Waterford Today

Last week, the U.S. Senate passed another round of stimulus aimed at helping rejuvenate the nation's economy, which has been struggling due to the COVID-19 pandemic.

Some of these funds will go towards direct checks for Americans, while other funds will be allocated to the states to help them bolster their economy in ways that they choose.

In Michigan, the early projections are that a significant portion of the state budget will come from federally provided funds. This is not out of the ordinary for a national emergency but could be seen as an alarming trend for economists concerned about the state's future. 

When compared to state budgets prior to the pandemic, a very large percentage of the budget will be coming from federal funds, according to Michigan Capitol Confidential.

In the last fiscal year before COVID-19, federal funds made up $23.2 billion of the state's budget. In the 2019-2020 fiscal year, the first year of the pandemic, that number jumped to $33.7 billion, which was a 45% increase over the year prior. This year's portion is smaller than last year's portion but still well over levels before the pandemic. 

The current budget projection for 2020-2021 includes $25.7 billion in federal funding, which is a 22% increase over pre-pandemic levels. This figure does not include additional stimulus, of which there has already been talk by House and Senate Democrats. A recent projection would add an additional $5.7 billion to that figure on top of what has already been allocated for the state from federal funds. 

The current rate at which the federal government is contributing to Michigan's state budget is reminiscent of the 2007-2008 recession, in which the Obama administration increased federal contributions to Michigan from $14.7 billion to $21.1 billion, a 44% increase. This was intended to provide financial relief for Michigan residents, and it did take some time to return to normal levels.