Key Michigan lawmakers encourage layoffs of nonessential state workers

Lansing — Michigan's top two budget lawmakers say it's time to consider laying off nonessential state workers as the state faces a projected $1 billion to $3 billion shortfall resulting from the COVID-19 pandemic.

Senate Appropriations Committee Chairman Jim Stamas, R-Midland, said Monday the state is threatened with a "serious financial challenge" because of the pandemic and needs to "consider all options to adjust our spending." The options should include "cuts to popular programs and laying off nonessential state employees, including those in the Legislature," Stamas said.

"The state is doing everything it can to address the global COVID-19 pandemic, but we also must soon make the hard decisions to address its tremendous impact to our economy and state budget," he added. "The longer we wait to act, the deeper the cuts will need to be."

His counterpart in the Michigan House, Rep. Shane Hernandez, R-Port Huron, questioned Monday whether every state employee is essential and whether there are state employees who should be laid off because there's less demand for services in their departments.

Hernandez asked if the state is issuing liquor licenses at the current moment with people ordered to stay at home unless they're making necessary trips. He also asked whether the Michigan Department of Education has the same amount of work to do with K-12 school buildings closed.

The state employee layoff suggestions are being made although the first-term Democratic governor previously pledged to protect state employees before a 2019 budget showdown and potential state government shutdown.

On Monday, Gov. Gretchen Whitmer acknowledged the COVID-19 pandemic is hurting the state budget and officials will have to "make some tough decisions."

"A lot of the fundamentals that we need to do as a state are going to be very important to continue doing," Whitmer added. "We’re going to continue having an open dialogue with the Legislature."

Senate Minority Leader Jim Ananich, D-Flint, said many state workers are doing their jobs remotely and "working their tails off" during the health crisis.

The state should make data-driven decisions, he said, and arbitrarily laying off state workers isn't the answer.

"You don’t want to just arbitrarily cut and cause bigger problems," Ananich said.

The Michigan State Budget Office estimates the impact of the virus on the economy could create a $1 billion to $3 billion revenue shortfall this fiscal year, which concludes at the end of September.

The Research Seminar in Quantitative Economics at the University of Michigan said last week that compared with its February forecast, it's now projecting General Fund and School Aid Fund revenues to be $2.6 billion lower this fiscal year and $3.2 billion lower next fiscal year.

So far, the state hasn't instituted any permanent or temporary layoffs of state workers, said Kurt Weiss, spokesman for the State Budget Office. The state employs about 49,000 workers, Weiss said. Whitmer, a Democrat, has already ordered temporary limitations on discretionary spending by state departments and a freeze on hiring.

"We know that we have other tough decisions in front of us when it comes to the impact of COVID-19 on state revenues and ultimately the state budget," Weiss said. 

He added the state is awaiting guidance from the federal government on how federal aid can be used to address revenue shortfalls, "which will be critical to how we address the state budget moving forward."

The state currently has about $1.2 billion in its Rainy Day Fund.

The expected shortfalls come about six months after the Legislature and governor battled over the state budget and the possibility of a 45-cent gas tax increase to pay for road repair and maintenance. 

The GOP-led Legislature rejected the tax increase and put aside $400 million in General Fund money for more road repairs by shuffling work funds and cutting information technology and administrative expenditures from several departments, including Corrections, Education as well as Technology, Management and Budget. 

Whitmer responded by vetoing $947 million from the Legislature's approved final budget and transferring $645 million within departments. Much of the money has been restored.

COVID-19 and restrictions aimed at stemming its spread are battering the state's economy. More than 817,000 people in Michigan filed jobless claims from March 15 through April 4.

Of the upcoming budget negotiations, House Appropriations Chairman Hernandez said, "there are going to be difficult decisions that need to be made."

cmauger@detroitnews.com

Staff Writer Beth LeBlanc contributed.