LANSING, Mich. — The state Legislature approved supplemental budget bills on Wednesday to resolve a $2.2 billion deficit brought on by the COVID-19 virus through spending cuts, hiring freezes and using a portion of the state’s rainy-day fund, while also directing additional federal funds to education and vital services that were hit hardest by the virus.
“This has been one of the most challenging times in our state’s history. In addition to everyone who has been affected by COVID-19, the state budget has also been hard hit by the virus,” said Senate Majority Floor Leader Peter MacGregor, R-Rockford. “The bipartisan plan we approved Wednesday not only balances the unprecedented budget shortfall caused by COVID-19, it also protects Michigan families, schools and communities.”
The bipartisan plan will save $936 million in the current year budget by reducing state spending, and it will direct additional federal COVID-19 funds to cover expenses by schools and local governments due to the virus, including:
- $555 million for schools;
- $200 million for universities and community colleges; and
- $350 million for local governments.
The Legislature will have directed over $3 billion in federal Coronavirus Relief Funds for schools, communities, job creators, workers and families affected by the pandemic. In addition to schools receiving a net increase of $175 per pupil to address the challenges posed by COVID-19, teachers will receive a one-time $500 payment for their efforts to ensure student instruction while schools were closed.
As part of the agreement, the Senate Appropriations Committee approved an executive order from the governor to reduce current-year spending. Most state agencies will see reductions, including the executive and legislative budgets. The budget plan also utilizes $350 million from the state’s budget stabilization fund, or rainy-day fund, to fund critical programs.
MacGregor expressed appreciation for the smart budgeting discipline under the previous administration.
“The ability to use the rainy-day fund is a result of the Legislature’s discipline over the eight years of the Snyder administration,” said MacGregor, who chairs the Senate Appropriations Subcommittee on Health and Human Services. “In the 2009-2010 budget year, the rainy-day fund was approximately $2 million, but after eight years of smart budgeting, the last fiscal year of the previous administration the total was in excess of $1.1 billion. That forethought has allowed us to use the fund in this emergency to help maintain vital programs.”
“I am pleased everyone was able to come together with such strong bipartisan support to balance the budget and prioritize funding for our schools, vital programs, and local governments, while at the same time protecting taxpayers,” MacGregor said.