Plans to fix $2B budget hole ready for governor’s signature

Coronavirus
michigan capitol building lansing

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LANSING, Mich (AP) — Plans to help address a $2.2 billion state budget gap caused by the coronavirus pandemic were ready for Gov. Gretchen Whitmer’s signature after lawmakers approved budget cuts, dipping into state cash reserves and increasing financial support for schools.

Two bills, which cleared the House and Senate Wednesday with strong bipartisan support, are part of a complex plan that’s heavily reliant on federal coronavirus relief funds. Michigan will also pull $350 million from a $1.2 billion “rainy day” fund.

Before the bills were approved, Whitmer issued an executive order cutting nearly $667 million to state agencies as part of the plan. Budget officials detailed modest cuts to departments including Natural Resources and Corrections, which a joint appropriations committee approved.

State officials anticipate most of the impact will be offset by redirecting federal funds. Michigan received about $3 billion in federal relief but hospitals, schools and other entities say isn’t enough.

Despite the bipartisan support, a government watchdog expressed concerns about heavy reliance on federal funds. Lawmakers face another massive shortfall for the fiscal year beginning in October.

“We strongly urge the Michigan Legislature to look at new revenue options that bring more money into the state while better balancing tax fairness and equitable state spending in the process,” Michigan League for Public Policy President and CEO Gilda Jacobs said in a statement.

Lawmakers approved a bill that allocates $512 million for K-12 schools and $200 million for higher education. Another they approved allocates $53 million for teachers to each receive $500 in hazard pay.