UP Gazette

Last week, the U.S. Congress passed the second-largest economic stimulus in the country's history, voting to allocate over $1.9 trillion in funding to help the country recover from the COVID-19 pandemic and bolster a struggling economy.

This will raise the amount of funds that are allocated for the state of Michigan to well beyond pre-pandemic levels. These funds will be used for a variety of purposes, including providing incentives to businesses and direct cash relief to residents. The funds are meant to help the economy bounce back in the midst of the coronavirus pandemic, which has been severely stifling to the economy. 

According to Michigan Capitol Confidential, in the fiscal year 2018-2019, the total amount of federal funds in the state budget came to $23.2 billion. In the first year of the pandemic, during the fiscal year 2019-2020, the state received $33.7 billion in federal funds. This represents a 45% increase over the pre-pandemic spending levels. 

The current 2020-2021 budget is expected to include $25.7 billion in federal funds, which is a decrease from last year but still a 22% increase over previous years.

This does not include any additional stimulus packages or COVID-19 relief that could be passed in the near future. Some proposals discussed by Congressional Democrats would add a projected $5.7 billion to the amount of federal funds that are allocated to Michigan. This additional stimulus has not yet been approved, but experts expect Democrats to try to push it through. 

This is the second such time in the recent past that Michigan's state budget has been dramatically affected by federal funds. The first time was during the 2007-2008 housing market crash and subsequent recession, where the federal funds in the state budget increased 44% when the Obama administration passed a stimulus to help the economy.