Coalition Letter Urges Fiscally Sound Approach to Federal Funds
Lawmakers should be cautious with American Rescue Plan Act Funds
Tuesday, March 23, 2021|Font size:
MIDLAND, Mich. — The Mackinac Center for Public Policy, along with eight other organizations, signed onto a letter to the Michigan Legislature with recommendations for how the state should approach allocating the $5.7 billion in state funds it will soon receive from the American Rescue Plan Act.
“Michigan’s state budget was already made whole by the previous two tranches of federal stimulus dollars,” said David Guenthner, the Mackinac Center’s senior strategist for state affairs. “Legislators should be cautious about accepting these federal funds and deploy them responsibly if they do.”
The coalition letter outlines five principles that lawmakers should keep in mind with regards to these funds:
Exercise due diligence and don’t be in a hurry to accept these monies.
Do not allow federal funds to undermine previous policy decisions.
Do not create ongoing obligations from one-time funds.
Prioritize ideas that will improve the state’s long-term financial picture.
Remember that local governments and schools have their own pots of money from federal aid.
“Applying these principles will strengthen the state as it emerges out of the pandemic,” said James Hohman, the Center’s director of fiscal policy. “Following them will help lawmakers put this money to good use and help the state over the long term.”
The letter recommends four priority areas to focus on if the state decides to accept these funds: direct business relief, fiscal stability, unemployment insurance and infrastructure.
“Keeping the state on firm fiscal ground means making sound fiscal choices,” said Michael LaFaive, senior director of fiscal policy at the Mackinac Center. “That means prioritizing items such as working to make whole the many small businesses unfairly victimized by the governor’s arbitrary and unnecessary shutdowns, filling the state’s rainy day fund, replenishing dollars lost in the state’s unemployment insurance fund and investing in efficient road and bridge repair. It does not mean creating new programs that commit Michigan taxpayers to new spending on new programs or underwriting demonstrably bad ones.”
The letter was transmitted to all legislators and the governor’s office earlier today. In addition to the Mackinac Center, other organizations signing onto the letter were: Americans for Prosperity-Michigan, Associated Builders and Contractors of Michigan, Grand Rapids Area Chamber of Commerce, Michigan Chamber of Commerce, Michigan Freedom Fund, Michigan Restaurant & Lodging Association, National Federation of Independent Business-Michigan and Small Business Association of Michigan.
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