Federal Spending Blowout — In Michigan’s Budget

Federal funds in the Michigan state budget for the 2018-19 fiscal year — the last budget before the pandemic started — came to $23.2 billion. The pandemic began during the FY 2019-2020 budget, which ended on Sept. 30, 2020. In that year's budget, the state received and spent $33.7 billion in federal funds, a 45% increase over the previous year.

The current (2020-21) state budget includes $25.7 billion in federal funds. The governor had proposed including $28.4 billion in federal transfers, or 22% more than pre-pandemic levels.

That $25.7 billion figure does not include additional dollars that may flow from congressional Democrats’ efforts to enact a large stimulus spending program. One recent draft would add $5.7 billion more for Michigan lawmakers to spend this year.

The current deluge in federal transfers is the second in recent times. In the 2007-08 fiscal year, federal funds in Michigan’s state budget rose from $14.7 billion to $21.1 billion in FY 2008-09, a 44% increase. That increase was due to then-President Barack Obama’s American Recovery and Reinvestment Act, also dubbed a stimulus.