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BILL ANALYSIS

BILL NUMBER: SJR F and SB 915, as introduced

TOPIC: A bill and resolution to put the Waterways, Harbor Development, and Marine Safety funds into the Constitution

SPONSOR: Senator Jason Allen

CO-SPONSORS: Senators Birkholz, Barcia, Sanborn, Gilbert, Patterson, Kuipers, Bishop, VanWoerkom, Toy, Jelinek, Cropsey, Brown, Goschka, Hammerstrom, Cassis, Stamas, Garcia, Olshove, Prusi, and Brater

COMMITTEE: Natural Resources and Environmental Affairs

Analysis Done: February 6, 2004

POSITION

The Department opposes this legislation in its current form.

PROBLEM/BACKGROUND

The resolution and bill are intended to prevent the redirection of the Michigan State Waterways Fund (Waterways), Harbor Development Fund (Harbor), or Marine Safety Fund (Marine) revenues to uses other than those prescribed in 1994, PA 451 of 1994, the Natural Resources and Environmental Protection Act (NREPA). In 2002, PA 746, $7,800,000 was transferred from Waterways to the State’s General Fund.

DESCRIPTION OF BILL

SJR F and SB 915 would create a Waterways Trust Fund (Fund) with constitutional protection. The Fund would receive a transfer of existing fund balances from Waterways, Harbor, and Marine. The current revenue streams dedicated to the individual funds would be deposited into the Fund. The Marine Safety program would be funded with 49 percent of the watercraft registration revenues from the Fund. Of the remaining revenue in the Fund, not less than 70 percent would be expended on capital improvements. The balance could then be expended on operational and administrative costs.

In addition, SJR F would establish the Michigan State Waterways Commission (Commission) in the Constitution. The composition of the Commission would not change. The Commission would be required to recommend projects to be funded by the Fund to the Governor, who would then submit the request to the Legislature. The Waterways Commission would have to approve all private contractors that would be paid from the Fund. In addition, the bill would require the Department, with approval of the Commission, to appoint a liaison to the Commission.

SUMMARY OF ARGUMENTS

Pro

The intent of the legislation is to prevent a future misdirection of the revenues. The Waterways Commission could not be abolished unless the voters approved a referendum to do so. Revenues would be directed to capital improvements rather than operating costs.

Con

This bill dramatically changes the emphasis of the Fund’s spending to capital outlay which would greatly curtail the Department operations of the harbors of refuge and boating access sites throughout the State.

FISCAL/ECONOMIC IMPACT

There are significant budgetary implications in the bill to the--

(a) Department

Budgetary:

The change in the emphasis of the Fund’s spending from operations to capital improvements would greatly impact the Department’s budget. Our Fiscal Year 2003-2004 operating budget includes over $12,000,000 from Waterways and Harbor for State Parks for support of the State-owned harbors and boating access sites. In addition, another $3,000,000 is allocated for payments in lieu of taxes, information technology, maintenance of boating access sites in State Forest campgrounds, and administrative costs. The Department cannot absorb the loss of any of the funding; programs would have to be discontinued.

Revenue:

The legislation would have no impact on the Department’s revenue.

Comments:

(b) State

Budgetary:

Approximately $500,000 is appropriated to other State agencies that would be redirected to capital improvements.

Revenue:

The legislation would have no impact on the State’s revenue.

Comments:

(c) Local Government

Comments:

The increase in capital outlay spending may make additional grant-in-aid funds available to local units of government.

OTHER STATE DEPARTMENTS

The Departments of Management and Budget, Treasury, Attorney General, Auditor General, Civil Service and Treasury may have their appropriations reduced or eliminated due to the reallocation of resources from operating to capital outlay improvements.

ANY OTHER PERTINENT INFORMATION

ADMINISTRATIVE RULES IMPACT

None

_______________________________

K. L. Cool

Director

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Date

BSS/PRB