Update: Gretchen Whitmer signs COVID spending, vetoes help for Michigan businesses

LANSING — Michigan’s Republican-led Legislature finalized its long-awaited COVID-19 plan on Wednesday, authorizing the state to spend $3.45 billion out of roughly $5 billion in federal funding sent here in December by Congress and former President Donald Trump.

Democratic Gov. Gretchen Whitmer wanted a $5.6 billion plan and is likely to veto some of the proposed funding because it’s tied to separate bills that would force her to give up her authority to respond to the pandemic.

The plan, which includes state funding and totals $4.25 billion, passed with bipartisan support and clears the way for increases in education funding, vaccine distribution, temporary business tax breaks; unemployment assistance and help for renters and those behind on their property taxes.

The plan — negotiated without Whitmer’s input —  follows two months of disagreement about the consequences of not immediately allocating all federal money directed to Michigan for the pandemic. Left unspent is about $1.5 billion in federal money, which could grow to at least $2.6 billion if Whitmer vetoes controversial GOP positions. 

Republicans say they can spend the money later this year and preserve some bargaining power with the Democratic governor. Whitmer and others accuse lawmakers of jeopardizing public health and school funding.

So who’s right? Bridge Michigan has spent weeks delving into the claims and has perhaps unsurprisingly discovered that both sides are guilty of exaggerating the facts.

Here’s a look at the claims that surround the debate.

The claim: Michigan may get fewer vaccines

Whitmer has said spending delays by the Michigan Legislature could create a “funding gap” that discourages suppliers and may “slow down the number of vaccines that we’re getting into arms every single day.”

House Minority Leader  Donna Lasinski, D-Scio Township, said Wednesday the GOP plan “will delay the distribution of life-saving COVID-19 vaccines.” 

That is unlikely. The Republican proposal authorizes the state to spend $110 million on vaccine distribution, up from the $90 million Whitmer initially proposed in January. 

Fine print in the bill means only about one-third of that funding — about $36.3 million — could be spent immediately. The other $73.7 million could be spent through a legislative transfer that would not require full votes in the House or Senate. 

The federal government is paying for vaccine doses from Pfizer, Moderna and now Johnson & Johnson, and the Whitmer administration still has about $2.4 million in federal reserves to spend on PPE and other supplies, according to the state budget office. 

There’s no evidence legislative delays have cost Michigan vaccines. Instead, shipments are increasing daily and expected to hit 4 million by April.

“Our understanding is that the federal allocations to states are based on state share of the adult (18+) population,” said Samantha Artiga, vice president and director of the Racial Equity and Health Policy Program at KFF, a health policy nonprofit once known as the Kaiser Family Foundation.

Bottom line: Michigan is getting more vaccines, not less, despite months of Republican delays in appropriating federal funding.

The claim: Money is withheld because Whitmer ruined the economy

Republicans who made more than $1 billion in federal funding contingent upon giving up power and did not appropriate another $1.5 billion made clear they were trying to send a message to the Democratic governor. 

“Gov. Whitmer, your strictest in the national restrictions are crippling the foundation of our economy, our small businesses,” said House Appropriations Chairman Thomas Albert, R-Lowell. “Your measures are not used on science, but are calculated measures to retain power.”

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Some researchers, however, have said that Whitmer policies likely prevented COVID-19 deaths and slowed the spread of the virus, which has killed more than 15,000 people in the state since March. 

Economists have told Michigan lawmakers that the virus, not necessarily government restrictions, is the biggest influence on the economy.

It is true that Michigan small businesses have fared somewhat worse than neighboring states like Ohio and Indiana, but not by huge margins, according to economic tracking data from a collaborative that includes Harvard University. And small business performance in Michigan is similar to Florida, which has among the fewest restrictions in the nation. 

Small business revenue is down in both Michigan and Florida by about 35 percent year-over-year, according to the Opportunity Insights tracker, compared to decreases of 30 percent in Ohio and 29 percent in Indiana.

Overall consumer spending is up 4.3 percent in Michigan, which is more than the 3.2 percent increase in Ohio and comparable to the 4.4 percent increase in Florida.

Bottom line: While the pandemic has taken a heavier toll on Michigan’s economy than some other states, business performance has beaten dour expectations. Ongoing restrictions harm some industries, but they haven’t devastated the overall economy. 

The claim: Republicans are holding school funding ‘hostage’

Democrats and school advocacy groups have accused Republicans of using Michigan students as pawns in a political fight by holding federal school funding “hostage” and attaching poison pills that would deter Whitmer from signing their bills. 

There’s some truth to the claim, even if the consequences aren’t as dire as Democrats contend.

The plan now heading to the governor’s desk would send schools nearly $1.8 billion in federal funding to help them resume in-person learning, prepare summer school programs and develop other remediation programs to help students catch up from any losses during remote learning.

One big catch: The GOP plan makes nearly half of the money — $841 million — contingent on Whitmer signing a separate House bill that would bar the state from closing schools or sporting events in the event of outbreaks. Local health officials could do so instead, but only if coronavirus case counts reach certain thresholds.

That’s likely a non-starter for Whitmer, who has resisted repeated attempts to diminish her authority during the pandemic.

If she vetoes the bill, that doesn’t mean the money goes away. It could still be released later by the Legislature, but schools say they need the money now to pay for things like upgrading air filtration systems and developing summer school to help students who have fallen behind.

Schools are “desperate ... because they don't have certainty on how much money they're getting or when they're getting it,” said Bob McCann, executive director of the K-12 Alliance of Michigan, a statewide education policy and advocacy group. 

Bottom Line: No doubt, withholding some money as leverage has caused heartburn for school leaders. But even with a veto, schools will receive nearly $1 billion in new funding now and likely the rest later this year.

The claim: Michigan must ‘use it or lose it’

Democrats contend that Michigan could lose some of the federal funding if the state does not spend it immediately. 

“Make no mistake, these dollars or use it or lose it,” Lasinski, the House Democratic leader, said on Feb. 4. “And you’re saying to Michiganders, we’d rather have you lose it than have them here working in Michigan.”

The claim is more false than true. Experts say most of the $5 billion in federal relief is not time sensitive and there’s no jeopardy in appropriating some later.

There are some exceptions, including $1.66 billion for schools through the federal Elementary and Secondary School Emergency Relief Fund, which must be appropriated to local districts by January 2022 and spent by those districts by October 2023 or returned.

That gives the Legislature nine months to appropriate the money.

“I don't think the money is in jeopardy of being lost,” said Craig Theil, research director at the non-partisan Citizens Research Council of Michigan.

Another $661 million for a rental assistance program is also time sensitive. Michigan must spend at least 65 percent of that — about $430 million — by the end of September or send some of the money back to Washington, D.C. To avoid any federal recapture, Michigan would have to spend about $60 million a month on the program if it began in March.

The GOP spending plan would only authorize the administration to spend an initial $220 million on the program, which is designed to help households that are unable to pay rent or utilities during the COVID-19 pandemic. That funding would likely last less than four months, requiring an additional authorization by mid-June for the assistance to continue.

Bottom line: As of now, Michigan doesn’t face any threat of losing federal funding and any remaining funds are safe in the bank. That could change if the standoff drags deep into the summer.