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Published in Economic Development

Whitmer’s $5.6 billion COVID recovery plan includes additional business support

BY Tuesday, January 19, 2021 03:44pm

Gov. Gretchen Whitmer has unveiled a $5.6 billion pandemic recovery spending plan that primarily uses federal funding to help control the spread of COVID-19, which state officials and economists say is crucial to ensure broader economic recovery.

The Michigan COVID Recovery Plan unveiled during a Tuesday afternoon press conference includes $90 million to distribute COVID-19 vaccines and $225 million to fund three new programs through the Michigan Economic Development Corp. The MEDC programs would distribute grants to restaurants and other “place-based businesses,” companies with fewer than nine employees, and high-tech startups.

Gov. Whitmer COURTESY PHOTO

“The most important thing we can do to jumpstart the economy is protect public health and end the pandemic,” Whitmer said.

Of the $5.6 billion plan, which will be submitted to the state Legislature on Wednesday, $575 million comes from one-time state tax dollars through the General Fund and School Aid Fund after new federal dollars and lower than expected expenses. The spending plan is subject to approval by state lawmakers.

Whitmer called on lawmakers to approve the Good Jobs for Michigan Program to help retain and increase jobs statewide as well as permanently extend unemployment insurance benefits from 20 to 26 weeks.

Whitmer’s spending plan also includes funding to waive penalties and interest for certain property owners who were unable to pay summer 2020 property taxes on time because of hardship created by pandemic restrictions. 

The plan calls for creating an Office of Rural Development to help expand broadband and other infrastructure in rural areas and would provide targeted employment and training services through the Department of Labor and Economic Opportunity (LEO).

“This plan addresses some of the major issues that must be overcome to win Michigan’s COVID-19 recovery: mitigating learning loss, rebuilding small businesses, attracting new jobs and upskilling our workforce,” Jeff Donofrio, president and CEO of Business Leaders for Michigan and former LEO director under Whitmer, said in a statement. “We’re encouraged by the proposed one-time investments for each of these priorities, and look forward to working with the Governor and our state’s leaders to recover and get back on the path to becoming a Top Ten state.”

Whitmer also proposes using federal funding from the most recent federal stimulus package to provide rental, utility and food assistance for struggling residents.

On the education front, Whitmer’s spending plan would allocate $1.7 billion in recent federal stimulus funding — as well as $300 million from the state School Aid Fund — to help prepare schools to offer in-person learning by March 1.

Meanwhile, Whitmer’s plan includes $90 million allotted to Michigan under the federal Coronavirus Response and Relief Supplemental Appropriations Act for COVID-19 vaccine distribution, which Whitmer said would help the state meet its goal of administering 50,000 vaccines a day. The funding would provide financial support to local health departments. The state is also set to receive $575 million to expand COVID-19 testing, contact tracing and lab capacity.

State budget picture

The Michigan COVID Recovery Plan was unveiled just days after the state released updated budget projections, which are more optimistic than previously forecasted, largely because of new federal stimulus funding.

“The state had better than expected revenues as a result of the pandemic not having as large of an impact on the economy as expected,” said state Budget Director David Massaron.

The state Treasury Department and directors of the Senate Fiscal Agency and House Fiscal Agency reached agreement on Friday over revised revenues for the remainder of the current fiscal year and fiscal years 2022 and 2023. While there’s still an estimated $500 million predicted loss in state tax revenue next year, projections were better than expected by roughly $1 billion in each of the next two years.

State Treasurer Rachael Eubanks expects a two-track recovery in Michigan over the next couple of years as some sectors rebound quicker than others that primarily rely on in-person interactions, such as bars, restaurants and brick-and-mortar retailers.

“We do expect a robust recovery once we get the pandemic under control,” Eubanks said Tuesday. “Public health and the economy go together.”

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