Gov. Gretchen Whitmer and Republican leaders have agreed to move forward on Michigan’s budget without a deal to fund improvements to roads, as the Democratic governor had sought.

By Riley Beggin (Bridge)

Michigan Gov. Gretchen Whitmer has agreed to put aside negotiations on how to raise $2.5 billion annually in revenue for the state’s roads and infrastructure.

This is the first time Whitmer, a Democrat, has publicly changed her position on the centerpiece of her budget — she has previously said she would veto any budget plan that doesn’t include some way to raise the massive amount of funding necessary to fix the state’s battered roads and bridges.

In a joint statement with Republican leaders Sen. Mike Shirkey and Rep. Lee Chatfield Monday, Whitmer said: “The people of Michigan deserve leadership in Lansing that will work to continue providing them with services they depend on every day. In conversations over the weekend, we’ve agreed that the best course of action is to immediately begin target-setting with legislative and executive leadership to get a budget passed by October 1st.”

Whitmer had previously planned a press conference for Monday morning but canceled it Sunday evening, citing a scheduling change.

“Budget work will ramp up this week and the leaders will meet tomorrow for their regular quadrant meeting,” Senate GOP spokesperson Amber McCann told Bridge, referring to the regular meetings Whitmer holds with the two Republican leaders, along with minority Democratic leaders Sen. Jim Ananich and Rep. Christine Greig.

The announcement comes just days after Shirkey and Chatfield said they had agreed on a budget without a negotiated deal on road funding and scheduled the first budget hearings for Thursday. That indicated they planned to test whether Whitmer would follow through on her veto promise. Whitmer said Friday that the move was “leading the state toward a Trump-style government shutdown.”

If Shirkey, Chatfield and Whitmer don’t agree to a budget plan before the new fiscal year begins Oct. 1, the state government will shut down for the first time in a decade.

“We have all agreed to continue conversations about road funding in a meaningful way and table all associated issues for the time being. Right now, our number one priority is getting a budget passed,” the joint statement read.

It’s not clear whether the announcement means Whitmer’s signature policy proposal of a 45-cent annual gas tax increase is dead. Republicans, who have been loathe to raise taxes or fees to address the state’s roads, have said the plan — which would make Michigan’s fuel tax the highest in the nation — is a non-starter.

Negotiations over a roads plan have been ongoing between the three leaders for weeks. Whitmer said the two Republican leaders have failed to offer any “viable” solution that raises “anywhere in the range” of the $2.5 billion experts have estimated are needed annually to maintain the state’s roads and bridges. Whitmer has said the proposed gas tax is important not only to raise necessary funds but also to guarantee it goes to roads, stopping what she’s called “shell games” in which money is shifted from schools to the transportation budget.

Republicans rebut that they have offered four solutions during private discussions with the governor and that Whitmer has rejected them all.

Neither Whitmer, Shirkey nor Chatfield have said what the GOP proposals have been, citing a confidentiality agreement. Shirkey has suggested the governor take a second look at a proposal that would require the state to issue a bond to fund the teacher pension system. They argue that would free up millions annually to replace sales tax revenue (dedicated to schools and local government) that would be lost under a House proposal to remove the state’s sales tax on gasoline.

Democrats have curtly dismissed that proposal. Whitmer called the bond strategy “fiscally bad ideas” and argued that “taking money out of education to fill potholes is not a real solution.” Last week a group of six House Democrats also released a statement opposing that idea. Rep. Julie Brixie, D-Meridian Township, said it was a “fiscally reckless gamble” that’s “fraught with financial peril.”

Meanwhile, there are plenty of other disagreements for Whitmer, Shirkey and Chatfield to tackle in the budget before Oct. 1. Whitmer’s budget proposal, announced in March, has significant differences from both of the budgets passed by the House and Senate. Notably, the Republican-led chambers proposed cuts to major state agencies, including the offices of Attorney General and Secretary of State, which are now in the control of elected Democrats. They are also at odds over how and how much to fund K-12 schools.