Gov. Gretchen Whitmer and the Republican-led Michigan Legislature have reached a deal on balancing the state’s Fiscal Year 2020 budget, using a combination of spending cuts and $915 million worth of federal coronavirus aid to patch up a multibillion-dollar shortfall caused by the COVID-19 pandemic.
The deal relies on using federal coronavirus funds to cover costs schools, universities and local governments are facing due to the coronavirus while making corresponding cuts in state general fund dollars to make up the $2.2 billion dollar shortfall.
The spending plan would balance the budget for the current fiscal year after the state saw a steep drop in expected tax revenue due to the COVID-19 pandemic. Legislative leaders still need to work out anticipated multibillion-dollar shortfalls for the next fiscal year, which begins Oct. 1.
In a joint statement, Whitmer, House Speaker Lee Chatfield, R-Levering, and Senate Majority Leader Mike Shirkey, R-Clark Lake, said they’re committed to working together to address remaining shortfalls in next year’s budget, and called on Congress for additional assistance.
“We are looking to our partners in Congress for support to help maintain the essential services relied upon by our families and small businesses,” the statement reads.
Shirkey in a separate statement urged Congressional leaders not to rely on defaulting to additional federal debt to help balance state budgets.
“As Congress contemplates further assistance to states, our caucus encourages them to balance fiscal responsibility with the realities of unprecedented challenges related to this insidious virus,” he said. “Restraint on spending will be difficult in the face of these needs, but absolutely necessary.”
Federal dollars as allocated in the spending deal will put $512 million towards schools and an additional $53 million for hazard pay for teachers, as well as $200 million for universities and community colleges and another $150 million for local governments.
To make up the rest of the state budget shortfall, the deal cuts $256 million in state aid for schools, $200 million for universities, $97 million for local governments and $475 million in public safety costs now eligible for federal coronavirus funds.
The deal also pulls $350 million from the state’s “rainy day fund,” which had a balance of about $1.1 billion as of September 2019.
$490 million in cuts will come from state budget cuts in the form of hiring and discretionary spending freezes and layoffs, and another $340 million in general fund revenue will be saved through using federal matching funds for Medicaid costs and other state COVID-19 response spending that is now eligible for federal funding.
COVID-19 PREVENTION TIPS
In addition to washing hands regularly and not touching your face, officials recommend practicing social distancing, assuming anyone may be carrying the virus.
Health officials say you should be staying at least 6 feet away from others and working from home, if possible.
Use disinfecting wipes or disinfecting spray cleaners on frequently-touched surfaces in your home (door handles, faucets, countertops) and carry hand sanitizer with you when you go into places like stores.
Michigan Gov. Gretchen Whitmer has also issued an executive order requiring people to wear face coverings over their mouth and nose while inside enclosed, public spaces.
Additional information is available at Michigan.gov/Coronavirus and CDC.gov/Coronavirus.
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