Economists project billion-dollar Michigan budget shortfalls
Michigan’s tax revenues will plummet between $3.1 billion and $3.6 billion below prior estimates this year due to the coronavirus pandemic, and will likely fall billions of dollars short in the next budget year too, economists said Thursday.
On Friday, nonpartisan legislative experts and Gov. Gretchen Whitmer’s administration will meet to try to get a handle on the budget outlook two months into the public health crisis. One-third of the workforce has filed for unemployment benefits, schools and many businesses are closed, and travel is restricted to curb the spread of COVID-19.
The Senate and House fiscal agencies projected a $2.4 billion to $2.8 billion, or 10% to 11.6%, drop in combined school aid and general revenues from last year. That would be $3.1 billion to $3.6 billion below what was forecast in January.
In the next fiscal year, which starts in October, revenues are projected to come in $2.7 billion to $3.3 billion below the earlier estimate.
While Michigan is getting $3 billion from the federal coronavirus relief bill, not including $800 million for large municipalities, it cannot be used to close revenue gaps. Whitmer has asked for more flexibility and federal funds.
Mayors on Thursday pushed Michigan’s congressional delegation to support House Democrats’ $3 trillion relief bill, which would include $375 million for U.S. cities. The National League of Cities projected Michigan cities will lose 37% of revenues, the fourth-highest drop in the country.
“We have already cut dozens of jobs from the city payroll, including in my office, and are facing more drastic service reductions that our citizens need,” said Bill Wild, mayor of Westland. “We see state revenues dropping and that means reductions in revenue sharing. The federal government has helped businesses — now it needs to aid cities that are vital to the success of those businesses, too.”
Whitmer, a Democrat, said the willingness of the Republican-led U.S. Senate and President Donald Trump to embrace another major rescue package is “the great unknown.”
“As a group of governors, this is front and center for every single one of us, Democratic and Republican. We are ... trying to get Congress to take action,” she said during a virtual town hall held by presumptive Democratic nominee Joe Biden.
The state reported nearly 1,200 additional COVID-19 cases and 73 more deaths, 35 of which occurred outside the previous 24-hour period. Officials attributed the larger-than-normal case increase — the first time it surpassed 1,000 in just over two weeks — to backlogged results being reported and increased testing inside prisons and jails. Deaths rose to nearly 4,800; cases increased to about 49,600.
Several county sheriffs have refused to enforce Whitmer’s stay-at-home order and other measures. But the Prosecuting Attorneys Association of Michigan, while acknowledging the Republican-led Legislature’s lawsuit challenging the governor’s authority and actions, said the orders are still in force. A judge will hear arguments in the case Friday.
State Attorney General Dana Nessel issued similar guidance last week.
Michigan officials called off the annual Labor Day walk across the Mackinac Bridge, the latest of many summer traditions to be canceled because of the pandemic.
The Mackinac Bridge Authority said the walk — which typically draws tens of thousands of participants to the 5 mile (8 kilometer) bridge linking Michigan’s Upper and Lower peninsulas — posed too great a health risk.
“We can’t in good conscience continue with an event we know draws people from across our state and beyond, and puts them shoulder-to-shoulder for hours, when medical advice strenuously advises against such gatherings,” said Patrick Gleason, chairman of the pan