Michigan lawmakers approve COVID-19 spending bills; budget official concerned

The top state budget official says COVID-19 relief money can’t be used for legal settlements or debt payments
The Michigan State Capitol in Lansing
The Michigan State Capitol in Lansing(WLUC)
Updated: May. 13, 2021 at 4:59 PM EDT
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LANSING, Mich. (AP) - Michigan legislators have approved mid-year spending bills, but the top state budget official has concerns about the plans.

Bills that passed the Michigan House on Thursday include billions of dollars in federal coronavirus relief to boost pay for frontline government workers, incentivize unemployed people to return to work and upgrade infrastructure.

Under a $3.3 billion plan sent to the Senate by the Republican-led House, some federal funding would go toward payroll costs and free up state dollars to pay the Flint water crisis settlement -- instead of borrowing -- and partially replenish the unemployment benefits fund.

Democratic Gov. Gretchen Whitmer’s administration questioned the bill, saying federal guidance states COVID-19 funds cannot be used to pay down debt and finance legal settlements.

The Legislature approved a plan in December to borrow $600 million through the Michigan Strategic Fund to pay the state’s share of the Flint water settlement. The 30-year loan is projected to cost the state about $1 billion to pay back fully.

Republicans now would rather pay the $600 million up front from COVID-19 relief funds and avoid the loan, saving about $400 million in interest.

Republicans also have proposed making lump sum deposits into the Michigan Unemployment Trust Fund, which employers pay into for workers drawing benefits. Whitmer vetoed a $220 million unemployment fund payment last December in a COVID-19 relief spending bill.

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