Michigan facing unprecedented public health and budget crises
The rapid expansion of COVID-19 across the country and world changed our lives in many ways, including the need to protect ourselves, our loved ones and our communities by staying home. As Michigan’s governor responded to protect the state’s residents, businesses were closed, jobs were lost, and students left their classrooms behind. The foundations of the state’s economy were shaken as they haven’t been in decades.
The fallout from COVID-19 placed an intense and much-needed spotlight on policies and budgets that have harmed Black and brown people and communities in Michigan and across the country. Michigan was one of the first states to report COVID-19 data by race and ethnicity, showing that while African Americans make up 14% of the state’s population, more than 40% of Michigan residents who died as a result of COVID-19 were Black.
The reasons for these inequities are many, including persistent and deep employment discrimination, fewer opportunities to work from home or take advantage of other workplace protections, lack of access to healthcare and transportation, and the lack of appropriate housing to shelter at home. All of these factors have a long-standing backstory in policies, practices and budgets with racist intention or impact–mostly designed without any leadership or input from the people and communities most affected.
The public health crisis isn’t over, but the state’s bold moves to flatten the curve of COVID-19 have had an unavoidable impact on the state’s revenues and budget. In May, state economists predicted a budget deficit of $3.2 billion in the current budget year (2020), and an additional $3 billion in 2021. Because Michigan is required to balance its budget, any shortfall this year has to be resolved before the end of September–just a couple months from now.
The unprecedented drop in state revenues has come with a sharp increase in the need for public services, and related costs. Hospitals struggled to care for the sick, and skyrocketing unemployment increased the need for food, water, shelter, medical care and safe transportation. As Michigan moves to reopen businesses, schools and other aspects of community life, the costs will be higher including higher healthcare costs; the need to purchase adequate protective and cleaning materials; the costs to businesses, restaurants, schools and colleges of maintaining safe social distancing; and the price tag associated with providing distance learning.
The bottom line is that Michigan residents are suffering, and this public health crisis has become a very personal crisis for the many who are ill, have lost a loved one, can’t access needed medical care, are unemployed or can’t find the child care they need to work–with the greatest impact on communities of color. Any attempt to address Michigan’s budget deficit without accounting for current inequities based on race, place and income will only widen disparities and ultimately impede Michigan’s economic recovery.
This week, the Michigan Legislature will be meeting to finalize the bipartisan 2020 budget supplemental agreement. The agreement will balance the current year budget with a mix of state government savings through hiring freezes, furloughs and layoffs, existing federal funds leveraged to offset state reductions, and additional, permanent budget cuts.
But the fate of Michigan’s fiscal future really depends on action in Washington this week, not Lansing. Michigan is still facing a large deficit for the next budget year, and the state’s ability to balance the 2021 budget will hinge on the willingness of Congress to provide additional and flexible relief to the state. Michigan and other states need federal relief that is tied to economic conditions, not the calendar, and allows states to use the funds to cover revenue losses created by COVID-related shutdowns.
The League is advocating for additional federal assistance through the HEROES Act that was passed by the U.S. House of Representatives in May and is awaiting action in the U.S. Senate this week. Despite bipartisan and nearly unanimous support for previous federal relief related to COVID-19, there has been much more partisan wrangling over the HEROES Act–even though states’ and residents’ needs are just as dire. We hope Congress can put political differences aside and iron out a compromise that is truly heroic in the face of the COVID crisis and its myriad impacts on our lives.
Pat Sorenson is the senior policy analyst at the Michigan League for Public Policy.