Uncertainty over whether the federal government will approve new stimulus funding for state and local budgets continues to cloud the future of Michigan’s multi-billion-dollar revenue shortfall caused by the coronavirus pandemic.
During a press conference today, Gov. Gretchen Whitmer renewed the call for “sufficient, flexible aid” from the federal government before steep budget cuts affect essential services like health care, public safety and education.
“Congress needs to come together soon so that Michigan and every state across the country can account for COVID-19’s impact to our existing budgets,” Whitmer said. “Neither the virus or economic distress stops at the state line or party line.”
At this month’s revenue estimating conference, state officials agreed Michigan faces a $6.2 billion general fund and school aid budget deficit through the next fiscal year.
State Budget Director Chris Kolb said another revenue estimating conference is planned this summer to update budget projections.
“There is very little left to cut from state government without impacting critical programs and services,” he said.
Kolb also noted state law requires a July 1 budget submission by the legislature, adding: “The budget timeline is going to have to be different.”
State officials and economists have highlighted the need for federal aid to patch state and local budgets that have suffered from massively reduced tax revenue because of widespread closures during the pandemic. State revenue sharing is expected to decline, while some communities are already cutting staff.
The $2.2 trillion CARES Act provided aid to states and municipalities with populations of more than 500,000 people, but the funds can only be used for new expenditures related to COVID-19. The U.S. House this month passed a $3 trillion stimulus package that includes $1 trillion for state, local and tribal budgets, but it’s unlikely to gain traction in the Republican-led U.S. Senate.
In the coming weeks, the Whitmer administration will be working with the legislature to address the anticipated revenue shortfall, but it remains unclear how that process will play out absent federal aid.
Today, Whitmer outlined her budget priorities moving forward, which includes maintaining funding for classrooms, public safety, hazard pay for first responders and extending unemployment benefits for people “struggling to get back into the workforce.”
“There are no easy solutions here,” Whitmer said. “There will be hard choices. … The vast majority of these issues are not partisan in nature.”