New deal maintains Michigan budget for now; big concerns for next year

$43B in federal funding helps support state economy amid coronavirus crisis

Michigan budget deal: Minimal change now, big concerns for next year

LANSING, Mich. – Billions of dollars from the federal government have helped keep Michigan afloat amid financial hardships caused by the coronavirus (COVID-19) pandemic.

Through its various coronavirus programs, the federal government has provided $43 billion to the state of Michigan to help the state maintain regular operations amid the pandemic.

The federal government’s unemployment benefits and loans to businesses under the Payment Protection Program (PPP) have helped Michigan either collect enough taxes or provided enough cash to prevent a budget disaster.

With the federal government’s help, two of the major traditional budget concerns in Michigan -- K-12 schools and local revenue sharing -- will not take any cuts.

House Appropriations Chairman Shane Hernandez tells Local 4 News that the federal government bought Michigan some time.

“They bought us time to understand COVID, understand how we deal with it and open our businesses and schools," Hernandez said. “We’ve seen the advantages of that now and we’ve actually made it through this past year; (we were able) to get a 2020 budget done and ... go into 2021 with revenue.”

Though the financial support has helped Michigan’s economy, the federal money could easily dry up, which would pose problems for the state’s budget next year -- which is already facing a projected deficit of $1.2 billion.

Hernandez believes that Michigan businesses cannot afford to operate under such heavy restrictions much longer.

“If we don’t take advantage of this time that was bought and get our businesses open, we are looking at trouble in 2022," Hernandez said. "So it’s incredibly important that we start to do that now and continue opening businesses.”

Michigan’s budget is currently $58 billion, though some details still need to be ironed out among legislators. The budget will likely get voted on next week.

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About the Author:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.