Following the Governor’s late June announcement of a budget deal to address the current year state budget shortfall due to the pandemic, the House and Senate Appropriations committees met jointly this morning to act on those negotiated reductions.

For League members, a key component of this budget deal includes a suspension of the August CVTRS payment to all counties, cities, villages and townships.  This move will save the state $97 million in their current budget.  The deal also includes replacing that lost revenue sharing with an additional $150 million in CARES Act federal money.  This new CARES money is expected to be automatically distributed to all units that would have received an August CVTRS payment and amounts to approximately 150% of what would have been received in the normal August payment.  These CARES dollars are not limited to any specific category of spending, but are open to any eligible CARES-related expense.

Additionally, League staff were able to secure some necessary changes to the previously adopted $300 million of CARES funding for hazard pay premiums for first responders and public safety payroll reimbursement to provide some needed eligibility flexibility and additional time to apply for those two programs.

Budget Director Kolb presented the budget plan and accompanying Executive Order spending reductions to a joint House/Senate Appropriations committee meeting this morning.  The Governor made over $600 million in spending cuts across various state departments. Many of the reductions were cuts to discretionary spending, hiring freezes, and temporary layoffs.  Two larger items were the use of CARES Act dollars to supplant payroll costs in Corrections and State Police.  Additional cuts in the E.O. to programs of interest to local government include; cuts to the local bridge program and Transportation Economic Development Fund in MDOT, rural blight removal grants, and PFAS and environmental remediation response funds.

In addition to the E.O. cuts, the Senate passed a supplemental spending bill (House Bill 5265) this morning, with House concurrence expected later today.  This supplemental appropriation reduced spending for the current budget year by an additional $538 million.

This supplemental bill cuts $43 million from cities, villages, and townships through a suspension of the August 2020 statutory revenue sharing payment.  The bill also cuts $53 million from counties by eliminating their August 2020 revenue sharing payment.  These dollars are replaced within the supplemental with an additional $150 million of federal CARES Act funding and will be distributed in proportion to what each municipality would have expected to receive from their normal August CVTRS payment.

In addition to these changes with revenue sharing, the language in HB 5265 also provides a series of adjustments to the $300 million of hazard pay premiums and public safety/public health payroll reimbursements that were approved earlier this month in SB 690.  Based upon feedback received from these original programs, we were able to negotiate amendments that will now allow multi-jurisdictional authorities to apply for the funding, clarifies the ability for communities who contract for public safety services with one of the counties that had previously received a direct federal allocation to qualify for these programs, and also extends the application period for the public safety payroll program for an additional week from the time the Governor signs the bill.

This bill is expected to be completed by the legislature later this evening and be signed by the Governor once it has been enrolled and presented.

Further action on the state budget fiscal year that begins on October 1st is not expected to be completed until sometime in September.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].