• Most of $645 million in state funding at the center of House Republican lawsuit can’t be canceled anyway, an attorney said Friday in court
  • GOP-led House committee last month blocked a funding extension request, a vote Attorney General Dana Nessel deemed unconstitutional 
  • A Court of Claims judge said he’ll rule next week whether to freeze the funds while the suit plays out

LANSING — A state judge on Friday froze millions of dollars in state spending as Michigan’s Republican-led House and Gov. Gretchen Whitmer’s administration wrestle over who can decide the fate of the funds. 

The Michigan House Appropriations Committee in December voted to block $645 million in funding the administration had sought to extend. This month, the House sued state departments preparing to resume the spending after Attorney General Dana Nessel deemed unconstitutional the rarely-used provision in state law the committee had leveraged.

But during oral arguments held Friday in the Michigan Court of Claims, a state attorney said the administration had already committed to spending most of the $645 million in question. 

“Approximately 70%” of the funding the State Budget Office had requested to extend for four more years had already been “encumbered” ahead of the House committee vote to send the money back to the state’s general fund, assistant attorney general Adam de Bear told the court.

None of the attorneys at the hearing were able to say how much of the funding remains unspent or unencumbered.

“I never represented that the state is still spending this money. I represented that I did not specifically instruct them not to spend this money,” de Bear said Friday. “Unclear as to whether that’s happened.”

RELATED: 

In a ruling issued hours later, Judge Michael Gadola ordered the state to freeze the remaining funds, saying the administration was “enjoined from encumbering, expending, transferring, or otherwise obligating” any money that had not already been encumbered by Sept. 15. 

In a legal brief filed ahead of the hearing, attorneys for the Michigan Economic Development Corporation said $92 million of its $104 million in funding wrapped up in the larger debate had “already been properly and timely encumbered by the statutory deadline” — before the end of the fiscal year — meaning that spending cannot be stopped. 

The math was “incorrect” in an initial State Budget Office letter requesting the Legislature carry over funding that was not spent last year, according to MEDC attorney Scott Eldridge. It was based on outdated numbers from August 2025, more than a month before the end of the fiscal year.

Eldridge said that freezing properly encumbered funds would “expose the MEDC and the (Michigan Strategic Fund) to a large degree to breach of contract claims.”

According to the State Budget Office’s request, the canceled funding included $159 million for the Whitmer-backed Make It In Michigan Competitiveness Fund, along with grants for various groups, like a cash assistance program for new moms and an organization that provides wigs to kids with cancer.

The House committee’s December vote had unilaterally canceled a litany of previously funded state projects, but after Nessel’s opinion was issued, the state quickly resumed the planned spending, and Gadola appeared to take some umbrage with the lack of restraint. 

“You’re kind of forcing my hand,” Gadola told de Bear, indicating he intended to issue a written ruling on whether to freeze the funds next week. 

Gadola seemed skeptical that a legislative committee’s ability to block executive funding extensions is unconstitutional, and if it is, why that wouldn’t also block the executive branch’s ability to extend funding beyond budgetary specifications.

But Gadola said he wouldn’t rule immediately to send those grant funds back to the state treasury, and at most would hold them in place while the lawsuit plays out.

Under a 1984 law, the State Budget Office, currently controlled by Whitmer appointees, can extend time limits on previously approved funding via requests to the House and Senate’s budget committees to make them “work projects.”

Instead of requiring both chambers to approve the requests, the law says the funding is automatically carried over for four years as work projects if lawmakers take no action. But either chamber’s budget committee can explicitly disapprove a request and send unspent funding back to the state general fund.

In her opinion, Nessel said that mechanism unconstitutionally allows the Legislature to take control from the executive branch and argued any action to block department spending, once the appropriation becomes law, should require formal action from both chambers.

Sean Dutton, an attorney for the House, argued the inverse, characterizing the law as a “grant of specific gubernatorial power with a check reserving what is already the legislative power.”

Dutton added, “the House Appropriations and Senate Appropriations Committees’ veto power over that procedure is a reservation of the existing power we already have.”

While opinions from the attorney general are binding on state officials and agencies, courts can ignore them and override them with decisions of their own. Gadola said from the bench that the ability to request funding extensions “isn’t an inherent executive power.”

“I don’t know how the statutory scheme can live on without both of those provisions being operative,” Gadola told de Bear. “I think what you’d be asking me to do is just sort of brush aside the quite obvious intent of the Legislature.”

Gadola said the Legislature “never would have granted the power” to request work projects if they believed a judge would later “determine that they didn’t have any say over the designations made by the budget director.”

An elected member of the state Court of Appeals, Gadola worked under Govs. John Engler and Rick Snyder before his appointment in 2015.

Creative Commons License

Republish our articles for free, online or in print, under our Republication Guidelines. Questions? Email republishing@bridgemi.com