Whitmer and Michigan lawmakers have $26.3 billion to work with to draw up the next state budget. That number is $2 billion dollars more than initially anticipated as the state dealt with the impact of COVID-19 on the economy.
“I’m delighted to say we’re in a much better place today than we were a year ago,” said Michigan Treasurer Rachel Eubanks.
Eubanks said the economy is rebounding as more people get vaccinated, people are spending money, and the state budget’s getting a boost from federal COVID-19 recovery funds.
That paved the way for Eubanks and the directors of the House and Senate fiscal agencies to adopt new revenue projections that will be used by Governor Gretchen Whitmer and the Legislature to craft a new budget.
This development came the day after Whitmer and the Legislature’s Republican leaders agreed to end a standoff and resume in-person budget talks.
An agreement between the Whitmer administration and the Legislature on how much money is available is an important step toward finalizing the state budget. But the windfall as well as additional recovery funds expected in the future creates a different problem: how to spend it.
“We have said that we want to make sure that any investment we make is transformational – so that after that investment is made, you can fundamentally see the change that’s occurred,” said David Massaron, Whitmer’s budget director. “And then we’ve also said that it needs to be sustainable.”
Examples could include financial assistance to make childcare available to low-income families, expanded pre-K education, and adding broadband capacity in urban and rural areas.
The Legislature’s GOP budget chairs said they will insist that COVID dollars be used on one-time expenditures and not things that will become permanent line-items in the budget.
“We must wisely and effectively use this once-in-a-lifetime funding for purposeful and lasting projects that improve our state for every Michigan family,” said a statement released by Sen. Jim Stamas (R-Midland), who chairs the Senate Appropriations Committee. “We also need to be guarded with new spending programs. While the federal relief is helpful to support people, businesses, and communities affected by the pandemic and free up state resources for long-term investments, it’s not sustainable.”
House Appropriations Committee Chair Thomas Albert said he’s also concerned that the state needs to be ready if COVID spending leads to inflation. From a statement released by his office:
“We should take advantage of the opportunities to make targeted, one-time investments that the federal aid allows – but we must also prepare for potentially tough times ahead when the consequences of Washington DC’s spending spree hit home.”