AGRICULTURE

Executive Recommendation

FY 2010-11

Analyst: William E. Hamilton

February 18, 2010

	FY 2009-10 YTD	FY 2009-10	FY 2009-10	FY 2009-10	FY 2009-10	*Difference: Executive* *From FY 2009-10 YTD*
	as of2/12/10	Executive	House	Senate	Enacted	*Amount*	%
IDG/IDT	$712,300	$289,100				(423,200)	(59.4%)
Federal	15,553,400	14,769,900				(783,500)	(5.0)
ARRA	22,300					(22,300)
Non-ARRA	15,531,100	14,769,900				(761,200)	(4.9)
Local
Private	243,200	260,100				16,900	6.9%
Restricted	33,809,600	33,530,000				(279,600)	(0.8)
GF/GP	30,050,500	28,828,700				(1,221,800)	(4.1%)
Gross	$80,369,000	$77,677,800				($2,691,200)	*(3.3)%*
FTEs	573.0	459.9				(113.1)	(19.7)

Notes: (1) FY 2009-10 appropriation figures do not reflect the impact of executive order, supplemental, or transfer adjustments made after the release of the FY 2009-10 Executive Budget on February 12. (2) "ARRA" represents temporary funds received under federal American Recovery and Reinvestment Act.

Overview

The Department of Agriculture promotes Michigan agricultural products and protects the public from disease and unsanitary conditions in food production and handling; regulates product labeling and producer practices for dairy products, animals, and plants; and enforces consumer protection laws in food, standard weights/measures, animal health, plant pests, and diseases.

Summary of Major Budget Issues

The Executive Budget proposed the following changes from current year:

Environmental Stewardship

Would shift authority for the Michigan Agriculture Environmental Assurance Program (MAEAP) from department to Michigan State University's Agriculture Experiment Station, with associated reduction of $586,400 GF/GP and 5.0 FTE positions. There is no corresponding budgetary increase for MSU in the Higher Education budget. This shift would require the amendment of Section 8707 of the Michigan Natural Resources and Environmental Protection Act which currently gives the department primary authority over the program.

Reduces department support for Right to Farm program by $150,000 GF/GP and 1.0 FTE position.

Offsets $537,900 reduction in GF/GP support for the migrant labor housing program with a proposed $30 per worker inspection fee. Note that the current year budget recognizes a new $5 per worker fee, but bills to establish the new fee have not yet been enacted.

Pesticide and PlantPest Management (PPPM)

Reduces GF/GP support for Plant Health and Export Certification program by $379,400 and 4.0FTE positions.

Food and Dairy

Offsets $500,000 reduction in GF/GP support for the dairy inspection program with a proposed increase in inspection fees. Note that the current year budget recognizes $100,000 from increased fees but bills to establish the new fee have not yet been enacted. The new fee would be based on a rate of one-cent per hundred weight of milk sold.

Office of Racing Commissioner

The Office of Racing Commissioner was transferred to the Michigan Gaming Control Board effectiveJanuary 17, 2010 through Executive Order 2009-45. This transfer is reflected in the proposed budget by the transfer of the associated 10.0FTE positions, and $1.9 million in Agriculture Equine Industry Development Fund

Horse Racing Programs

Includes $5.1 million from the restricted Agriculture Equine Industry Development Fund for horse programs (primarily for horse race awards, purses and supplements). The appropriation is approximately equal to the current year. However, the appropriation for horse programs had averaged $10.7 million from FY 1997-98 through FY 2007-08.

FTE Reduction

The proposed budget brings authorizedFTE positions more in line with actual funding.

Economics

Increases related to economics total $3.3 million gross, of which $1.2 million represents GF/GP funding.

Major Budget Changes From FY 2009-10 YTD Appropriations

FY 2009-10 YTD (as of 2/12/ 10)

Executive Change

From YTD

1. Commissions and Boards

No change from current year.

Gross

Restricted

GF/GP

$23,800

8,800

$15,000

2. Unclassified Positions

No change from current year.

FTEs

Gross

GF/GP

2.0

$213,000

$213,000

0.0

3. Executive Direction

Reduces FTE count to better align with actual. Increase reflects economic factors.

FTEs

Gross

Restricted

GF/GP

10.0

$973,800

36,500

$937,300

(2.0)

$52,000

1,900

$50,100

4. Management Services

Increase of $54,000 reflects economic factors. Offset by shift of 8.0 FTEs and $878,300 GF/GP to MDOT as part of accounting function consolidation (see item 8 below), additional 4.0 reduction in FTE count to better align with actual.

FTEs

Gross

Restricted

GF/GP

24.0

$1,840,900

121,000

$1,719,900

(12.0)

($824,300)

6,900

($831,200)

5. Statistical Reporting Service

Increase reflects economic factors.

FTEs

Gross

Restricted

GF/GP

1.0

$145,000

79,700

$65,300

0.0

$5,300

2,900

$2,400

6. Emergency Management

Increase reflects economic factors. Reduces FTE count to better align with actual.

FTEs

Gross

Federal

Restricted

GF/GP

6.5

$747,100

500,000

$247,100

(0.5)

$12,300

12,300

7. Producer Security/Grain Dealer Licensing

Function transferred to Pesticide and Plant Pest Management Division (see below).

FTEs

Gross

Restricted

GF/GP

5.0

$238,500

238,500

(5.0)

($238,500)

(238,500)

8. Accounting Service Center

Reflects consolidation and transfer of accounting functions and related FTEs and funding to the Michigan Department of Transportation.

Gross

GF/GP

$878,300

$878,300

9. Departmentwide – Rent and Building Occupancy

Recommends $1,042,200 which better reflects actual department building occupancy costs, however without GF/GP appropriated revenue may not be supported by actual revenue.

Gross

Federal

Restricted

GF/GP

$421,100

153,400

267,700

$621,100

311,000

310,100

10. Food and Dairy – Food Safety and Quality Assurance

Executive proposes to offset a $500,000 reduction in GF/GP support with restricted revenue from a proposed alternative milk inspection fee. The current year budget recognizes $100,000 in new milk inspection fee revenue, howevera bill to effect this increase has not yet been enacted.

The proposed budget also reflects economic factors of $620,200 gross, $441,600 GF/GP, and reduces FTE count to better align with actual.

Line item represents the largest share of GF/GP funding in this budget

FTEs

Gross

Federal

Restricted

GF/GP

115.0

$12,539,700

470,500

3,139,100

$8,930,100

(8.0)

$620,300

23,200

655,500

($58,400)

11. Animal Industry – Animal Heath and Welfare

Proposed budget reflects theelimination of $259,400 in baseline GF/GP support, and elimination of 2.1FTE positions. In some cases, the budget would eliminate program, in other cases the program would be maintained with only restricted fund support. Specific program reductions are as follows:

Animal Control Shelter program ($150,000)

Animal Protection Shelters ($70,400)

Aquaculture licensing program ($20,000)

Bodies of Dead Animals program ($750)

Livestock Marketing ($2,200)

Animal Shelters program ($8,000)

Animal Welfare program ($8,000) *

Budget also eliminates $75,000IDG related to Cervid fees; no actual revenue is available to support thisIDG.

Proposed budget also reflects economic factors of $70,100 gross, $47,800 GF/GP, and transfer of 7.0 FTE positions to Bovine TB line to better align with actual program funding.

* The Executive budget appears to make a $8,000 GF/GP reduction related to department activities under 117 PA 2009 relating to animal welfare, however, no funds are currently provided for those activities under the current year budget.

FTEs

Gross

IDG

Federal

Restricted

GF/GP

21.5

$2,290,800

75,000

470,100

246,000

$1,499,700

(9.1)

($263,700)

(75,000)

15,100

7,800

($211,600)

12. Animal Industry – Bovine Tuberculosis

Offsets reductions in restricted AEIDF and SSFF support with increased GF/GP. The $6.6 million GF/GP appropriation is the second largest use of GF/GP within this budget. State Budget Office had identified economic increases related to the two Animal Industry line items to be $331,700 Gross, $294,500 GF/GP.

FTEs

Gross

Federal

GF/GP

48.5

$7,338,300

781,100

$6,557,200

7.0

$233,400

24,900

$208,500

13. Pesticide and Plant Pest Management – PPPM

Reflects economic adjustments of $500,900 gross, $194,300 GF/GP. Reduces FTE count by 12.0 to better align with actual.

Reduces GF/GP support for Plant Health and Export program by $379,400 and eliminates 4.0 FTE positions. This represents a 22% reduction in GF/GP support for this program.

Proposed GF/GP funding in this line would be $3.8 million in the Executive budget; it had been $6.6 million in FY 2000-01.

The budget retains $200,000 in pesticide license fee revenue in the base. This revenue replaced GF/GP in the FY 2008-09 budget, in anticipated the passage of 2008 PA 18.

FTEs

Gross

Federal Private

Restricted

GF/GP

110.0

$11,929,300

2,549,600

152,600

5,211,800

$4,015,300

(16.0)

($562,500)

(530,100)

13,800

138,900

($185,100)

14. Emerald Ash Borer Program

Proposed appropriation of $2.1 million reflects continuing reduction in federal support for thisprogram;appropriationhadbeenas much as $25.0 million in FYs 2003-04 and 2004-05.

FTEs

Gross

Federal

24.5

$3,034,200

3,034,200

(14.5)

($895,700)

(895,700)

15. Producer Security/Grain Dealer Licensing – PPPM

In the current year budget this line item is in the Executive direction appropriations; reflects transfer to PPPM and economic increase.

FTEs

Gross

Restricted

GF/GP

0.0

4.0

$252,600

252,600

16. Environmental Stewardship

Budget would shift authority for the Michigan Agriculture Environmental Assurance Program (MAEAP) from department to Michigan State University's Agriculture Experiment Station, with associated reduction of $586,400 GF/GP and 5.0 FTE positions. There is no corresponding budgetary increase for MSU in the Higher Education budget. This shift would require the amendment of Section 8707 of the Michigan Natural Resources and Environmental Protection Act which currently gives the department primary authority over the program.

Reduces department support for Right to Farm program by $150,000 GF/GP and 1.0 FTE position.

Shifts Migrant inspection housing program to separate line item, resulting in a reduction of $537,900 GP/GP in this line and the shift of $110,000 in migrant labor housing inspection fees to the new line.

Eliminates $351,600 IDG from MDEQ related for MAEAP program; the IDG is not supported by actual revenue.

Proposed budget also reflects economic factors of $63,500 gross, $55,600 GF/GP, and elimination of 5.0 FTE positions to better align with actual program funding.

Proposed budget would appropriate $718,600 GF/GP – GF/GP funding for this program had been $2.7 million in FY 2000-01.

FTEs

Gross

IDG

Federal

Restricted

GF/GP

27.0

$2,582,500

445,400

39,500

160,400

$1,937,200

(19.0)

($1,672,400)

(348,200)

2,200

(107,700)

($1,218,600)

17. Groundwater/Freshwater Protection Program

Reflects economic increase of $99,000. Federal funding from EPA grants; restricted revenue from Freshwater protection fund.

FTEs

Gross

Federal

Restricted

15.0

$5,255,100

215,500

5,039,600

0.0

$99,000

99,000

18. Farmland/Open Space Preservation

Reduces funding from Freshwater Protection Fund by $131,000 to better reflect actual revenue. State Budget Office spread economic increases of $52,700 to Agriculture Preservation Fund.

FTEs

Gross

Restricted

9.0

$1,006,900

1,006,900

0.0

($78,300)

(78,300)

19. Agriculture Pollution Prevention Program

No change from current year appropriation.

Gross

Federal

Restricted

$1,000,100

1,000,000

100

20. Migrant Labor Housing

Consolidates inspection program (transferred from Environmental stewardship line) with grant program. The inspection program in Environmental stewardship had been funded with $537,900 GF/GP and $110,000 in restricted funding from a new $5 per worker migrant labor housing inspection fee.

Executive budget would fund the regulatory program with a $30 per worker inspection fee, estimated to generate $647,900. Note that although the current year budget recognizes a new $5 per worker fee, bills to establish the new fee have not yet been enacted.

The budget also recognizes $26,800 in economic increases.

FTEs

Gross

Federal

Restricted

GF/GP

0.0

$425,100

400,000

25,000

$100

8.0

$717,600

63,900

653,800

($100)

21. Laboratory Services

Increase reflects economic factors. Reduces FTE count to better align with actual.

Executive budget would appropriate $2.6 million GF/GP – GF/GP funding for this program had been $4.0 million in FY 2000-01.

FTEs

Gross

IDG

Federal

Restricted

GF/GP

63.0

$5,893,100

189,100

916,200

2,330,600

$2,457,200

(34.0)

$249,400

145,400

$104,000

22. USDA Monitoring

Reflects economic increase. Reduces FTE count to better align with actual.

FTEs

Gross

Federal

17.0

$2,171,700

2,171,700

(4.0)

$87,300

87,300

23. Consumer Protection Program

Proposed increase reflects economic adjustments.

Line item supports motor fuel quality program, weights and measures, and metrology laboratory. Restricted revenue includes $3.0 million from the Refined petroleum fund. The fee that supports the Refined petroleum fund is set to sunset on September 30, 2010. The budget assumes extending the sunset.

FTEs

Gross

Restricted

GF/GP

51.0

$5,237,400

5,236,900

$500

0.0

$260,700

260,600

$100

24. Agriculture Development

Reflects economic increase of $35,400. Reduces FTE count to better align with actual. Includes baseline GF/GP reduction of $27,300.

Executive budget would appropriate $305,300 GF/GP – GF/GP funding had been $915,000 FY 2000-01.

FTEs

Gross

Private

Federal

Restricted

GF/GP

6.0

$2,177,000

10,900

1,579,300

259,500

$327,300

(2.0)

$8,100

200

25,700

4,200

($22,000)

25. Grape and Wine Program

Recognizes economic increase.

FTEs

Gross

Restricted

GF/GP

3.0

$722,200

722,200

0.0

$14,600

14,600

26. Fairs and Racing

Recognizes economic increase. The fund source for this line item is the Agriculture Equine Industry Development Fund (AEIDF).

FTEs

Gross

Restricted

GF/GP

4.0

$496,500

496,500

0.0

$29,400

29,400

27. Horse Racing Programs

AEIDF funding for horse racing programs at current year levels.

	Current YTD
Purses & supplements-fairs/licensed tracks	$1,019,100
Licensed tracks - light horse racing	56,800
Standardbred (SB) breeders' awards	416,700
SB purses/supplements-licensed tracks	769,400
SB sire stakes	348,300
SB training and stabling	15,500
Thoroughbred owners' awards	53,300
Thoroughbred program	1,032,000
Thoroughbred sire stakes	356,900
Distribution of outstanding winning tickets	500,000
Total	$4,568,000

Gross

Restricted

$4,568,000

4,568,000

28. Office of Racing Commissioner

Reflects the transfer of this office to the Michigan Gaming Control Board (MGCB). The related funding from the AEIDF was also transferred to the MGCB in the General Government budget.

FTEs

Gross

Restricted

10.0

$1,785,000

1,785,000

(10.0)

($1,785,000)

(1,785,000)

29. Information Technology

Reflects transfer of Office of Racing Commission to the MGCB and related transfer of $120,000 in associated AEIDF revenue. In addition, the budget recognizes $82,800 in economic increases related to information technology.

Gross

IDG

Restricted

GF/GP

$1,540,300

2,800

409,500

$1,128,000

($39,900)

(101,700)

$61,800

30. Capital Outlay - Farmland/Open Space Development Acquisition

Adjusts state restricted Agriculture Preservation Fund support to better align with available revenue.

Gross

Federal

Restricted

$3,750,000

1,250,000

2,500,000

($450,000)

(450,000)

31. Economics

The State Budget Office had identified $3.2 million for economic increases: $857,200 for employee salary and wages; $528,900 for insurances increases; $1.2 million for retirement contributions; $31,600 for workers compensation, and $621,100 for building occupancy charges. The increase in building occupancybetter reflects actual department building occupancy costs, which have been under appropriated. In addition, the budget recognizes $82,800 in economic increases related to information technology.

Gross

IDG

Federal

Private

Restricted

GF/GP

N/A

N/A

$3,241,300

3,400

917,000

16,900

1,147,200

$1,156,800

Major Boilerplate Changes From FY 2009-10

The Executive budget eliminates a number of legislatively-initiated boilerplate restrictions and reporting requirements.