Michigan has a $7 billion budget surplus. That’s thanks to federal pandemic stimulus funding as well as the state’s booming economy. Consumer spending and higher wages are driving up state revenues from sales taxes, income taxes and other sources. In her budget presentation this week, Gov. Gretchen Whitmer said she wants to make historic investments in everything from public education, to roads and infrastructure, to social programs.
But the governor doesn’t just want to spend that money. She’s asking for targeted tax cuts as well. They include breaks for retirees and low-income Michiganders. Republicans want more wide-reaching tax relief. That sets up an interesting dynamic heading into a huge election year here in Michigan.
Listen: Gongwer’s Zach Gorchow breaks down Gov. Gretchen Whitmer’s budget proposal.
“Looking at the governor’s proposal, to see 10%, 20%, 30%, 60% increases [in certain department budgets] … some departments 80%, 90% increases, your head is just spinning,” says Gorchow, noting that a 4% increase has been considered a big budget increase in years past.
However, he says that many of these increases are not designed to continue on past the next budget year. That’s because so much of the budget surplus is from one-time federal stimulus funding.
One “wow” after another while reading through the budget rec. https://t.co/EkDiOQdvYT
— Zach Gorchow (@ZachGorchow) February 9, 2022
“Most of these large increases are not built into the base of the budget. They’re designated as ‘one time,'” says Gorchow. “So, the governor and her staff feel confident that this is a budget that, while it does push an enormous amount of money out the door, that it doesn’t create expectations into future years that this is going to continue.”
It’s important to remember that this is the first step in the budget process, Gorchow notes. It will be up to the Republican-led state Legislature to approve a budget and send it to Whitmer’s desk.
“This is a statement of her values, and it’s a negotiating point,” he says.