Michigan lawmakers pass $84B budget, 67 bills in marathon session

After missing budget deadline, Michigan Legislature works through the night to finalize a new $84 billion spending plan
Lawmakers also sent more than three dozen policy bills to Gov. Gretchen Whitmer’s desk, tripling their total from first half of year
Governor and legislative leaders praised the final production, but some criticized the process and various spending changes

LANSING — After working for nearly 24 straight hours, Michigan lawmakers on Friday morning passed a compromise budget to fund the state government and schools for the next fiscal year.

The Legislature began session Thursday and worked through the night, giving final approval to more than 60 policy bills before approving a fiscal year 2027 spending plan shortly after 8 a.m. Friday, the state’s observed Independence Day holiday.

The budget totals $75.1 billion on paper, but like last year, that figure does not include Medicaid provider tax revenue that lawmakers instead put into a contingency fund. That means the final spending plan is closer to $84 billion.

Additional creative accounting in the education budget obscures the amount of federal funding the state may spend next year. Still, House Republicans celebrated the budget as a decrease in spending from the current fiscal year.

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The final product is a balanced, bipartisan budget that “delivers for every Michigander,” Democratic Gov. Gretchen Whitmer said in a statement, citing new investments in student literacy and continued funding for other priorities.

In a divided Legislature, with a Republican-majority House and Democratic-controlled Senate, negotiations between legislative leaders and the Whitmer administration were lengthy and fraught.

The final push

For the second straight year, lawmakers missed a legal July 1 deadline to get the budget done, leaving schools to finalize their own funding plans without knowing exactly how much money they’ll receive.

But unlike last year, lawmakers completed the budget well before the start of the next fiscal year on Oct. 1, averting any prospect of a state government shutdown.

On Thursday afternoon, ahead of budget votes, Republican state Rep. John Roth of Interlochen downplayed the July 1 deadline that is written into state law, saying the budget was far enough along that schools had sufficient guidance to craft their own spending plans.

“I talked to most of my schools; they’re not upset,” Roth said. “Sure, they would have loved to have it by (June) 30th, but if it’s done this week, they’re fine.”

Some lawmakers, though, decried yet another year of last-minute negotiations and rushed votes.

“The entire budget, over 1,000 pages, passed here in the middle of the night, given to us about 40 minutes ago and no one knows what’s in (it),” said Sen. Jim Runestad of White Lake, who is also the chair of the Michigan Republican Party.

No new taxes

Michigan’s state government is still facing substantial federal funding cuts due to President Donald Trump’s One Big Beautiful Bill, a shortfall that some experts have calculated could exceed $1.1 billion by 2032.

Whitmer had proposed a series of new sin taxes on smokeless nicotine products, sports betting and online advertising to bolster Medicaid and close the funding gap with $800 million in new revenue, along with a transfer from the state’s “rainy day” fund.

But in an election year, that proved too tough a sell for lawmakers, who instead opted to make some cuts and shift money around. That includes a record $1.7 billion in School Aid Fund revenue for community colleges and universities, a practice that K-12 school groups have decried.

Still, Whitmer touted the Legislature’s approach as a win, saying in a statement the budget “cements Michigan as a national leader in response to” Trump’s tax cut law, “including a proactive, comprehensive plan to help Michiganders maintain access to health care and food assistance following cruel policies passed out of Washington, DC.”

Senate budget committee chair Sarah Anthony, a Lansing Democrat, called the move a necessary shift.

“We unfortunately had to make the math work,” Anthony said, noting, “what we didn’t do is raise taxes or take money from the rainy day fund” as Whitmer had proposed but House Republicans strenuously opposed.

School funding, creative accounting

Overall, the new School Aid budget for K-12 schools totals $19.8 billion, down 7% or $1.2 billion compared to the current year. But that is attributable to creative accounting that could allow lawmakers to say they’re reducing the budget even if spending ends up increasing.

How? The budget reduces federally funded grant authorizations for school lunches, low-income and special education students by a combined $1.5 billion but simultaneously allows the state to appropriate “all available federal funding.” That means what appears to be a $1.2 billion budget cut on paper could end up as a $300 million spending increase.

The final education budget:

Increases the per-pupil funding allowance for schools by $250. The bump from $10,050 to $10,300 will cost the state an additional $323.7 million. The budget includes another $150 million in one-time funding for per-pupil payments to increase educator compensation.
Boosts spending on targeted initiatives, especially programs aimed at helping improve poor student reading scores. It includes $65 million in additional funding for LETRS teacher literacy training, $10.5 million in extra funding for literacy coaches, $50 million for “high-impact tutoring” grants and $30 million early learning partnerships.
Cuts $45 million in spending on “grow your own” program grants for school support staff to earn teacher certifications and $71 million in “enrollment stabilization” funding to help offset losses for districts with declining enrollment, among other things.
Ditches culture war penalties proposed by House Republicans, who had wanted to cut up to 20% of funding for any district that uses state funding for diversity, equity or inclusion initiatives, allows transgender girls to participate in girls’ sports or has multistall unisex bathrooms.
Continues the state’s universal free student meal program, increasing funding by $400,000 to cover anticipated increased costs.

State Superintendent Glenn Maleyko praised the new literacy spending, calling it “one of the most significant investments” in the education budget, and school groups praised a shift toward a weighted funding formula.

But Bob McCann, a former legislative staffer for Whitmer who is now executive director of the K-12 alliance, criticized the final plan.

“I have no doubt Gov. Whitmer and legislative leaders will pat themselves on the back and claim they provided schools with ‘record funding,’ but the reality is this legislative malpractice provides below-inflationary funding increases, was turned in late, and plays political games with $1.9 billion in federal money for special education that raises real questions as to whether that money will actually reach our classrooms,” McCann said in a statement.

Flurry of bills, ‘cooling off period’

In the run-up to the final budget votes, the dam on Michigan’s long pent up backlog of legislation finally burst.

The politically divided Legislature had been off to a historically slow start — sending Whitmer just 21 bills through the first half of the year.

Yet in less than 24 hours over Thursday and Friday, lawmakers sent 67 bills to Whitmer’s desk — more than three times their prior total — many in the middle of the night with little or no debate.

Ahead of the budget votes, legislative leaders had said they anticipated a number of “policy bills” could be included alongside budget negotiations. And by Thursday night, negotiators emerged with a long list of legislation that lawmakers proceeded to approve.

Those included:

Key legislation that could fund much-lobbied-for public subsidies for the partial demolition and renovation of Detroit Renaissance Center. The reauthorization to the transformation brownfields program would allow companies to keep the income tax withholdings of employees at sites within the program, which billionaire businessman Dan Gilbert has argued is necessary for that project on Detroit’s riverfront.
Dam safety legislation that both parties in both chambers had proposed, but squabbled over who could receive credit.
A 2-year “cooling off period” before legislators, governors, lieutenant governors or department directors can become registered lobbyists, a long-sought reform from ethics-in-government advocates.
A wildlife-feeding bill previously vetoed by Whitmer is again heading to her desk for approval. Political dynamics surrounding the Department of Natural Resources have changed this year, as House Republicans have looked to use the agency’s budget as a bargaining chip to achieve their policy goals including weakened regulations from the department.
A ban on large institutional investors from buying residential properties. Those are companies that own more than 100 homes or control more than $375 million in assets.

Other campaign season priorities, such as property tax cuts or medical debt relief, did not make it into the flurry of late-night action.

$125 million in earmarks

The budget headed to Whitmer’s desk for signature includes $125 million for 135 different earmarks requested by lawmakers.

That’s down from $160 million in pet projects included in the current-year budget, and far less than the combined $4.2 billion in earmarks lawmakers had requested.

Among the biggest allocations: $6 million for the Jewish Federation of Detroit to implement safety and security measures, $3.73 million for water main replacement projects in Utica and $3.5 million for road repairs on Rivergate Drive in Macomb County.

No cuts for U-M, MSU

The education budget includes 1% funding increases for operations at community colleges and Michigan’s 15 public universities.

That’s far different from the 27% reduction proposed by House Republicans, who had wanted to cut $470.6 million in spending, mostly for the University of Michigan and Michigan State. Under the final deal, U-M and Michigan State will each see a 0.9% funding increase.

The final deal also expands eligibility for Michigan Reconnect program that pays for community college by lowering the minimum age from 25 to 21 years old, a priority for the Whitmer administration, which had temporarily expanded eligibility before.

Other budget moves

House Appropriations Chair Ann Bollin, R-Brighton, said the final state budget pushes the state government to “live within its means, spend responsibly and focus on results.”

Anthony, the budget chair for Senate Democrats, told reporters after the budget vote she was disappointed the state did not do more to share revenue with local governments.

The money paid to Michigan’s local government will slightly drop by about $10 million, compared to last year, due to softening projections for state revenue.

Some other notable budget moves:

The state expects food stamp work requirements will save the state $71 million as the number of recipients declines. Implementing work requirements for SNAP and Medicaid, however, is expected to cost the state nearly as much.
A proposed $43 million grant to buy new voting machines statewide did not make the final cut. The House Fiscal Agency reports “much of the equipment has reached the end of its lifecycle.”
Lawmakers cut funding for the Pure Michigan tourism campaign to $11 million, down from $17 million.
The state will not fund a new database that’s a federal requirement for social safety net programs to comply with the One Big, Beautiful Bill Act.
The spending plan creates a new program to incentivize government hires by emphasizing public service student loan forgiveness.
But House Republicans say the budget eliminates 250 vacant jobs across state government and directs departments to “develop return-to-office plans” for their employees.
It also eliminates a $20 million federal funding allocation to Rx Kids, the cash-for-moms program that GOP lawmakers have been scrutinizing despite mostly positive research about its impact.
Provides $350,000 to combat plummeting whitefish stock levels in the Great Lakes, which is lower than some policymakers had hoped given the dire state of the fishery.