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Michigan $70B budget deal hailed for ‘historic investment’ in child care

children getting read to
Michigan legislative leaders and Gov. Gretchen Whitmer have agreed to a budget for next fiscal year, avoiding the possibility of a government shutdown on Oct. 1. (Shutterstock)

Sept. 29: Whitmer signs $70B Michigan budget: What survived, thrived and died

Republican leaders in the Legislature and Democratic Gov. Gretchen Whitmer announced a budget deal Tuesday that will modestly boost spending on infrastructure and the state’s fledgling free community college program.

The deal’s biggest winners, though, are working families and their employers struggling with a growing child care crisis.

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The budget allocates $1.4 billion in federal COVID relief funds to help support child care providers, bring down costs and expand subsidies to another 105,000 Michigan families.

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The budget also includes $30 million for a one-time $1,000 bonus for child care staffers. 

“On a scale of one to 10, this is a 100,” said Dawne Bell, chief executive of the Early Childhood Investment Corp., a Michigan-based nonprofit that advocates on early childhood issues. 

“This is a truly historic investment in child care.”

The pending deal, which still requires approval this week from the House and Senate, likely ends the possibility of a state government shutdown that was looming Oct. 1. 

The general fund budget of about $27 billion includes across-the-board increases, including another 5.4 percent increase for universities and colleges and $150 million to stabilize the unemployment system, whose coffers are sagging from a record number of claims. 

All told, along with federal funding and other sources, the budget is closer to $70 billion. And upwards of $10 billion in federal COVID relief money still remains and has yet to be budgeted. 

“I am thrilled that the Legislature and I were able to come together to agree on a bipartisan budget,” Whitmer said in a statement. 

House Appropriations Chair Thomas Albert, R-Lowell, said the budget “provides much-needed stability and peace of mind — desperately needed in this time of instability.”

The budget increases come largely because of federal COVID funding, but also because state tax revenues exceeded dire projections earlier in the pandemic.

But Republicans and Whitmer haven’t agreed on all provisions, including a section added by the Senatethat would prohibit local health officials from enacting school mask mandates to thwart the spread of the coronavirus. Whitmer no doubt would veto such a requirement.

Here’s a look at some highlights of the budget:

Long-overdue child care help

The staggering cost of child care is one of the biggest economic burdens facing Michigan families. 

The cost can delay home ownership and keep some parents out of the workforce, according to a 2016 report for the Michigan Department of Education on child care access and affordability.

Child care for an infant or toddler can cost upward of $300 a week at many centers. Four years of child care can cost Michigan families as much as tuition at the University of Michigan.

Those costs also hobble businesses looking to attract or retain workers who must calculate whether their paychecks justify the cost of child care.

That may help explain why the state’s overall workforce is down by 136,000 women compared to early 2020, before COVID-19 hit, with many saying child care is a factor.

Currently, Michigan helps families with child care costs less than almost any state. Business leaders from across Michigan are increasingly framing child care as an economic issue and have coalesced to push state leaders into action.

The budget will provide a series of investments, including: 

  • $108.1 million to increase income eligibility to 185 percent of the federal poverty level ($49,025 for a family of four) through fiscal year 2023, then 160 percent ongoing in the following fiscal years. The current eligibility level is 130 percent of the federal poverty line, which equates to $34,450 a year for a family of four. 
  • $13 million to waive parent copays for child care through fiscal year 2022. 
  • $158 million for an ongoing 30 percent rate increase for child care providers for subsidized care, with another $222 million for a temporary rate increase. 
  • $117.4 million for enrollment in child care through fiscal year 2023. 
  • $36.5 million over three years to expand the number of child care spaces for infants and toddlers.   
  • $800 million in direct funds for child care providers, many of which are on the edge of going out of business because of low profits and the inability to find workers. The money can be used to increase worker pay. 

“This relief is coming not a moment too soon,” Annemarie Valdez, president of First Steps Kent, said in a statement released by the governor’s office. “These funds will make it possible to stabilize not only the child care industry, but will help bring Michigan parents back into the workforce, which will in turn alleviate pressures on our economy overall.” 

Other winners include:

Police: The Michigan State Police’s budget would increase 12 percent to $829 million, including $3.8 million for expanded use of body cameras, $12.5 million for $12.5 million for professional development and training and a trooper recruiting school, $2.5 million to help replace blood-alcohol testing devices and $2 million to increase the number of patrols on secondary roads.

The increase comes as some city officials nationwide say they want to cut police budgets in response to brutality allegations, but both Whitmer and Republicans have found common ground in supporting more money for training.

Counties, cities, townships and villages. Because sales taxes were higher than expected, revenue sharing to municipalities would increase 2 percent to $1.4 billion.The money will help local communities pay for police, fire and public safety, Whitmer said. 

Roads and bridges: The plan also includes $129 million more for the state’s crumbling infrastructure. The proposal increases the budget of the Michigan Department of Transportation by 2.5 percent to $5.2 billion. 

Of that, $196 million is expected to go for the fixing of local bridges. 

Higher education. Funding for Michigan’s colleges and universities would increase 5.4 percent to $2.2 billion, including an additional $108 million for the state’s 15 public universities. Much of that increase, $85 million, would pay for pension obligations at the seven universities that are part of the state pension system.

Free community college. The fledgling Michigan Reconnect program, which offers free community college or job training for Michigan residents age 25 or older, would increase $25 million to $55 million. 

Environmental cleanup and protection. The Department of Environment, Great Lakes and Energy’s budget would increase 35 percent to $690 million. That includes $45 million for lead service line replacement and other projects in Flint and another $92.7 million for work on PFAS contamination, drinking water assistance, high-water-level projects, dam safety and contaminated cleanups.

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