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Michigan’s nonpartisan, nonprofit news source

Biden COVID stimulus brings billions to Michigan. How much will your town get?

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In the past 20 years, municipalities in Michigan have delayed infrastructure improvements and winnowed the size of staffs as tax revenues fell. They are weighing how best to spend billions coming from the federal government. (Shutterstock)

May 11: Fun for Michigan governments: How to spend $11 billion in federal stimulus

April 5: How Michigan communities can, and should, spend billions in Biden stimulus

Michigan cities, townships and counties are set to receive an unexpected windfall of billions of federal dollars that have many officials grateful and others flabbergasted.

As part of the $1.9 trillion American Rescue Plan approved last week, the Michigan state government is expected to get $5.9 billion, according to an estimate from the U.S. House Committee on Oversight and Reform.

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More than $4.4 billion more is going to every township, city and county, in amounts ranging from $100 per resident to as high as $1,300.

Detroit, where income tax revenues have plummeted as workers worked from home during the pandemic, is slated to get nearly $880 million, equal to $1,313 per resident.

And tiny Grand Island Township in the Upper Peninsula’s Alger County — population 44 — will receive a total of  $4,344.

 

While community leaders cannot use the money to pay pension debts or provide tax cuts, there are few limits on the money. Governments can pay for infrastructure upgrades, hazard pay for workers, parks, downtown improvements and the like.

It’s all covered and communities have until 2024 to spend the money, said Eric Scorsone, director of Michigan State University’s Center for Local Government Finance and Policy.

“I don’t think we’ve seen anything like it since probably the New Deal,” he said, referring to President Franklin Roosevelt’s economic plan during the Great Depression.

“This is a game changer, there’s no doubt about it.”

The infusion of money comes after cities from Detroit and East Lansing to Clawson and Battle Creek have laid off staffers during the pandemic, and follows years of budget cuts that experts say have left infrastructure crumbling and emptied municipal offices.

Michigan municipalities lost $8.6 billion in state-revenue sharing from 2001 to 2018, according to one report. The number of municipal employees fell 20 percent — over 87,000 jobs — to 356,012 between September 2001 and September 2018, according to the Bureau of Labor Statistics.

But while many local government leaders were thanking their fortune for the stimulus largesse, it’s likely not free. 

Reports on Monday indicate President Joe Biden will push for tax increases to pay for the plan, likely seeking to reverse cuts on corporations and high earners enacted during the Trump administration.

And other officials questioned why their communities should receive money in the first place — especially when they didn’t ask for it.

In West Branch Township in Missaukee County near Houghton Lake, Supervisor Cindy Wagner said the township of about 500 people can find a way to spend the $47,098 it is set to receive. 

But she asked whether a small government in farm country — with no paid staff — is the right recipient for the federal government to target pandemic recovery.

“There's a lot of other things that need to be fixed, versus all this money that the government’s sending, you know,” Wagner said. “I think they need to take care of businesses and get people back to work and so on.”

‘A big one’

The money is largely based on population but some counties and communities with higher rates of poverty got more money.

That’s a relief in places like Detroit, a regional hub where tens of thousands of workers switched to working at home when the pandemic started last year.

All told, the city has lost an estimated $410 million in revenue, including $170 million in income taxes. The city has cut hours and reduced pay of many of its 8,000 workers to make up the shortfall. 

“We are deeply appreciative to President Biden for this needed federal assistance, which (will) play an important role in our city's economic recovery,” said John Roach, a spokesperson for Detroit Mayor Mike Duggan. “Once we hear from (the U.S.) Treasury what restrictions come with these funds, we will develop our priorities and plans accordingly.”

Other communities weathered the pandemic far better economically, even the 24 municipalities that levy income taxes including Bay City.

The city of about 33,000 on the Saginaw Bay is receiving $31 million, or about $951 per person.

That’s nearly 10 times as much as the city expected — and an amount nearly equal to the city’s general fund budget of $34 million, said Jesse Dockett, president of the city commission. 

“That’s a big one,” Dockett said when told about the latest estimate.

Many residents were hurt by the coronavirus — unemployment went up — and some businesses closed. Overall, he said the city managed the crisis well and the money could be used to shore up needed infrastructure problems, particularly roads.

“People want to see good things happen,” Dockett said, particularly getting the money into neighborhoods. Roads and sidewalks would be a good start, he said.

Though one voice on the commission, Dockett said he’d like to see “as much as we can (put) to that long-term infrastructure, to benefit the community for 20, 30 years.”

As of Monday, many communities were still wrapping their heads around the dizzying numbers and trying to make sense of how they’re allowed to spend their checks.

In Baraga County in the Upper Peninsula, which is set to get $1.6 million, county officials contacted by Bridge Michigan said only that they haven’t yet had a chance to discuss it.

In Marquette County, which is set to receive $12.9 million — about half of the county’s annual budget — County Administrator Scott Erbisch said he’s “super excited” but not yet making plans about how to spend the windfall. 

Erbisch noted that local governments have until 2024 to use the money, and he expects some revenue losses from COVID to continue beyond this year. As such, he’s inclined to be cautious. 

“Clearly, we're excited for the opportunity,” he said, “but we need more guidance.”

Scorsone, the local government expert at Michigan State, said counties and municipalities should act cautiously since budgets could still take a hit if property values drop or the economy worsens. 

Hiring new employees or incurring costs that have to be paid for years to come is unwise, he said.

But he said the infusion of billions could help communities across every county in the state.

“We need investment in local government and the state is either unable or unwilling to do it,” he said. “For a lot of communities, there are serious needs.”

A chance to ‘really breathe’

In Flint, a city with an annual budget of $71 million but revenue of only $56.9 million, Mayor Sheldon Neeley called the anticipated $99.3 million COVID relief allocation “a game changer.” 

The money, he said, will help the city chip away at “a structural deficit that’s been in place for many years,” and back-fill parts of the city’s general fund, potentially freeing money to put a dent in hundreds of millions of dollars in unfunded pension obligations.

“It gives us the opportunity to really breathe, and take a look at a problem that has not been addressed for decades,” he said.

Meetings are likely with residents and community leaders on spending, but Neeley said he anticipates investing in public safety, blight removal, infrastructure, economic development and rehabilitating owner-occupied homes.

Between Flint’s money and tens of millions more apiece allocated for Genesee County and Flint schools, he said, the dollars could go well beyond making Flint whole from financial losses tied to the pandemic. 

“It’s a game changer for this community, if we execute upon these dollars correctly,” Neeley said. 

But in a county where 712 people had died from COVID-19 as of Monday — a rate that translates to about 175 deaths per 100,000 residents, well above the statewide average of 158 deaths per 100,000 residents — Neely said, “one deficit we can never overcome is the death deficit.”

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