Priorities for American Rescue Plan Act Funding

After decades of disinvestment, critical programs and services have been underfunded, making it harder for kids, families and workers to thrive. The COVID-19 public health crisis made these inequities even more apparent. Michigan lawmakers have come together in a bipartisan manner to address the needs of some businesses and make some of the investments necessary to open schools safely and keep our kids learning in a safe environment. However, with billions still remaining from the state’s anticipated $6.5 billion in state fiscal recovery funds from the American Rescue Plan Act, the state should, in a similar bipartisan fashion and with the same sense of urgency, seize this historic opportunity to invest in its people and create an equitable recovery. 

To ensure that we move forward with a better economy and stronger communities, Michigan lawmakers should spend this federal relief where it is needed most: to create opportunities and improve life for Black and Brown Michiganders and for residents with low incomes–they have been hit hard by the pandemic and face long inequities due to racism and discrimination. Michigan lawmakers should also make budget decisions that address the future, not just create patches for the dire problems that currently exist.

Strengthen Michigan’s safety net programs
The COVID-19 public health crisis has made it apparent that our safety net programs, like food and cash assistance, are not prepared to handle crisis-level needs. Despite restrictive state policies, including a rigid 48-month lifetime cap on cash assistance and asset tests to receive federally provided food assistance, the COVID-19 pandemic showed how necessary these programs are. In fact, the need for basic income assistance from the Family Independence Program (FIP) doubled in just a few months after the onset of the COVID-19 pandemic. To that end, Michigan policymakers should review policies around the state’s safety net programs to make them more responsive to need, including improving Michigan’s cash assistance policies to help more Michiganders in high-need, such as expanding eligibility, lengthening Michigan’s strict lifetime limits, and increasing the grant; eliminating the asset test on food assistance; and making improvements to Michigan’s unemployment insurance system.

Assist workers and Michigan residents looking to return to work
Throughout the pandemic, Michiganders left the workforce due to child care issues, business closures, for mental health reasons, and others in between. While existing long before COVID, the pandemic exacerbated disparities experienced by Black and Brown workers, workers with low incomes and Michigan residents working in frontline jobs. The American Rescue Plan Act dollars should be used to help support the equitable recovery for these workers. Michigan should continue to support our frontline workers and help provide increased wages for support staff in the healthcare and nursing home industry, such as custodial and food-service workers. Policymakers should also use these funds to help support and expand adult education, continue funding the Michigan Reconnect and Futures for Frontliners programs, and improve access to affordable, high quality child care in efforts to reduce poverty and increase opportunity. 

Improve access to healthcare
Barriers to health existed long before COVID-19 for our Black, Brown, Indigenous, and immigrant communities, but the pandemic clearly exacerbated these barriers and made the disparities more evident. Many Michigan residents went without basic preventative care and mental health services even though need for these services was high. The American Rescue Plan Act funding, while it cannot make up for the disinvestment in our low-income communities, can start to break down the systemic barriers experienced by Michiganders and improve health equity for all. To that end, policymakers should target funding to our communities most in need, including increasing testing and lab capacity in communities hit hardest by COVID, encouraging vaccine distribution, and funneling additional funding to our local public health departments so that Michigan residents are able to access the care they need. 

Address ongoing housing needs
When COVID-19 significantly slowed down the national economy, many Michigan residents worried about their ability to continue paying their mortgage and rent, especially when they were unable to work. The American Rescue Plan Act, like prior federal aid legislation, included targeted rental assistance to ensure families were not evicted from their homes. However, despite this aid, Michigan’s housing needs remain high. State fiscal recovery funds could be used to help improve access to affordable housing by providing a significant down payment into the Michigan Housing and Community Development Fund, establishing funds to incent landlords to accept Housing Choice Vouchers and other non-wage sources of income, and provide housing navigation services or eviction prevention assistance.

Avoid broad-based tax cuts that won’t restart the economy
We learned through the Great Recession, from which the state still has not fully recovered, that tax cuts for the wealthy and budget cuts to critical services will NOT get the economy moving again. These strategies simply made it difficult for the state to make long-term investments in its people and its communities. Tax cuts like these were an ineffective strategy at the time, and they are a bad idea now. In fact, the American Rescue Plan Act discourages states from making significant state tax cuts by clawing back federal aid from those that do. However, targeted tax relief to the Michigan families most in need, through an expanded state Earned Income Tax Credit (EITC), should be considered. The EITC helps families with low to moderate incomes continue to make ends meet by allowing them to pay for everyday needs such as utilities, transportation, child care, and groceries.