Gov. Gretchen Whitmer today signed legislation that provides $106 million in COVID-19 relief that includes grants for small businesses and entertainment venues that have been closed or had operations limited by state orders.
The supplemental spending bill includes $55 million for small business grants through the Michigan Strategic Fund (MSF), which will work with 15 local and nonprofit economic development corporations across the state to provide small business grants of up to $20,000.
Another $3.5 million will go for grants of up to $40,000 through the Michigan Strategic Fund to eligible entertainment venues. The state will use another $45 million for direct payments to workers laid off or furloughed because of the economic fallout from the pandemic.
“The bipartisan relief bill will provide families and small businesses the support that they need to stay afloat as we continue working to distribute these vaccines and eradicate COVID-19 once and for all,” Whitmer said in a Tuesday morning media briefing.
The state is “moving very quickly” to get the new grant programs and application process going, Whitmer said. The Michigan Strategic Fund and local economic development organizations have operated prior grant programs this year and have the structure in place to do so again, she said.
The legislation also appropriated $220 million for the state unemployment insurance trust fund that the governor line-item vetoed. The veto does not affect the temporary extension of unemployment benefits to 26 weeks from 20 weeks through March, Whitmer said, although business groups claim otherwise. The extension was in a separate bill Whitmer also signed today.
Whitmer said funding for the state’s Unemployment Insurance Trust Fund, supported through assessments on employers, should not come from the state’s general fund. The $220 million she line-itemed vetoed also was not subjected to negotiations with lawmakers on the COVID-19 relief package and supplemental appropriations bill.
“It was incumbent on all of us to avoid the temptation to spend limited dollars on anything outside of our basic public health needs and an economic stimulus,” Whitmer wrote in a letter to legislative leaders. “Unfortunately, the Legislature decided at the eleventh hour to scrap our collaborative process and included a number of projects that we don’t have the revenue for at this time, along with favors for special interests.”
TAX INCREASE AHEAD?
The $220 million would have been deposited in the Unemployment Insurance Trust Fund. With an elevated unemployment rate from the pandemic, the fund could have avoided or eased any future unemployment tax increases “on already struggling businesses,” the Michigan Chamber of Commerce said last week after lawmakers passed the bipartisan supplemental appropriations bill.
In a tweet shortly after this morning’s media briefing, Michigan Chamber CEO Rick Studley called the veto “extremely disappointing!”
“It’s bad enough she decided to not allow more businesses to re-open safely!! Worse yet is her unilateral decision to force struggling businesses to pay the high cost of layoffs directly resulting from her shutdown orders,” Studley wrote on Twitter.
The Michigan office of the National Federation of Independent Businesses said that because of the veto, “Michigan’s smallest employers will see significant tax hikes in the coming years as the UI Trust Fund goes further into debt due to the state’s temporary extension of unemployment benefits from 20 to 26 weeks through the end of March 2021.”
The NFIB states office also questioned whether the unemployment benefit extension would take effect. Language in the bill states the extension “would only go into effect if the legislature appropriated the $220 million to the UI Trust Fund to cover the cost,” according to a statement.
In a social media post, the Michigan Manufacturers Association also noted language in the bill “prevents an extension of benefits unless the Legislature appropriates funds.”
The legislation extending unemployment benefits, S.B. 604 sponsored by Sen. Curtis Hertel, D-Detroit, specifically states that the extension “does not take effect unless $220,000,000.00 or more is appropriated as provided for in” the COVID-19 relief bill and approved “for deposit into the unemployment compensation fund to cover the extension of benefits.”
The $220 millon after March 1 “shall be deposited into the unemployment compensation fund for the sole purpose of funding the extension of benefits for claims for weeks beginning after January 1, 2021 but before April 1, 2021,” according to the bill.
The legislation does allow federal funding to cover the cost of extended unemployment benefits, although David Worthams of the Michigan Manufacturers said “we are very interested in seeing what the governor’s next move is.”
“The statute clearly says if the money is not appropriated for the Trust Fund the extension doesn’t happen,” said Worthams, the MMA’s director of HR policies. “I’m curious where she’s going to find the money to do this. Hopefully, it doesn’t come off the backs of small businesses.”
Worthams said he’s unaware of anything in the federal relief package that would go toward the state unemployment extension. State unemployment extensions have always been paid for by state funds, he said.
Whitmer today called the $220 million a “giveaway of taxpayer money to the employer-owned Unemployment Insurance Trust Fund — a pool of funds designed to help businesses fund benefits for laid off workers.”
The $220 million didn’t “have anything to do with solving the public health crisis and helping people who are struggling right now, and that’s why it was not a wise use of precious little general fund money that we need to build out our apparatus for vaccine administration.”
“General fund dollars have got to be used to fund essential services like vaccines and PPE, not to give tax breaks to big businesses right now. The Unemployment Insurance Agency has also provided more than $900 million to help businesses impacted by COVID-19,” Whitmer said. “So, we have helped, but this went too far because it is really important that we use every precious general fund dollar we can to help get through the current crisis.”
Whitmer also urged the new state Legislature that takes office in January to pass a permanent extension of unemployment benefits.
“The Legislature really needs to come back and finish the job,” she said.
The governor today did not offer an indication on whether she may ease or lift present state pandemic restrictions early, enabling restaurants and bars to resume indoor dining.
Hospitalization and infection rates that had surged across the state this fall have declined in recent weeks, opening the potential for the governor to review the present Michigan Health and Human Services Department order that expires Jan. 14.
“We are cautiously optimistic about the data we are seeing in the state,” said Dr. Joneigh Khaldun, Michigan’s chief medical officer.
COVID-19 cases are now at 279 per 1 million people. Cases have been declining for more than 38 days, but remain more than four times higher than at the beginning of September, Khaldun said.
The positive test rate is at 8.9 percent and “has been declining for multiple weeks,” but remains nearly three times higher than early September, Khaldun said. Two regions, Saginaw and Jackson, have positive test rates above 10 percent and have the highest case rate in the state, she said.
Hospital bed occupancy by COVID-19 patients stands at 13.8 percent, versus 16.5 percent a week earlier, and the state’s death rate continues to decline. The state now averages 107 deaths per day from COVID-19, which compares to an of 123 per day last week.
“So overall, there is reason to be cautiously optimistic, but it’s important that people do not get complacent. What we are seeing in the data is not a cause to celebrate,” Khaldun said. “While Michiganders are doing a great job bringing our cases down, that progress is fragile. We are still identifying many cases across the state every day. It only takes one gathering to spread to multiple households and their close contacts.”
As of today, Michigan has recorded 480,508 confirmed COVID-19 cases and 12,089 deaths, Khaldun said.
The current state restrictions on indoor dining started with a three-week pause through an order issued in November that was extended twice, most recently on Dec. 18 with a change that allowed entertainment venues to begin to reopen.
Implemented as COVID-19 cases surged across the state, the restriction further hit bars and restaurants that had been closed for weeks in the spring and summer under prior executive orders issued by Whitmer.
On Monday, Small Business Association of Michigan President Brian Calley speculated that present trends in hospitalizations and new cases could lead the governor to lift or ease restrictions earlier than planned. The governor twice in the last week hinted at such a move, Calley said.
“The trends are all going in the right direction, so if the governor was already inclined to revisit it earlier, there’s certainly nothing in the number that would cause anybody to change their mind about that inclination, so I’m hopeful,” he said.
EDITOR’S NOTE: This report has been updated with additional details about the legislation that extended unemployment benefits being tied to the $220 million appropriation for the Unemployment Insurance Trust Fund, which the governor cut via a line-item veto.