A resolution introduced in the House Wednesday would deny the state federal bailouts and financial relief during Michigan’s worst economic downturn since the Great Recession thanks to the COVID-19 crisis.
House Resolution 267, introduced by state Rep. Michele Hoitenga (R-Manton), says that “it should not be incumbent on the federal government and American taxpayers to bail out states for their fiscal irresponsibility.”
The resolution has been moved to the Government Operations Committee. The sponsors on the resolution include state Reps. Steven Johnson (R-Wayland), Pamela Hornberger (R-Chesterfield Twp.), John Reilly (R-Oakland Twp.), Daire Rendon (R-Lake City), Luke Meerman (R-Polktown Twp.), Kathy Crawford (R-Novi), Matthew Maddock (R-Milford), Ryan Berman (R-Commerce Twp.) and Gregory Markkanen (R-Hancock).
It also states that Michigan is “prepared to address revenue shortfalls without a federal bailout” because of its rainy day fund.
“Some state rainy day funds alone could cover a significant portion of annual expenditures,” the resolution reads.
However, state budget experts estimate a $6.3 billion shortfall in the next two fiscal years. Michigan’s budget is roughly $60 billion and there’s only about $1 billion set aside in a rainy day fund. Before GOP Gov. Rick Snyder left office, he signed a $1.3 billion supplemental spending plan passed in the Republican-led Legislature, draining some of the surplus he could have left his Democratic successor, now-Gov. Gretchen Whitmer.
“Other states have nonexistent rainy day funds and have accumulated significant debt through pension obligations and other sources,” the resolution states. “Bailing out states that have failed to budget responsibly will incentivize this type of behavior to continue in the future. By telling states that the federal government will not step in to save them in times of economic stress, there will be no reason for these states to continue to be irresponsible with taxpayer money in the future.”
State House Appropriations Chair Shane Hernandez (R-Port Huron) didn’t sign onto the resolution, but he slammed Whitmer for not making cuts to the budget.
“Waiting for a federal bailout is not a plan,” he said. “The $6 billion shortfall over this year and next will not go away through wishful thinking.”
But Budget Director Chris Kolb said during a Thursday press conference that despite Michigan’s healthy economy before the pandemic, the economic forecast going forward looks grim.
“Michigan is a well-managed state with a good credit rating and a healthy rainy day fund. Our revenue shortfall is a direct result of COVID-19 and the economic toil it has taken. This is a 50 state problem,” Kolb said.
“This is as bad, if not worse, than the Great Recession. And the only way we made it through that recession was with direct support from the federal government. We need them to step up again now,” he continued.
A number of governors, both Republican and Democratic, asked U.S. congressional leaders in late March to provide states grants to help ease the economic stress caused by a loss of revenue and spending during the COVID-19 pandemic.
Earlier this month, the Democratic-led U.S. House passed a $3 trillion COVID-19 relief plan. It included almost $1 trillion for state, local, territorial and tribal governments. It would also offer direct payments of $1,200 to Americans, extend federal unemployment benefits, increase funding for nutrition assistance programs and ensure that every American can vote by mail in the November election.
However, U.S. Senate Majority Leader Mitch McConnell (R-Ky.) declared the bill “dead on arrival.”
Whitmer still struck an optimistic tone Thursday.
“We need our partners on both sides of the aisle in Washington to come together and pass a plan to aid states in our recovery. We need them to provide sufficient and flexible aid to mitigate this economic crisis that everyone of us is going through,” Whitmer said.