New $70B Michigan budget plan includes across the board spending hikes

Lansing — Next year's proposed $70 billion state budget would include huge spending increases across the board thanks to a combination of federal COVID-19 relief funds and better than expected state tax revenue.

Michigan House and Senate conference committees on Tuesday moved a $50.7 billion general omnibus budget and $2.2 billion higher education budget, including a 6.4% increase in higher education aid. 

In late June, the Legislature approved a historic $17.1 billion K-12 education budget earlier this year. 

Even after the $70 billion budget is signed into law, the Legislature has roughly $10 billion in additional money that could be included in a supplemental spending plan later this year. About $7 billion of that $10 billion is leftover federal COVID relief funds, state budget director Dave Massaron told reporters Tuesday. 

“This budget is going to help Michigan emerge as an even stronger state, and it provides the type of investments that will foster real and lasting improvements to support Michigan’s families and businesses," Massaron said. 

Gov. Gretchen Whitmer proposed an initial $67.1 billion budget in February, a jump from last year's $62.8 billion spending plan. The increase in part reflects the billions of dollars more that have been added thanks to federal COVID-19 relief dollars funneled into the state.

The budget blueprint moved from committee will go before the full House and Senate this week for final approval before it is sent to Whitmer's desk. 

The budget moved Tuesday includes about $1.4 billion in child care spending that is expected to make 105,000 more children eligible for child care aid. 

It includes an about $150 million allotment that would be funneled into the Unemployment Insurance Agency Trust Fund to stabilize the fund after losses due to fraudulent jobless aid benefits, said House Appropriations Chairman Thomas Albert, R-Lowell. The fund usually is financed through employer taxes.

The budget includes about $86 million to reduce university pension obligations and $500 million in budget stabilization funding, which brings the total in the rainy day fund to nearly $1.4 billion and reflects one of the largest contributions to the fund, Albert said. 

The spending plan also has several contributions to job skills and tourism programs including $40 million to Going Pro, $55 million to Michigan Reconnect, $25 million to Futures for Frontliners and $40 million to the Pure Michigan program. 

“The budget will make the biggest-ever one-time deposit into our rainy day fund, repair or replace nearly 100 bridges, expand childcare to 105,000 kids at low or no-cost, replace lead service lines, permanently raise pay for direct care workers, and do so, so much more," Whitmer said in a Tuesday statement. 

During an interview Tuesday morning, Lt. Gov. Garlin Gilchrist noted that the budget won’t be finished until the governor signs it into law. But he spoke positively of the plan, saying it would include an investment in childcare programs, support for small businesses and investments in place-making projects.

The budget will “lay a foundation” for additional discussions on how to spend remaining federal COVID-19 relief dollars.

“You’ll see the beginnings of that, sort of the first chapter of that story coming to fruition with the budget,” Gilchrist said. “But there’s more work to do. And the governor and I continue to be ready to have those negotiations.”

eleblanc@detroitnews.com

Staff writer Craig Mauger contributed to this report.