United StatesMichigan

State Senate plugs midyear budget holes without raising taxes

Michigan state Sen. Jim Stamas

(The Center Square) – The Michigan Senate on Wedneday approved a measure aimed at closing the state’s $2.2 billion budget deficit for the remainder of the 2020 fiscal year.

The agreement will balance the budget shortfall through spending cuts, hiring freezes and dipping into $350 million from the state’s “rainy day fund” without raising taxes.

Senate Bill 373 passed Wednesday afternoon by a 36-1 vote with one excused absence.

The cuts and freezes will save the state $936 million in fiscal year 2020 by reducing spending and other cost-saving measures. Two supplemental bills will direct more than $3 billion from the state’s portion of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

“Every budget is a statement of priorities,” said Sen. Jim Stamas, R-Midland, the state Senate Appropriations chairman. Stamas worked on the agreement with State Budget Director Chris Kolb and state Rep. Shane Hernandez, R-Port Huron, the House Appropriations chairman.

“This is an agreement that protects our public schools, keeps our commitment to students and teachers across Michigan, and maintains necessary health care funding in the wake of COVID-19,” Kolb said.

The reductions will allow the state to “maintain critical government services” and assist local communities, Kolb added.

Stamas concurred.

“In the face of unprecedented and unforeseen challenges in 2020, this budget agreement is evidence of our shared commitment to schools, local governments and everyone affected by COVID-19. We’re all in this together,” Stamas said in a statement.

“This is a uniquely challenging time, but through leadership and collaboration, we have come a long way – and I am encouraged by this progress,” Hernandez said. “We have protected Michigan families and taxpayers through tough decision-making, smart planning and the use of already available resources.”

The CARES funds will be distributed as follows:

  • $555 million for schools;
  • $200 million for universities and community colleges; and
  • $350 million for local governments.

In a statement, Sen. Roger Victory, R-Hudsonville, noted the COVID-19 pandemic has devastated the state’s economy and budget. He lauded the bipartisan agreement to balance what he termed “a historic midyear deficit.”

“This agreement places nearly all of the shortfall on the state and protects critical support for our local governments and our schools,” Victory said. “We still face challenges ahead, but this responsible budget solution illustrates that we can work together to solve big issues while protecting families and job creators.”

SB 373 and House Bill 5265 will be sent to the governor to be signed after being finalized by the House.

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