Michigan has $2.8B left in federal COVID-19 relief, some lawmakers want flexibility to spend it

Michigan Capitol | Susan J. Demas

Michigan has yet to spend $2.8 billion in federal COVID-19 relief funds, and some legislators are hoping that Congress will allow that money to fill substantial budget holes.

So far, Michigan has received $3.1 billion in federal relief money through the Coronavirus Aid, Relief and Economic Security (CARES) Act. But as the Detroit Free Press first reported Friday, the state has so far only spent about $250 million of it — roughly 8% of what has been allotted, as the Department of Management and Budget (DTMB) confirmed to the Advance.

Michigan is facing a $6.3 billion budget deficit over the next two fiscal years. That gap includes shortfalls of $2 billion in General Fund tax revenue and $1.2 billion in the School Aid Fund for Fiscal Year 2020.

That’s not far off from the amount left in federal funding. CARES Act dollars, however, come with strict requirements that the money can only go toward efforts specifically geared toward COVID-19 relief.

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“Right now, the language in the CARES act doesn’t allow states the ability to use federal funding for existing items in the budget that are affected by lost revenue,” DTMB spokesperson Kurt Weiss told the Advance Friday.

“We really need additional flexibility on the use of existing federal funding so we can better address the budget shortfall, especially now knowing that Congress may not look at additional aid for the states until later in July. Our revenue shortfall is a direct result of COVID-19 and this is a 50-state problem that requires action,” Weiss added.

Lawmakers this week put forward two resolutions that would urge Congress to change that. House Concurrent Resolution 26 and Senate Resolution 124 essentially request that Michigan be given more flexibility of use for the federal COVID-19 money, so those dollars can soften the pandemic’s blow to the state government, local governments and schools. 

There’s some bipartisan support for that idea.

So far, the Legislature has taken little action to fix the FY 2020 budget or hammer out the FY 2021 budget. Senate Appropriations Chair Jim Stamas (R-Midland) said Thursday he doesn’t expect to wrap next year’s budget until August or September. The new fiscal year starts Oct. 1. 

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A number of FY 2020 supplemental bills have been introduced, but have not made it to Gov. Gretchen Whitmer’s desk — although there is a hope legislation will move next week. After that, the Legislature takes several weeks off until late July.

It’s not clear what might make it in a final deal. 

“The House, Senate and the governor’s administration are working together on a plan right now. Conversations are ongoing,” said Gideon D’Assandro, spokesperson for House Speaker Lee Chatfield (R-Levering).

Amber McCann, spokesperson for Senate Majority Leader Mike Shirkey (R-Clarklake) also said that “discussions on a supplemental are ongoing.” But she added that Shirkey “is not specifically waiting for flexibility from the federal government.”