Michigan’s plan to spend $3B from feds, fill 2020 budget hole

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GRAND RAPIDS, Mich. (WOOD) — State officials say they have reached a deal on how to spend some $3 billion in federal coronavirus relief aid and how to make up for a $2.2 billion revenue shortfall for the current fiscal year.

The biggest single chunk of federal cash, $648 million, will go to public health emergency response.

Hundreds of millions are also being directed to education:

  • $512 million to schools
  • $53 million to hazard pay for teachers
  • $200 million to universities and community colleges

Another $150 million is going to local governments to cover public health and safety costs and hazard pay for first responders.

Other federal dollars will fund state public safety costs, support local governments, back child care rent and other individual aid programs, and help businesses. About $94 million has yet to be earmarked.

To make up for the $2.2 billion revenue gap in the general and school aid funds, the state says it will save $490 million in various spending freezes and layoffs and pull $350 million from the rainy day fund. It is also cutting millions in aid to schools, universities and local governments.

In a joint statement Monday, Democratic Gov. Gretchen Whitmer and House Speaker Lee Chatfield of Levering and Senate Majority Leader Mike Shirkey of Clarklake, both Republicans, also urged Congress to make more money available to the state:

“COVID-19 has had an unprecedented impact on our state budget. In this time of crisis, it is our responsibility to come together and build a budget that reflects a bipartisan commitment to the things we value most as Michiganders. This agreement provides crucial funding for Michigan families, schools, and communities grappling with costs incurred as a result of the virus.  

“Our collective priority is a healthy state and a healthy economy. We are committed to working together to address the remaining shortfalls in next year’s budget and we are looking to our partners in Congress for support to help maintain the essential services relied upon by our families and small businesses.” 

Joint statement from Whitmer, Chatfield and Shirkey

The changes outlined are for the 2020 budget, the one the state is currently running on.

It remains to be seen how the state will manage the 2021 budget, which will also have a multibillion-dollar revenue gap. Last week, the Legislature OK’d an exception to the July 1 deadline to send a budget plan to the governor.

The new fiscal year starts Oct. 1.

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