Pressure builds on Michigan lawmakers to provide COVID-19 relief to cities, businesses

LANSING – With further coronavirus relief money still stalled at the federal level, pressure is building for state lawmakers to provide financial help to struggling cites and businesses.

On Monday, city leaders called for state legislative actions they said would help prevent cuts to vital services such as police and fire protection, without requiring a state handout.

Late last week, Gov. Gretchen Whitmer asked lawmakers to pass a $100 million state relief plan for Michigan families and small businesses, saying the state can no longer wait for federal action.

City leaders and the governor are asking for legislative action during what is known as the "lame duck" period after the Nov. 3 election and before Jan. 1, when many newly elected state representatives will take office.

"There's a lot of divisiveness in D.C. right now," Grand Rapids Mayor Rosalynn Bliss said at a news conference organized by the Michigan Municipal League.

"I don't have a lot of high hopes that we're going to get another relief package that provides direct relief … to cities. We need to act now and we need to do it in partnership with the state."

Local leaders said they want legislation to allow:

• The 24 Michigan cities with income tax to continue to collect those taxes from people who are working from home because of the coronavirus, as if those residents were working at their usual places of business.
• Allow millage rates to move up or down based on the relationship between growth in property values and changes in the inflation rate. There would still be limits on increases to millage rates and for properties that do not change hands, maximum tax rates could still not increase beyond the rate of inflation.
• Allow cities and other local taxing authorities to more fully benefit from the tax benefits resulting from increasing property values after a sale, while still complying with the Headlee Amendment to the state constitution, which limits property tax revenues resulting from increased assessments.
• Allow local governments to continue to hold public meetings remotely beyond the end of this year, when current approvals under state law expire.

Cities with income taxes stand to lose about $160 million this year as a result of people working from home, the municipal league estimates. The loss is even greater because unlike the state, cities can't tax unemployment insurance benefits, the league said.

Senate Majority Leader Mike Shirkey, R-Clarklake, "is glad to see the governor reverse her position that there is nothing she can do for the workers and businesses impacted by her shutdown orders," spokeswoman Amber McCann said.

That is an apparent reference to comments Whitmer made Nov. 16, when she called for more federal stimulus money for Michigan and said that beyond unemployment insurance, there is little the state can do to help restaurant and other workers who lose their jobs as a result of a new halt on indoor dining and other restrictions her administration had just imposed to address a spike in coronavirus cases.

Shirkey is not able to endorse the governor’s plan without seeing the details, including the source of funding, McCann said.

"The Senate is actively working on a responsible plan to get dollars to Michiganders in need," she said. "We will share that soon and would welcome support from the Whitmer administration."

The Free Press also left a message with House Speaker Lee Chatfield, R-Levering, on Monday, seeking his response to the proposals from cities and the governor.

More:Letter from Andiamo owners urges Michigan restaurants to defy dine-in shutdown

More:Black Friday shoppers see fewer lines, clear parking lots amid coronavirus surge

Congress remains stalled on a follow-up to the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March. Billions in federal aid helped the state of Michigan pass its 2020 and 2021 budgets without major cuts and while providing relief to cities.

Eric Scorsone, an expert in municipal finance at MSU, said the state actions are needed even if the federal government comes through with short-term relief. That's because the CARES Act or something similar to it provides short-term relief, while municipal impacts from the pandemic will be felt for years, even if a vaccine is soon approved, he said.

Whitmer said in a Wednesday letter to legislative leaders from both parties that Michigan needs "a targeted, state-based economic stimulus plan of up to $100 million that will provide direct financial support to the families and small businesses that have been hit hardest by the pandemic."

She said in the letter that Michigan, which has about $830 million in its Rainy Day Fund, faces a budget shortfall of up to $1 billion in the 2022 fiscal year.

Whitmer also called on lawmakers to permanently extend eligibility for unemployment benefits to 26 weeks, up from 20. That extension also expires at the end of the year. And she also called on a legislated face mask requirement to back up her public health order.

"While there is real hope on the horizon with multiple vaccines becoming available in the coming weeks and months, we are entering what could be a very dark and deadly winter," Whitmer said.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter. 

Become a subscriber.