Both chambers of the Legislature on Thursday took steps on the budget process, as measures were introduced to compel Congress to provide more flexible financial assistance to states and to waive the Legislature’s quickly approaching deadline to present a budget to Gov. Gretchen Whitmer.
House Concurrent Resolution 26, sponsored by state Rep. Jon Hoadley (D-Kalamazoo) and Senate Resolution 124, sponsored by state Sen. Winnie Brinks (D-Grand Rapids), both request that Congress make it possible for funding from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to also be used to fix budget shortfalls across the state, schools and local governments.
“Michigan’s projected General Fund revenue has declined by $2 billion and projected School Aid Fund revenue has declined by $1.2 billion for the current fiscal year,” Hoadley’s resolution reads. “… Failing to mitigate these budget shortfalls will result in unprecedented and incredibly damaging cuts to core government functions.”
As such, the bills request Congress “to provide continued and flexible financial relief to state and local governments affected by COVID-19.”
In May, state budget experts estimated that Michigan faces a $6.3 billion budget hole over the next two fiscal years. That includes a $2 billion drop in tax revenue for the General Fund, while the School Aid Fund will drop by nearly $1.2 billion for Fiscal Year (FY) 2020.
“The COVID-19 pandemic is both a public health crisis and an economic crisis,” Brinks said. “As Michigan continues its work to limit the spread of COVID-19 and reduce its effects, we now must contend with an unprecedented financial problem that we cannot resolve on our own. We need the federal government to join us in this fight and to provide clarity regarding the funds previously allocated in order to help offset Michigan’s revenue shortfall.”
Both resolutions were introduced Thursday. So far, only the Senate resolution — which has a much more bipartisan array of co-sponsors – has been adopted.
A group of House Republicans introduced a resolution on May 28 coming out against a federal bailout, claiming that the state’s rainy day fund (currently around $1 billion) should be enough to address the budget shortfall ($6.3 billion) and the federal government’s help is not needed.
A bill also was introduced in the state Senate Wednesday that would waive the state Legislature’s new July 1 deadline to send Whitmer a budget for the upcoming FY 2021 that starts on Oct. 1.
Senate Bill 963 is sponsored by the minority chair of the Senate Appropriations Committee, Sen. Curtis Hertel Jr. (D-East Lansing), and co-sponsored by Appropriations Chair Jim Stamas (R-Midland).
Whitmer signed into law in December a new target deadline of July 1 with the hopes of providing a quicker, more established timeline for state lawmakers to get their budget for the next fiscal year on the governor’s desk. It was meant to avoid last year’s fiasco, in which the Legislature sent Whitmer an un-negotiated budget in late September, followed by a round of vetoes and renegotiations.
But thanks to the pandemic that hit the state of Michigan especially hard and a recession, that goal of July 1 would likely be all but impossible now. The state Legislature is still working to finalize a COVID-19 relief supplemental bill, and the state will likely not have the updated revenue figures needed for the budget until August.
SB 963 does not set a specific later date for the Legislature to present budget bills to Whitmer, but instead clarifies that the July 1 deadline rule will go into effect starting next year on July 1, 2021.
According to the Associated Press, Stamas expects that the FY 2021 budget will not be resolved until August or September.