LANSING, Mich. (AP) — Republican lawmakers and Democratic Gov. Gretchen Whitmer agreed to a budget framework Monday, saying there will be no cuts to K-12 schools or municipalities despite the coronavirus pandemic’s effect on tax revenues.
The deal came 17 days before the start of the fiscal year. Few specifics were released, including whether spending will be reduced in some areas. The chairs of legislative budget subcommittee will now take their spending “target” levels, which were not made public, and work to iron out bills.
Legislators will take final votes next week. The agreement was announced three weeks after the state received a better-than-expected revenue forecast. Billions of dollars from a federal bailout that were used to address a projected deficit in the current budget, combined with stronger tax collections than projected in May, will effectively help in the fiscal year beginning Oct. 1.
Senate Appropriations Committee Chairman Jim Stamas, a Midland Repubican, said working together was “absolutely essential” given it “has been a year unlike any other.” House Appropriations Committee Chairman Shane Hernandez, a Port Huron Republican, said the budget will be “sound and sustainable so we are ready for what lies ahead.”
State budget director Chris Kolb said that under the framework, there will be funding for “key priorities such as education, health care and skills training.”
Legislators and others have urged caution due to uncertainty over whether Congress and President Donald Trump will do another round of stimulus checks and keep in place supplemental unemployment benefits — which, along with federally funded forgivable loans to businesses, are credited with lessening the economic pain from virus-related shutdowns.
Relative to the last budget year, combined revenue in Michigan’s school and general funds is estimated to drop by $657 million, or 2.7%, this fiscal year, according to the nonpartisan House Fiscal Agency. It is forecast to fall by $973 million next budget year, or 4.1%, and $1.4 billion in the ’20-21 fiscal year, or 6.1%. The declines are roughly equivalent to $3 billion in federal rescue funds sent to the state, but it is facing higher social service caseloads during the downturn, inflationary spending pressures and higher costs due to COVID-19.