Gretchen Whitmer signs COVID spending, vetoes help for Michigan businesses

April 12 update: Whitmer to GOP: Work with me to spend Michigan’s billions from COVID stimulus

LANSING — Michigan Democratic Gov. Gretchen Whitmer on Tuesday signed a major new COVID-19 spending plan but vetoed $652 million in proposals from the Republican-led Legislature and rejected a bill that would limit her pandemic powers.

Whitmer’s signature will authorize the state to spend at least $2.3 billion of the roughly $5 billion in federal funds that were sent to Michigan in December but delayed amid a standoff with Republican lawmakers.

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The plan will pump money into several bipartisan priorities, including $110 million for vaccine distribution, more than $1 billion for schools, $150 million for a pay raise for direct care workers and $283 million for an emergency assistance program for families struggling to pay rent and utilities during the pandemic. 

But small businesses hit hard by the pandemic will not get any relief after Whitmer vetoed $405 million in business tax and fee breaks proposed by the GOP-led Legislature, which rejected her earlier proposal for $225 million in business grants.

“The bills I received were not negotiated with me or my administration, and I continue to call on the Legislature to ensure that we work together to ensure we maximize every penny that is available,” Whitmer said in a statement. 

“There were problems in the bills that I had to veto, and I expect the Legislature to step up to fix the bill to allocate all of the money so we can get back to normal as soon as possible.” 

Republicans and others accused Whitmer of turning her back on small businesses.

“This desperately needed assistance was not tied to any other measure or condition in the relief plan – yet the governor vetoed it anyway, and with it, she is killing off whatever hope struggling families and job providers had left,” House Appropriations Chairman Thomas Albert, R-Lowell, said in a statement. 

Brain Calley, a Republican former lieutenant governor and president of the Small Business Association of Michigan, said Whitmer’s veto “sends a message that the state is not serious about the survival of small businesses.”

Whitmer also rejected $150 million to prop up the employer-funded Unemployment Insurance Fund, $87 million in relief funding for private schools and $10 million in grants for parents to cover their children’s summer school expenses. 

Whitmer did explain those vetoes, but she’s rejected similar proposals for the unemployment trust fund and property tax deferrals before and noted that Republicans did not try to negotiate with her this time around.

Whitmer’s action leaves federal funding unspent and room for more negotiations with the Legislature, whose majority leaders are furious she has continued to impose COVID-19 restrictions without their direct input. 

House Republicans on Tuesday afternoon tried — but narrowly failed — to override the governor’s line-item vetoes, which would have required two-thirds supermajority votes. The unemployment trust fund deposit failed in a 64-45 vote, with a handful of Democrats joining Republicans in the attempt. 

Whitmer had proposed a $5.6 billion COVID relief plan in January, but the Legislature sat on the funding for weeks while trying to use it as leverage to force policy concessions. 

Republicans sent her a $4.2 billion plan last week, which she scaled back to $3.5 billion with a series of line-item vetoes.  

Roughly $1.2 billion of that — all federal funding — remains in limbo as the governor’s legal team reviews the legality of strings attached by the Legislature. 

Whitmer chopped one of those strings Tuesday, vetoing a GOP bill that would have prohibited the state health department from closing schools or sporting events in the event of an outbreak. 

The Legislature tried to make $841 million in K-12 education funding contingent on the governor signing that policy bill, and it’s not immediately clear what happens next. 

Republicans contend the money goes back into the bank for future negotiations, but it’s possible the governor could declare the GOP language unconstitutional and try to spend the money anyway. 

In her veto letter, Whitmer told lawmakers her legal team is still reviewing that question, but she signed the proposal before the analysis is complete “in the interest of getting this money to work for Michigan.”

Senate Appropriations Chairman Jim Stamas, R-Midland, accused Whitmer of putting “her absolute power” ahead of relief funding, calling it a “sad day for our system of government, our students trying to catch up, and the family-owned businesses trying to survive after being shut down by the governor without a path for reopening.”

Whitmer also vetoed a measure that would have transferred the power to close schools and sports to local health departments, and only allow them to do so based on COVID-19 case counts and other metrics. 

The Michigan Association for Local Public Health argued the measure would create “variation and confusion,” noting that school district boundaries don’t overlap exactly with those of health departments.

The Legislature also tried to make $347 million in federal funding for contact tracing and lab testing contingent upon Whitmer signing a Senate GOP bill that would prohibit the state health department from extending epidemic orders beyond 28 days without legislative approval.

Whitmer is expected to veto that bill as well, but it has not yet actually reached her desk. 

It’s possible the Whitmer administration could still spend funding the GOP had tried to use as leverage for policy concessions, according to Democratic attorney Steven Liedel, who served as chief legal counsel to former Gov. Jennifer Granholm. 

That’s because by tying the spending to an unrelated bill, Republicans may have violated the “object-title” clause in the Michigan Constitution, Liedel said, referencing a requirement that “no law shall embrace more than one object, which shall be expressed in its title.”

Legislative Republicans are attempting to “force approval” of a “provision that would otherwise not be approved on its own,” Liedel told Bridge Michigan. “That’s known as log rolling, and it’s inconsistent with the purpose of the title-object clause.”

Whitmer could use her unilateral authority to declare the GOP language unconstitutional or unenforceable, which would allow the state to spend the federal funding unless it is blocked by a court, which Liedel called an unlikely scenario. 

“I’ve never seen the Legislature or other groups successfully use the courts to alter the governor’s course of action,” he said. “There isn’t any precedent for that.” 

In the meantime, more negotiations are likely as Michigan has more than $1 billion in unspent federal money, and Congress is on the brink of approving another relief package that will send another surge of cash into the state. 

In a Tuesday letter, Budget Director Dave Massaron requested a meeting with House and Senate appropriations chairs to open talks on the state’s next supplemental spending plan. 

“The items that were vetoed in the recent set of bills sent to us by the Legislature represent key points of difference between us, but it does not represent an unwillingness to work together,” Massaron wrote. 

“If we can get together in a room and discuss our common goal to help the people of Michigan, I believe we can come to an agreement on putting the remaining federal dollars to work for our state.”