Bipartisanship and Budget Gaps: Takeaways from Lansing

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This week served as a relatively good one for bipartisanship in Lansing, particularly with agreement around patching the budget hole for the current fiscal year.

The Chamber-backed PPE tax relief package also received strong bipartisan sponsorship, which is a good sign the Legislature recognizes the importance of working together to keep the economy moving forward.

Here are some key developments from the state capitol this week.

Amended Budget Headed to Governor’s Desk, Most of Michigan’s CARES Act Funds Allocated

The Legislature passed an amended budget, supported by the Governor, closing the $2.2 billion budget deficit for the current fiscal year, which ends Sept. 30.  The deal primarily uses about $1.3 billion in federal COVID-19 funds, $350 million from the state’s Rainy Day Fund, savings from state employee furloughs, and other cuts to make up the shortfall.

While there have been plenty of partisan moments over the past few months, particularly around the Governor’s emergency declaration powers, this budget eventually moved through nearly unanimously (only one vote in opposition) after weeks of behind the scenes work from both parties and awaits the Governor’s signature.

Following the deal, which also provides hazard pay to teachers, and additional funding for schools and local governments, Michigan reportedly has about $94 million left in federal funds for COVID-19.

Federal Money, or Lack of It, Will Set Backdrop for Next Year’s Budget Talks 

While addressing the budget gap for the current fiscal year is good news for Michigan, the heavier budgetary lift – next year’s budget with a projected shortfall of over $3 billion – remains.

The most important factor to how budget talks will go between the Republican-led Legislature and Democratic Gov. Gretchen Whitmer will be the federal government’s decision on additional federal funding to support state and local governments.

Michigan used much of its CARES Act money to plug the gap in this current fiscal year. Without more federal funds, expect those budget talks to intensify, and heat up along party lines.

The Chamber and 14 other business organizations from across the state have called on Michigan’s Congressional delegation to unify behind smart legislation to provide additional relief to states facing shortfalls in tax revenue due to the COVID-19 crisis.

PPE Tax Relief Package Would Help Grow Jobs, Keep Families Safe

A Chamber-backed legislative package to provide tax relief to businesses with robust COVID-19 safety plans picked up bipartisan sponsorship in the House. The proposed legislation would exempt purchases of PPE from the sales and use taxes and provide a refundable income tax credit to businesses who submit their COVID-19 safety plans at the time of tax filing.

The legislation is designed to help ease the burden on businesses as they take action to reduce the spread of COVID-19. Providing relief to businesses will help them retain employees and provide new jobs while keeping the employees and customers and their families safe. Read more here.

Health Care Immunity Bills Offer Glimpse into Broader Liability Conversation

Michigan had a peek at what larger discussions regarding federal COVID-19 immunity legislation might look like this week – and it likely won’t be free of significant debate.

The state House passed immunity protections that would help shield hospitals and doctors from COVID-19 litigation. The passage reportedly came over concerns from the Governor and Democratic legislators who felt it went too far or was unnecessary.

Business liability protections are part of the Chamber’s priorities for the next round of federal stimulus funding. The scope of any immunity will also likely be at the center of broader discussions at the federal level.

The Chamber will continue to provide updates as this develops.

For the latest information, visit the Chamber’s Business Restart Center.

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