Published in Economic Development
Whitmer joins governors in calling for $500B in state, local budget aid COURTESY PHOTO

Whitmer joins governors in calling for $500B in state, local budget aid

BY Thursday, April 16, 2020 08:37am

Gov. Gretchen Whitmer has joined the leaders of Wisconsin and Pennsylvania in calling on federal officials to approve $500 billion to support state and local budgets facing billions of dollars in revenue shortfalls from COVID-19. 

In a letter to President Trump on Wednesday, the governors asked the administration to “work quickly, and without hesitation” with Congress to approve the funding, which economists say will be crucial to avoid a prolonged recession. 

“The damage to our state economies will be exacerbated by the cuts we know we will be forced to make,” the letter says.

The shortfalls largely are due to a lack of revenue from income and sales taxes, which could take time to fully recover to pre-coronavirus levels and hamper public services. Some Michigan cities have local income taxes, while municipalities also depend on state revenue sharing.

Michigan officials estimate statewide shortfalls could be up to $3 billion for the fiscal year that ends Sept. 30, and up to $7 billion over the next 18 months. Experts have told MiBiz it “might be worse than that.” Detroit Mayor Mike Duggan this week announced a plan to resolve a $348 million shortfall with pay cuts, staff reductions and spending down reserves.

Wisconsin could see a $2 billion budget deficit over the next year, while Pennsylvania’s deficit could range from $4.5 billion to $5 billion.

The National Governors Association last week asked for the $500 billion to be allowed with the “maximum flexibility possible.” The $2.2 trillion CARES Act stimulus bill includes $71 billion to meet immediate needs in state and local budgets, but the governors and experts say hundreds of billions of dollars more is needed. 

The three governors stressed the urgency of the situation.

“As the COVID-19 crisis continues, the health of our people and our economies are dependent on your actions in the coming days and weeks,” according to the letter. “We implore you to act decisively and expeditiously during this unprecedented time for our Nation.”

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