AGRICULTURE

House Committee Recommendation

House Bill 5875 H-1

FY 2010-11

Analyst: William E. Hamilton

March 24, 2010

	FY 2009-10 YTD as of2/12/10	FY 2009-10 Executive	FY 2009-10 House Committee	FY 2009-10 Senate	FY 2009-10 Enacted	*Difference: House Committee* *From FY 2009-10 YTD*
	FY 2009-10 YTD as of2/12/10	FY 2009-10 Executive	FY 2009-10 House Committee	FY 2009-10 Senate	FY 2009-10 Enacted	*Amount*	%
IDG/IDT	$712,300	$289,100	$289,100			(423,200)	(59.4%)
Federal
ARRA	22,300					(22,300)
Non-ARRA	15,531,100	14,769,900	14,769,900			(761,200)	(4.9)
Local
Private	243,200	260,100	260,100			16,900	6.9%
Restricted	33,809,600	33,530,000	28,621,200			(5,188,400)	(15.3)
GF/GP	30,050,500	28,828,700	28,828,700			(1,221,800)	(4.1%)
Gross	$80,369,000	$77,677,800	$72,769,000			($7,600,000)	*(9.5%)*
FTEs	573.0	459.9	454.4			(118.6)	(20.7)

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

House Substitute HB 5857 H-1 is $4.9 million less (Gross) than the Executive recommendation. General Fund appropriations would be the same as proposed by the Executive. The differences between the House Substitute and the Executive all relate to restricted funds; the House Substitute does not recognized proposed increases in dairy inspection fees or migrant labor housing inspection fees proposed by the Executive. In addition, the House substitute does not include revenue from the Refined Petroleum Fund. The fee supporting the Refined Petroleum Fund is set to sunset at the end of this fiscal year. The Executive budget assumes extending the sunset and recognizes $3.9 million in the Agriculture budget. Most of the Refined Petroleum Fund revenue in this budget had been appropriated for the motor fuel quality and consumer protection programs, as well as for certain administrative support lines.

Major Budget Changes From FY 2009-10 YTD Appropriations

Except as noted, the House substitute follows the Executive Rec.

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

House Committee 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.

The House substitute does not recognize $57,800 in Refined Petroleum Fund revenue.

FTEs

Gross

Restricted

GF/GP

24.0

$1,840,900

121,000

$1,719,900

(12.0)

($882,100)

(50,900)

($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.

FTEs

Gross

Federal

Restricted

GF/GP

6.5

$747,100

500,000

$247,100

(0.0)

$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

The Executive recommends $1,042,200 which better reflects actual department building occupancy costs. However; since there is no GF/GP revenue appropriated, the appropriation may not be supported by actual revenue. Building occupancy costs not supported by actual revenue are charged to department program lines.

The House substitute does not recognize $257,200 in Refined Petroleum Fund revenue.

Gross

Federal

Restricted

GF/GP

$421,100

153,400

267,700

$363,900

311,000

52,900

10. Food and Dairy – Food Safety and Quality Assurance

Reflects economic factors of $620,200 gross, $441,600 GF/GP, and reduces FTE count to better align with actual. Represents largest use of GF/GP revenue in this budget.

Executive proposed to offset a $500,000 reduction in GF/GP support with restricted revenue from a proposed alternative milk inspection fee. The House substitute does not recognize the proposed $500,000 in increased dairy inspection fee revenue.

Note that the current year budget does recognize $100,000 in new milk inspection fee revenue. Senate Bills 1131 and 1132 would amend the Grade A Milk Law of 2001 and the Manufacturing Milk Law of 2001, respectively, to increase dairy inspection fees by an estimated $100,000. The two bills have passed both chambers in identical form but have not yet been presented to the Governor.

FTEs

Gross

Federal

Restricted

GF/GP

115.0

$12,539,700

470,500

3,139,100

$8,930,100

(8.0)

$120,200

23,200

155,400

($58,400)

11. Animal Industry – Animal Heath and Welfare

Reflects theelimination of $259,400 in baseline GF/GP support, and elimination of 2.1FTE positions. In some cases, the reduction in funding would eliminate programs; 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 eliminates $75,000IDG related to Cervid fees; no actual revenue is available to support thisIDG.

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

State Budget Office identified economic increases of $233,400 Gross, $208,500 GF/GP. The $6.6 million GF/GP appropriation is the second largest use of GF/GP within this budget.

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 – a 22% reduction in GF/GP support for this program. GF/GP funding is $3.8 million; GF/GP support had been $6.6 million in FY 2000-01.

Budget retains $200,000 in pesticide dealer license fee revenue in the base. This restricted revenue was used to replace GF/GP in the FY 2007-08 budget, in anticipated the passage of 2008 PA 18. The fee generated no additional revenue in FY 2007-08 and only $17,700 in actual revenue in FY 2008-09.

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

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 this line item is in the Executive direction appropriation unit, funded at $238,500. The proposed $14,100 increase reflects economic factors. The department indicates that the program can not be sustained at current funding levels.

FTEs

Gross

Restricted

GF/GP

0.0

4.0

$252,600

252,600

16. Environmental Stewardship

Gross appropriation is $910,100 Gross, $718,600 GF/GP – GF/GP funding for this program had been $2.7 million in FY 2000-01.

The Executive would shift authority for the Michigan Agriculture Environmental Assurance Program (MAEAP) 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. The shift would require 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.

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

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

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.

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)

($1,218,700)

16a. Michigan Agriculture Environmental Assurance Program (MAEAP)

The H-1 substitute includes a $100 placeholder for a new MAEAP line item.

Gross

GF/GP

$100

$100

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 current year inspection program in Environmental stewardship had been funded with $537,900 GF/GP. The current year budget also recognized $110,000 in restricted funding from a proposed $5 per occupant migrant labor housing inspection fee. House Bills 5657 and 5658 were recently enacted as 2010 PA 14 and 2010 PA 13 to establish the new $5 fee.

The Executive proposed to offset a reduction in GF/GP funding through a $25 increase in the inspection fee. The proposed $30 per occupant regulatory fee was estimated to generate $647,900 –

a $537,900 increase from the current year baseline.

The House substitute does not recognize the proposed $537,900 in increased migrant labor housing inspection fee revenue. The House substitute recognizes only 2.0 FTE positions; the Executive budget had recognized 8.0. The House substitute is also $100 GF/GP less than the Executive and current year.

FTEs

Gross

Federal

Restricted

GF/GP

0.0

$425,100

400,000

25,000

$100

2.0

$179,700

63,900

115,900

($100)

21. Laboratory Services

Reflects economic increase of $249,400 Gross, $104,000 GF/GP. Reduces FTE count to better align with actual. Appropriation includes $2.6 million GF/GP – GF/GP funding for this program had been $4.0 million in FY 2000-01.

The House substitute does not recognize $405,000 in Refined Petroleum Fund revenue.

FTEs

Gross

IDG

Federal

Restricted

GF/GP

63.0

$5,893,100

189,100

916,200

2,330,600

$2,457,200

(18.0)

($155,600

(259,600)

$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

Reflects economic adjustments of $260,700 Gross; $100 GF/GP.

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 Executive budget assumes extending the sunset.

The House substitute does not recognize $3,150,900 in Refined Petroleum Fund revenue.

FTEs

Gross

Restricted

GF/GP

51.0

$5,237,400

5,236,900

$500

(12.0)

($2,890,200)

(2,890,300)

$100

24. Agriculture Development

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

Appropriation includes $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. Budget recognizes $82,800 in economic increases.

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 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

State Budget Office 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 House substitute does not include any new boilerplate sections.

The House substitute updates reporting requirements for sections 229 (Impact of Administrative Rules); 237(General Fund lapse estimate); 402 (Food-borne illness report); 706 (Ag. Development report); and 709 (Grape and Wine Industry Council report).

The House substitute deletes sections 212(2) (Indemnification due to animal kills); 220 (standard Information Technology language no longer requested by State Budget Office); 224 (Employee discipline/ communicating with legislative branch); 232 (Continuous improvement report); 235 (C. S. Mott funding); 238 (FTE report); 407 (Dairy Inspection baseline); 455 (Animal ID); 456 (Animal ID); 457 (Bovine TB quarterly report); 458 (aquaculture inspection baseline); 459 (Bovine TB exemption from hiring freeze); 460 (aquaculture inspection baseline); 608 (right to farm program baseline); 609 (legislative intent regarding migrant labor housing inspection fees); 610 (water withdrawal directive); 705 (export market directive); 707 (regarding Julian-Stille grants); and 713 ($100,000 earmark for export market development).