Michigan to Cut Hours for 31,000 Workers to Cope With Budget Hit

(Bloomberg) -- Michigan is poised to force as many as 31,000 state employees to take unpaid days off to cope with the steep drop in tax revenue caused by the pandemic.

The state will require employees to take two days off every two weeks from May 17 to July 25, a step that Governor Gretchen Whitmer said is expected to cut payroll costs by $80 million. Some employees will be allowed to collect unemployment benefits for the days they’re idled under a federal program that provides compensation to workers whose hours are cut.

The decision to scale back the schedules of about 64% of the state’s workforce shows how quickly the economic contraction is rippling through the finances of local governments. The swift disappearance of tax collections brought on by surging unemployment and business closures led House Democrats to include about $1 trillion of aid to states and cities in the latest stimulus proposal.

The Michigan layoffs won’t affect law enforcement, prison, veterans’ home and other health workers. Whitmer and her cabinet officials will also take 10% and 5% pay cuts, respectively, for the remainder of the fiscal year.

The state is projecting a $2 billion to $3 billion revenue shortfall for this fiscal year, which ends June 30, and $3 billion to $4 billion for fiscal 2021, according to its budget office.

It has already done a round of temporary layoffs that affected 3,000 employees.

“As we continue to combat Covid-19, it’s clear that we’re facing unprecedented challenges that will lead to serious budget implications for the state of Michigan,” Whitmer said in a statement.

©2020 Bloomberg L.P.