LANSING — A new report is warning that President Trump’s federal budget law will leave the state of Michigan more than a billion dollars short in this year’s state budget cycle.
The finding will likely add stress to the already contentious negotiations.
“We’re estimating it will have about a $1.1 billion impact in terms of reducing resources that would have been available for something else,” said Bob Schneider, lead author of the report from Citizens Research Council.
Schneider says the findings complicate the framework put forward by Gov. Whitmer in February, which recommended $83.5 billion in spending.
“It has a billion dollars that’s not there, that won’t be available anymore,” he said. “Most of that comes out of federal tax cuts for business that spill — the federal cuts spill into Michigan’s corporate income tax.”
State Rep. Ann Bollin, who chairs the Republican-led House budget committee, says the findings won’t change her party’s approach to this year’s negotiations.
“The projections and their analysis is not far off from what we were planning,” she said. “We knew that there was going to be impact on the state budget — so we’re continuing to proceed.”
Schneider says the tax policies, coupled with increased operating expenses for Medicaid and food assistance, will reduce the state’s revenue growth by nearly half over the next 6-7 years.
“We’re either going to eat up a lot of our revenue growth or have some really significant cuts to Medicaid, or some of both,” he said. “It basically means that both in the near term and the long term, budgets are just going to get a lot tighter.”
By 2031, the state would need to put up more than half a billion dollars every year to make up for federal funding reductions.
Bollin says that cuts to state programs were already being considered by House Republicans, who plan to put out their budget proposal in August.
“The funding comes from the taxpayers pockets. We need to provide value for the taxpayers,” she said. “And it cannot always be going to the taxpayers pockets to make up these differences.”
“We have to revisit what our priorities are, and certainly it is making sure that we’re taking care of the most vulnerable,” Bollin added. “But we’ve got to eliminate the waste, you got to get rid of the fraud, and we’re going to have to potentially scale back the services.”
