A state budget panel has determined that Michigan’s budget picture is bleak, but not as bad as forecasts from earlier this year.
The numbers are still being finalized, but budget cuts for the upcoming fiscal year will be less than a billion dollars. That’s largely due to rounds of federal assistance that led to unexpected levels of spending by Michigan consumers, including car and truck purchases.
“The thing that was probably surprising was how much consumers were willing to spend of that immediately,” said state Treasurer Rachel Eubanks, “and how much more Michigan consumers (spent) compared to consumers in other parts of the country, the US average.”
Michigan Budget Director Chris Kolb said the fact that the deficit is smaller than expected is good news, but balancing the budget with less revenue remains a huge challenge without more federal financial assistance.
“We still need additional federal aid to help us manage through the devastating impact that COVID-19 has had,” he said, “or else we will be facing tough decisions about what essential programs and services to cut.”
Kolb said Governor Gretchen Whitmer’s priorities will be shielding schools, health care, and human services from devastating reductions.
He also warned that COVID-19 and its effects on businesses, employment, and consumer spending will be felt for years.
“Until COVID-19 is defeated, uncertainty is the word when it comes to revenues and their impact on the budget.”
One surprise was a surge in Lottery sales during the COVID-19 crisis.
The numbers adopted by the Whitmer administration and House and Senate budget agencies will be used to adopt a spending plan for the coming fiscal year that begins October 1st.
