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State budget faces "unprecedented" shortfall in pandemic

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May 2020 Consensus Conference
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Michigan House and Senate Fiscal Agencies

Michigan's state budget faces a more than six billion dollar shortfall this fiscal year and next, according to a consensus revenue estimate from the state House and Senate Fiscal Agencies.

Budget officials say it's twice as much as the decline in state revenues at the beginning of the Great Recession. The estimate may have to be revised downward again later in the year.

State Budget Director Chris Kolb says the impact to the state budget from the pandemic is sobering.

"There's no playbook that's on the shelf to really address a loss of revenue of this size, this quickly," says Kolb. "So that we don't have to cut vital services on health, education, public safety, we need the federal government to step up to the plate -- not only here in Michigan but across the country if we're going to get through this."

Kolb says he supports a Democratic-sponsored proposal in the U.S. House for a $500 billion aid package for state and local governments.

Meanwhile, personal income in Michigan has remained stable compared to the same period in 2019, because of the federal economic impact payments of $1200 for each eligible taxpayer, along with an additional $600 a week in unemployment payments from the federal CARES act. 

But University of Michigan economist Gabriel Ehrlich says personal income will drop dramatically after the $600 additional payments for unemployment end in July.

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Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Radio. She began her career at Michigan Radio as an intern, where she was promptly “bitten by the radio bug,” and never recovered.
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