Governor Gretchen Whitmer has proposed an austerity budget for the coming fiscal year with an overall rollback in spending and narrowly focused priorities during her final year in office.
The governor’s budget chief rolled out the $88.1 billion spending plan for the coming fiscal year before a joint meeting Wednesday of the House and Senate appropriations committees. This will be the final budget of the Whitmer administration before she is term-limited out of office.
“This is a budget that helps Michiganders save money, improves student literacy, protects access for health care, and sets Michigan up for long-term success,” said Whitmer Budget Director Jen Flood.
The plan proposes around $625 million to help kids learn to read, spending to attract new business to the state, and tax breaks for seniors and families with kids in school.
The governor’s office spent much of Wednesday’s presentation, however, discussing financial issues facing the state.
Last summer’s One Big Beautiful Bill Act — President Donald Trump's signature tax and spending legislation — added new rules to qualify for Medicaid and put more responsibilities on states for running food assistance programs. Flood said that would be costly for the state as her office proposes hiring hundreds of staff and expanding support programs to adjust.
Between federal changes to social safety net programs and a projected revenue shortfall, state officials said there could be a $1.8 billion funding gap.
The budget proposal suggests filling that hole with some spending cuts along with new revenue from tax increases on nicotine products and online gambling, as well as higher hunting, fishing and boating fees. It would also draw $400 million from the state’s Budget Stabilization Fund, commonly referred to as the “rainy day fund.”
House Speaker Matt Hall (R-Richland Township) said the revenue plans in Whitmer’s budget are non-starters on the GOP side of the aisle.
“We’re not going to raise taxes on vape and alternative nicotine products and other tobacco products,” he said in a press conference prior to the budget rollout. “We’re not going to do a delivery tax. We’re not going to raise taxes on internet gaming. We’re not going to do any of that. There are going to be no tax increases in this budget.”
Hall is the top Republican at the state Capitol. He said he’s pleased to see the governor propose a property tax cut for older adults, but Republicans plan to roll out a bigger plan. Hall said Republicans can support a tax cut for seniors and more spending on student literacy.
Senator Sarah Anthony (D-Lansing), who chairs the Senate Appropriations Committee, said lawmakers will have to be open to uncomfortable options now that the economy is slowing, federal COVID aid is no longer flowing, and revenue is leaner.
“This is going to be a very challenging year,” she said. “We can place blame wherever we want to place it, but the reality is the numbers don’t lie, and so this is going to take a lot of courage from all of us.
Anthony said she would like up-front commitments from all sides to get the budget done by the July 1 deadline set in state law. Last year, lawmakers missed that deadline and also blew past the October 1 start of the fiscal year before getting a budget to the governor’s desk. That left K-12 school districts, public universities, community colleges and many local governments hanging for months into their budget year before they knew what to expect from the state.
The next step is for budget subcommittee hearings to begin. In coming months, the GOP-controlled House, and the Senate, which is controlled by Democrats, will adopt their own versions of budget bills, which will have to be reconciled and sent to Whitmer for her signature and line-item vetoes.
Whitmer was not present at the budget rollout. She will share more on plans for her final year in office when she presents her State of the State address in two weeks.
