Michigan Facing Estimated $3 Billion in Revenue Losses this Fiscal Year

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by Scott McClallen


Michigan is facing a grim outlook for the state’s economic future.

Legislators are divided over whether the crisis requires severe budget cuts or a federal bailout to fix.

Lawmakers are facing a projected $6.2 billion drop in revenue over the next two fiscal years.

Gov. Gretchen Whitmer and other local government officials have asked for federal help.

The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act granted a restricted $800 million to large Michigan municipalities but didn’t include smaller units of local governments.

The National League of Cities projects Michigan cities will lose 37 percent of revenues, the fourth-highest in the nation.

On Thursday, local government leaders advocated for a $3 trillion U.S. House Democrat package that aims to give $375 billion to cities around the nation.

“We have already cut dozens of jobs from the city payroll, including in my office, and are facing more drastic service reductions that our citizens need,” said Bill Wild, the mayor of Westland and vice president of the Michigan Municipal League board.

“We see state revenues dropping and that means reductions in revenue sharing. The federal government has helped businesses – now it needs to aid cities that are vital to the success of those businesses, too.”

House and Senate Appropriations Republican leaders on Friday called on Whitmer to slash spending to “immediately” balance the budget.

“While the governor has time for regular press conferences and appearances on national news shows, it’s time to put a priority on resolving this budget crisis,” Sen. Jim Stamas, R-Midland, said in a statement. “I stand ready to work with the governor to enact a budget correction plan as soon as possible that puts Michigan families first. Every day she waits leaves us with fewer options and less money.”

Stamas gave an example to explain the problems’ magnitude.

“For example, if we cut state employees by 30%, cut the remaining payments to public universities, community colleges and local governments, and cut Medicaid coverage in our state, it would cover just over half of the shortfall,” Stamas said.

Senate Minority Leader Jim Ananich, a Democrat from Flint, argued a hole this deep required federal help.

“There’s no other way to put it: the numbers presented at today’s conference are sobering,” Ananich said. “Just like every other state that’s been ravaged by COVID-19, we will need a national solution to address this national problem.”

He cautioned against reopening the economy too quickly.

“It is also clear that we can’t afford another coronavirus spike. As we discuss reengaging sectors of the economy safely, the state must continue to use the best science to guide those critical decisions,” Ananich said in a statement. “We cannot let all of the sacrifices Michiganders have made in the past two months go in vain.”

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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org.
Photo “Michigan House Floor” by MittenStatePhototog CC2.0.



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