October 23, 2021

Whitmer signs $70B budget into law

Gov. Gretchen Whitmer signed into law a $70 billion budget on Wednesday. The spending marks an 11.5% increase compared to the last budget.

“This is a budget that puts Michiganders first. We are coming together to grow the middle class, support small businesses, and invest in our communities,” Whitmer said in a statement. “This is a comprehensive budget that builds on the school aid budget I signed this summer, which made the largest investment in K-12 education in Michigan history without raising taxes.”

The budget signing two days before the new fiscal year shows a change of pace after 18 months of partisan bickering between Democrats and Republicans over COVID-19 policy.

The budget focuses on child care, education, infrastructure, and recovery from the COVID-19 pandemic. About $1.4 billion of child care spending is expected to qualify 105,000 more children for child care by increasing income eligibility to 185% of the federal poverty level through fiscal year 2023, then 160% ongoing in the following fiscal years. About $700.7 million will fund stabilization grants, with another $100 million for startup grants for child care providers and $30 million for a one-time $1,000 bonus for child care staff.

The ramped-up child care spending aims to unlock a workforce of women and young parents who left because of child care costs, scarcity, or virtual schooling. Between February 2020 and December 2020, roughly 136,000 women left Michigan’s labor force, a 5.8% decline. Even 17 months into the pandemic in August 2021, the state’s total labor force remains 202,100, or 4.1% below the pre-pandemic February 2020 level.

The budget appropriates $196 million to repair or replace nearly 100 crumbling bridges, and $14.3 million to help local governments prepare for climate change and extreme weather, including flooding and coastal erosion. Another $19 million will fund dam repairs and flood mitigation, while $10 million will replace lead service lines in Benton Harbor to provide access to safe drinking water, and $15 million would fund the Emergency Drinking Water Fund.

In July, Whitmer and the Legislature approved a $17 billion school aid bill aiming to eliminate the funding gap between districts at the minimum and maximum foundation allowances – a goal for nearly 30 years.

The budget aims to pave a path to higher education or advanced skills through multiple programs.

  • $55 million for the Reconnect program to provide a tuition-free pathway to an in-demand industry certificate or associate degree for Michigan adults age 25 and older.
  • $25 million for the Futures for Frontliners scholarship program paying for frontline workers to attend local community college tuition-free.
  • $40 million for the Going Pro program to expand employer-based training grants to get industry-recognized credentials and certificates to help raise wages and fill job openings.
  • $8 million for pre-apprenticeship/apprenticeship training programs will expand Michigan’s talent pool in the construction and building trades.

The spending package includes $146.9 million for 176 “Michigan Enhancement Grants” in lawmakers’ local communities typically deemed as pork spending.

The budget will also deposit $500 million into the Budget Stabilization Fund, bringing the total fund balance to nearly $1.4 billion, representing the most significant rainy day fund balance in state history.

The Michigan Health and Hospital Association welcomed the new budget.

“The COVID-19 pandemic has challenged hospitals throughout the state and, on behalf of our members, we commend Gov. Whitmer for signing today a state budget that continues vital funding sources for our hospitals, increases support for direct care workers and ambulance services, and maintains extended Medicaid coverage for mothers up to 12 months postpartum,” MHA CEO Brian Peters said in a statement. “We extend equal appreciation to both the Legislature and Gov. Whitmer and her administration for passing a budget on time that maintains access to care throughout Michigan.”

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