to work with if if they're able to come to the table and, you know find some kind of middle ground.

Well, it'll be interesting to see how they thread this needle because i obviously needs to be threatened and even even this idea of having just the Midwest agreed to this fact that is total unilateral disarmament, that's put a sign out, please come in and steal our jobs.

I mean, it's a constant battle.

You know, Ohio, you had a great used to have a graduated income tax until this year.

And so these states are constantly making these moves to try to one up the other, whether that's reducing taxes new incentive plans or whatnot.

And so it's a constant arms race.

Very quickly.

Mr.

Trump looks like he's scoring some victories with his tariffs.

Yes.

in Michigan?

Stellantis just made a big announcement in Michigan that could bring hundred of jobs over the next few years, especially to the Warren truck plant as they introduce new vehicles.

Trump is taking it as a victory lap, saying, you know this on shoring this plan.

The shift.

You know, some of these jobs were initially expected to go to Canadian plants.

Now they're coming back to the U.S.

So so he is taking it as a victory.

It's a little more nuance than that.

Certainly every you know, economically, every manufacturing sector i the economy is not necessarily getting the same benefits or making the same decisions, especially these small manufacturers that don't have the same bandwidth as some of these larger companies like Stellantis, to make these big shifts.

But, you know, for for both fo both the Trump administration, we also saw some of the union who have been really supporting domestic production, looking at this as a big positive.

Yeah, but there's still a lot of debate over the effect that tariffs are having on this state.

And we all remember just one month or so ago, Governor Whitmer standing u and really hitting the president pretty hard about the impact of tariffs on the state.

She's been a little silent on this one.

Now that he's still in jobs.

She she applauded the jobs in Warren.

But what else could she do?

Right.

Absolutely.

You know, this certainly doesn't do anything to help our relationship with Canada, because basically these jobs are being stolen from Canada and they're put here.

So they are winners and losers in this.

Let's talk about the county clerks who are unusual, unanimous, said we don't like the RCV, which is ranked.

Choice.

Voting.

That's what it is.

What's what's going on here?

There's an organization and this has been something that has been sort of bubbling up both nationally and in a few counties across Michigan of this idea of ranked choice voting, where instead of when you get your ballot, you just put in one person.

Instead you say, this is my number one choice as my number two choice, and so on and so forth.

And the clerks and unanimously, as you said, which is a surprise for them, usually they don't get so involved.

They don't like this idea.

It wouldn' be implemented for a few years.

But they are saying that it would cause for confusion at the ballot because not every election on your ballot would necessarily be ranked choice.

They're also concerned that it would take longer for them to get through the ballots because there's a whole different formula when it comes to figuring out who wins in a ranked choice vote election.

So they are coming out very strongly against this option.

And against this ballot measure.

And there's even the legislature, which is trying to, With the Republicans.

The Republicans in the legislature, trying to head them of at the pass and say, actually, we're going to make this completely not a nonstarter.

I mean, look, Michigan's had two hug constitutional amendments pass on voting access in the last decade, Proposal three of 2018, which was the no reason absentee, among other things, Proposal two of 2022, which had the early voting drop boxes and too many other things to mention.

These were big changes to the election system.

Clerk did not get involved in those.

They are coming out in a way I've never seen them before.

On this ranked choice voting to say we oppose this.

This is a bipartisan organization.

The Democratic clerk of Washtenaw County and Republican clerks from other counties saying we're united on this, that this is a bad idea.

And it's it's a real blow, I think, to the ranked choice voting effort.

Yeah.

If they do get it on the ballot, you can just picture the ads.

You know, the people who run Michigan elections say this is a disaster.

How did how do they overcome that?

They because they're the one who have to explain the system.

I know they will argue this is not as confusing as people are making it out to be.

It's been used in a couple of states, but we all know voters who ar uncertain are going to vote no.

And if they're you know if you stick a Democratic clerk and a Republican clerk next to each other in an ad saying this is a terrible idea, vote no, what do we think is going to happen?

And you've got the deniers on the other side.

They're almost never linked up together.

That's a lot of negative going up against that proposal.

But this group says what we're after if we want to take the rancor out of politics.

And so if we give people a choice, we like you best second, third, fourth.

The problem is if nobody gets 50%, that's when it gets complicated.

Exactly.

You know.

If we if we knew somebody was going to get 51% this is a walk through the park.

But it may not always be that way.

I mean, I think one of the things that's interesting here and the thing is it doesn't automatically apply to local elections, but a lot of school board elections, you can get in with like 20% of the vote because it's like picked the top four vote getter and it's just a blanket ballot.

That's where this process could be kind of interesting because sometimes in a community, you know, 70% of the people are like, I can't stand this person.

Yeah.

But they have their group and it gets them through.

That's, I think, what this concept is designed to avoid, but it doesn't even automatically require it in those elections.

We have five cities that are already doing this Eas Lansing, Ann Arbor, Kalamazoo.

Well they're not doing it.

They said they will do it.

Okay, Yeah.

Okay.

Okay, guys, Sorry.

First mistake of the year.

I think it is interesting when we see it play out in some of these local race where, you know, maybe there's a little bit less partizan politics, a little bit more connection to the community.

And not six or seven people on the ballot.

Exactly.

And then but if you start playing that out on a statewide level, I can certainly see where the clerks are coming from in terms of getting people to understand what they're doing.

I think Zach is totally right.

Where there's been so many changes, it's hard to keep track even for an informed voter.

So then if if the whole process changes again ahead of the next election, that's that's all so, so much work for the clerks, but also a lot of work for the voter to get them on board with i with a relatively new process.

You talk to a lot of average people out there and you see ranked choice voting.

They're very confused and the you try to explain it to them.

They get even more confused.

And as soon as you get the clerk saying there's going to be delays, there's going to be delays at the polls, there's going to be delays in figuring ou who has won different elections.

I mean, you can just wipe a lot of people off the board with that because they're just going to be like, no, I already wait too long.

And we've already had several very contentious elections where we're waiting to see and people thinking that we've waited too long to find ou who won in a certain election.

You tell them that it might be even longer than that.

People are not going to be okay with that.

Alright our final story.

A majority of Republicans are.

Democrats did support this new budget sans three people.

Their names were Mike Cox Eric Nesbitt, and Tom Leonard.

Mr.

Leonard, former speaker of the House.

Mike Cox, former A.G.

and Nesbitt, who is already in.

Why did these three people sa what all of my colleagues did in the legislature was wrong.

Because they're runnin to become governor and because they are in a primary and they have to play to the Republican primary and they don't want to make sure that they're on the same side with the president of the United States and not have President Trump coming in messing up their primary.

So they got to run one way in the primary and then it whoever gets their primary, then they've got to explain why they weren't in sync with the budget, a bipartisan budge that the majority of Democrats and Republicans passed and got along on.

Did you just accuse them of political expediency?

Yes, I did.

Okay.

And he's right.

Why is he right?

Because they're just they're playing the game.

I mean, at the end of the day, it is right no their focus is on the primary.

They can't get to the general unless they get through this primary.

And they are three people who are gunning for the same seat, who are gunning to win in the same primary if they start making it seem like.

And in that sense they have to play to their base.

The base doesn't like Democrats.

But what about independent voters who are semi smart and could figure out that this was a political play and not an exercise in statesmanship?

So that's the problem for later.

Independent voters are not necessarily who they're trying to get during the Republican Party.

Well what if they happe to like one of these three guys?

Tim we're so early right now.

The game is being fought out and Lincoln and Reagan day dinner in far flung parts of the state, festivals, the most core active Republican voters who are paying attention.

And this is you know, them, you know, these Republican candidates that you mentioned coming out and saying like, well, I think this is a pretty good deal that we worked out.

It doesn't merel get the attention and excitement of saying like, you know what, when I'm governor, we'r getting rid of the income tax.

This budget isn't good enough.

And that's what's happening here.

I thought Senator Nesbitt, I think, said it pretty well, which was he applauded Speaker Hall and the House Republican for doing everything they could.

But he said we're not going to get the budget we want unless we have the governorship and the entire legislature.

And I think that's where they're coming from.

And I'll tell you who was hurt just a little bit was Mike Duggan, who' been running as an independent.

The fact that they got this budget done, yes, it was a week late, but if this thing had totally exploded, he could have used that and said, that's why you need it independent.

He'll find another way to do that.

Right.

Thanks to all of you guys for showing up.

Thank you.

If you're still with us for watching.

Next week, more Off the Record right here.

See you then.

Production of Off th Record is made possible in part by Bellwether public Relations, a full servic strategic communications agency partnering with clients through public relations, digital marketing and issue advocacy.

Learn more at bellwether.com.

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