Waterford Today

Last week, Congress passed a multi-trillion-dollar spending bill aimed at simulating the struggling economy.

Several billion in funds are set to be allocated towards states' COVID-19 relief, including the state of Michigan. These funds are intended to go directly to residents in the form of cash relief payments and expanded tax credits. It is expected that the relief will be what is needed to pull Michigan and the rest of the country out of an economic slump that has been impacting the U.S. due to the effects of the coronavirus pandemic. 

According to Michigan Capitol Confidential, the most recent state budget prior to the pandemic included $23.2 billion in federal funding to be allocated to the state. This budget was expected to cover the usual expenses. However, the next state budget, coming during the fiscal year 2019-2020, the first year of the COVID-19 pandemic, jumped to $33.7 billion, which was a 45% increase over the year prior. 

The current budget now includes over $25.7 billion in funds from the federal government, not counting any additional stimulus that may be passed by Congress in the coming months. This represents a figure that is 22% more than what was normal in pre-pandemic budgets. 

The current spending level is reminiscent of the 2007-2008 recession and housing market collapse, which saw the federal funds in Michigan's state budget rise from $14.7 billion to $21.1 billion as part of the Obama administration's effort to stimulate the economy. This drastic action was taken as a result of the economic distress of the Great Recession.

Some are speculating that this could not only indicate that the country is in store for another, similar recession, but that the state will become dependent on federal funds. Michigan is trending once again towards utilizing more federal funds in its annual budget. 

Congressional Democrats have also discussed additional stimulus, which could add an additional $5.7 billion of federal funding to the state budget, according to some early projections.