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Michigan's COVID-19 budget crisis could be more severe than Great Recession

Posted at 6:23 PM, May 15, 2020
and last updated 2020-05-15 22:05:40-04

LANSING, Mich.(WXYZ)  — Michigan’s state budget director says COVID-19 is causing a budget crisis is potentially worse than what we saw during the Great Recession.

Friday the state held a conference to hear from experts estimating tax revenue. They painted an ugly picture.

“For the current fiscal year and next fiscal year we are seeing a combined $6.2 billion…” said Chris Kolb, State Budget Director. “As we pointed out, that is double the decrease in 2009.”

That is the decrease in projected revenue. As a result the combined general fund and school aid fund budgets for this year and next year are projected to have a deficit of $3.8 billion.

“Even if we eliminated 12 departments, including if we did away with the budget for the judiciary and legislative branch, we would not have $2 billion. That is in a full year, yet alone in this fiscal year. This is unprecedented. It is something we have never seen before,” said Kolb.

“It is going to come down to what are the essential budget priorities,” said State Senator Jim Runestad (R-15th District)

State Sen. Runestad says under law the state has to have a balanced budget, so tough decisions will be made. Seven Action News asked him if the state faces going into default.

“I think we can. I just don’t see the state of Michigan defaulting,” said Sen. Runestad.

School leaders are being told that this year’s funding will be cut. That is right. This school year that is almost over.

“You’re looking at this year, school districts are looking at potentially loosing $850 per student. So in a district with 10k students that is $8.5 million. There is nothing we can do to reduce costs at this stage in the game,” said Dr. Randy Liepa, the Superintendent of Wayne RESA.

Dr. Liepa said to reduce that amount a school district would have to make significant staffing cuts. So schools face carrying that debt over to next year, when again, they are expected to lose on average more than 800 dollars per student if major adjustments aren’t made.

“This type of cut is going to directly impact children at a time when we need more support,” said Dr. Jamii J. Hitchcock, Superintendent Oak Park Schools.

Dr. Hitchcock says this comes as the district spends more on technology, tutors, PPE, and prepares for an increase in social emotional needs.

“Approximately 20 percent of our students have experienced grief or loss during this COVID-19 health crisis,” she said.

So what is the solution?

“I am hopeful that the federal government will provide some support to us because we significantly need support at this time,” said Dr. Hitchcock.

Will that happen?

“It would be nice…” said Sen. Runestad. “Whether that is going to happen at the federal level, I don’t know. I kind of doubt that is going to happen. I think the fed is going to start trending down what they are spending.”

U.S. Representative Debbie Dingell’s (D-12th District) Office tells WXYZ she supports what is being called the Heroes Act. It potentially could address the budget hole, sending $7.3 billion to Michigan. It is unclear whether it will be able to get enough votes.

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