Opinion: Michigan needs federal aid for budget after COVID-19
None of us knew at the beginning of this year how our lives would be changed. The way we work, think, play and socially interact have all been changed by a virus we cannot see. The impacts of COVID-19 are boundless. As state budget director, I am reminded daily of not just the toll it has taken on the physical health of our state, but on our financial health as well.
When we gathered in January for the first revenue estimating conference of the year, economists were predicting continued revenue growth with which to build the state budget and make investments to grow our state. By the time our second revenue conference rolled around in May, the state was facing a $6.2 billion revenue loss over this fiscal year and next.
The federal government played a critical role in helping the state address revenue losses in this current year. In short, we were able to get the fiscal year in balance, in large part through federal funding combined with the use of state fund balances available due to strong fiscal management. We also implemented a freeze on hiring and discretionary spending throughout state government to save additional dollars. But now that federal funding is gone, fiscal year 2021 is staring us in the face, and we have just two short months to address it.
I work for a governor who is committed to a strong set of values and priorities that will move Michigan forward. She wants to ensure that every resident has a great public education and a path to a good-paying job, that every community has clean, safe drinking water, that we can ensure the health and public safety of our residents, and that we have an environment where businesses can thrive. Without strong funding support from the federal government, those values and priorities will suffer, and essential government services will be cut.
There are no hidden pots of gold in the state budget that can address the current needs of our state. We tapped the state’s rainy day fund for $350 million to help get the fiscal year in balance, but the just over $800 million left in the rainy day fund, is not nearly enough to address the billions of dollars in revenue shortfall that remains. I have reviewed every dollar in the state budget, but the fact of the matter is there’s simply no way to cut the budget in fiscal year 2021 without impacting essential services at a time when our residents need them the most.
Keep in mind that even before COVID-19 hit and the revenue picture was stable, Michigan was working with a General Fund that had been flat for more than 20 years. In other words, the budget Michigan uses to fund departments and provide essential services at both the state and local level had not grown in two decades, while inflation and demand for services continued to grow.
Over 90% of state general fund and school aid fund dollars support schools, colleges and universities, local governments, public safety and health care. We know these are all top priorities for the state’s residents and I don’t want to see them cut, but that’s where we are headed without additional funding from the federal government that can be used to address our revenue losses.
The recent executive orders by the president are woefully lacking in many ways, notably the absence of the type of additional fiscal relief that is necessary to help states and localities with our collective budget shortfalls. These orders do very little to help states avoid potential cuts to education, public safety and health care services at both the state and local level.
I am hopeful that the leaders of our nation can come together and find a resolution to the budget problems the states are facing. The framework is there for an agreement, but time is growing short. Action is needed now so that we can get the Michigan budget in place by Oct. 1. I am calling on the president and legislative leadership in Washington, D.C., for help. Without it, the fundamental services residents rely on in Michigan to protect their families and economic livelihoods are in jeopardy.
Chris Kolb is the budget director of the state of Michigan.