Michigan finalizes plan to spend $880 million in federal coronavirus funds

Small businesses, day cares, schools and the state’s beleaguered unemployment insurance system are expected to benefit from federal funding aimed at helping the state recover from the coronavirus shutdown. (Shutterstock photo)

LANSING—Michigan is poised to create a new “small business restart” grant program, cut child care rates, boost summer school programs and invest in a beleaguered unemployment insurance system under a midyear spending bill that will allocate more than $880 million in federal COVID-19 relief funding.

The state House and Senate unanimously approved the proposal Wednesday evening after successful negotiations with Gov. Gretchen Whitmer, who is expected to sign the spending plan into law.

The legislation would eat up less than one-third of the $3 billion awarded to Michigan through the federal Coronavirus Aid, Relief, and Economic Security Act. 

Whitmer is lobbying the Trump administration for permission to use remaining CARES Act funding to fill part of a projected $6.2 billion hole in the Michigan budget for the current and upcoming fiscal year that resulted from the public health crisis and forced business closures. 

“I have had a number of conversations with people at the federal level who assure me that we are going to get some additional resources, but precisely what that looks like we won’t know until the U.S. Senate takes action,” the governor said in a Wednesday morning press briefing. 

Current federal rules only allow states to spend CARES Act funding on direct responses to the pandemic. As of last week, Michigan had spent $85 million on premium pay for front-line state workers, and it was expected to use another $100 million as a state match to unlock Federal Emergency Management Agency assistance, according to Budget Office spokesman Kurt Weiss.

The new spending plan will send $200 million to local governments in Michigan, which were largely left out of the CARES Act package. Many cities and townships have already issued furloughs or layoffs and begun to cut services, and leaders across the state have also urged more federal assistance.

Michigan would use another $100 million of its CARES Act money to provide grants to small businesses and nonprofits rocked by the pandemic. Firms with 50 or fewer workers could qualify for up to $20,000 each. Grants would be awarded by local and nonprofit development agencies, along with the Michigan Strategic Fund. 

While some Michigan companies have already qualified for federal or state aid, the grants could be a "very, very big help" for those in "significant financial stress," said Brian Calley, president of the Small Business Association of Michigan, an industry group.

Police, firefighters and other first responders who “performed hazardous duty or work related to COVID-19” could qualify for up to $1,000 in extra pay under a separate $100 million grant program. And another $120 million will be used to provide a $2 hourly pay boost to direct care health workers, including nurses, nursing assistants and respiratory therapists. 

The new spending plan includes $125 million for licensed child care providers to reduce costs for families of essential workers. Providers would get a stipend for June, July and August through an existing grant program designed to help both opened and closed child care centers cover costs during the pandemic. 

The legislation will also send $29 million to Michigan’s Unemployment Insurance Agency, which has been overwhelmed by record claims and suspected fraud. The agency will use the funding to hire an additional 500 employees or contractors over the next six months and purchase software and equipment to help resolve backlogs. 

Lawmakers on both sides of the aisle called for additional funding for the UIA system, saying they’ve been flooded with complaints from constituents who have been unable to access promised benefits amid the pandemic. 

“I recently got an email from a young lady who is at the end of her rope and said she was going to jump off the roof. I had to call the cops,” said Rep. Mike Mueller, R-Linden. “The government got us into this mess, so the government should lead us out of this mess.”

The spending bill includes $18 million for local school districts and charter schools to implement instructional recovery programs and help students “catch up and resume learning that was interrupted due to COVID-19.” 

Whitmer closed schools March 16 but said Wednesday they should be able to resume in-person instruction in the fall, provided the state does not see a second wave of COVID-19 cases and districts implement new safety measures. 

Those rules are likely to include reduced class sizes and “open air” instruction when possible. The governor is expected to release a more detailed “return to school roadmap” on June 30.

Without additional federal support, Michigan could be forced to make steep budget cuts by the new fiscal year on Oct. 1, but Whitmer has said she hopes to prioritize K-12 spending.

“There are lots of pressure points that we are trying to navigate, and funding is but one of many,” she told reporters. “I remain hopeful and somewhat confident that we’re going to get support out of the federal government because this is not a situation unique to Michigan.”

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