The big winner among businesses in Gov. Gretchen Whitmer's 2022 state budget proposal may be daycares and service sector companies with lower-paid workers who need daytime child care in order to show up to work each day.
The Democratic governor's daycare plan calls for a three-year expansion of income eligibility for taxpayer-subsidized child care to 200 percent of the federal poverty level — or $52,400 annual income for a family of four — from 150 percent of the federal poverty line or $39,300 annually.
Whitmer's plan also calls for a 10 percent boost to provider rates to daycares that receive state subsidies. And the plan would pay daycares based on the number of students enrolled in their programs, not by attendance, which has fluctuated over the past year because of forced shutdowns and declining enrollment during the COVID-19 pandemic.
Because of budgetary constraints on the horizon in the 2023 fiscal year, the child care eligibility expansion would be temporary through Sept. 22, 2022. The income threshold would then permanently revert to 160 percent of the federal poverty level, state Budget Director Dave Massaron said.
But for the remainder of 2021 and the first nine months of 2022, the governor's plan would expand access to low-cost child care for 150,000 children from working class families, Massaron said.
"How many children take advantage of it, obviously, will depend on the course of the pandemic," Massaron said.
All told, Whitmer's plan calls for a $370 million, multiyear investment in child care programs and the industry itself, including $55 million in direct grants to child care businesses to help them remain open while enrollment remains low during the pandemic.
The governor called the proposed investments a "game changer" for Michigan's workforce, which has seen a disproportionate number of women leave during the pandemic to care for children at home.
"We know the impact that COVID has had on women and working moms," Whitmer said Thursday during a video conference call with reporters. "They've borne the brunt of this economic pain during this pandemic. ... It's been called a she-session for good reason."
To fund this significant expansion of daycare, Whitmer proposes spreading the cost over three fiscal years, starting with this current fiscal year that ends Sept. 30. The three-year cost is estimated at $157.4 million, according to the State Budget Office.
Family copays would be waived, adding another $6.5 million annually to the cost of the program, according to the State Budget Office.
But some families would still have to pay for the difference between the state's set provider rates and the weekly rates a daycare center normally charges, Massaron said.
"It's not free (daycare)," he said.
Whitmer's proposal relies upon $292.1 million in federal funds from the COVID aid bill Congress passed in December that were designated to aid the struggling child care industry.
Boosting provider payments by 10 percent and ensuring they get paid in the event of future coronavirus outbreaks will cost $123.6 million over three years.
The changes would stabilize the daycare industry amid rapid turnover, said Erica Willard, executive director of the Michigan Association for the Education of Young Children, a Lansing advocacy organization whose members include daycare providers.
"Anything we can do to stabilize the industry is good for the field, it's good for programs, which ultimately is good for families in terms of the consistency of the care their kids are able to receive while they're working," Willard said.
Sen. Rosemary Bayer, D-Beverly Hills, said the governor's proposal strikes a balance between increasing child care enrollment and helping the businesses recover.
"The providers have businesses as well," Bayer said. "We have to take care of both sides."
Whitmer's budget plan contained a variety of business-specific proposals. Here are some of the highlights:
- The governor's budget calls for making a $2-an-hour hazard pay premium for direct care workers permanent. Home health care companies have advocated for an increase in Medicaid-funded direct care provider rates to help retain workers in a field that normally pays about $12 an hour. The current pandemic hazard pay for direct care workers is set to expire Feb. 28. To extend it for this fiscal year, Whitmer is proposing spending $43 million in general fund tax dollars ($110 million overall with federal match funding) and $121.4 million from the general fund in fiscal year 2022 ($360 million overall with federal funds).
- Road construction and engineering firms in the bridge-building business could see more work coming from the Michigan Department of Transportation if Whitmer's budget plan is approved. She's proposing a one-time $300 million program to replace or repair 120 bridges deemed structurally unsafe across the state. MDOT officials plan to bundle bridge design-build projects together for bidding purposes. "If additional federal stimulus or infrastructure funds become available, MDOT is prepared to quickly scale the program to include additional bridges," according to a briefing memo for lawmakers.
- In the Department of Labor and Economic Opportunity's budget, there's $25 million to fund the state's Mobility Futures initiative, a collaboration of public and private entities focused on challenges surrounding the deployment of autonomous and connected vehicles.
- The labor department budget proposal also calls for $3 million for skilled trades pre-apprenticeship and apprenticeship programs and a $15 million one-time increase in the Going Pro Talent Fund program, which provides grants to employers that help employees earn industry-recognized certificates and credentials and boost retention.
- The governor's budget calls for pumping $180 million in one-time surplus tax funds into free college tuition programs in order to boost enrollment and worker retraining efforts to help the state emerge from the coronavirus-related economic downturn. Whitmer wants to add $120 million for the newly launched Michigan Reconnect program for adults 25 years or older to get a tuition-free associate degree or industry certificate. She also wants to add another $60 million to a $24 million fund for her Futures for Frontliners program that covers gaps in financial aid for pandemic essential workers who want to gain new job skills. Both worker retraining programs have been backed by the Detroit Regional Chamber, the Small Business Association of Michigan and other business lobby groups.
- Whitmer's funding proposal for cities braces for what's expected to be an influx of nonresident workers in Detroit, Grand Rapids, Pontiac and other cities with an income tax claiming taxable income exemptions in 2020 and seeking refunds for spending months working at home during the coronavirus pandemic. The governor is proposing a one-time payment of $70 million to 24 cities with a municipal tax on individual and business income. The maximum single-city grant of $25 million would go to Detroit, followed by $17 million for Grand Rapids, $6 million for Lansing, $2.8 million for Battle Creek, $2.5 million for Flint and $2.3 million for Pontiac, according to the State Budget Office.
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What's in Whitmer's proposed budget for businesses - Crain's Detroit Business
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