- Michigan lawmakers passed a nearly $81B state budget early Friday morning, putting an end to a months-long budget stalemate
- The plan contains nearly $2B for roads, cuts vacant government jobs and continues free student meals
- Absent from the budget: $50M in funding for a controversial UP mine, no new fees on hunting and fishing licenses, and culture war issues
LANSING — Michigan lawmakers broke a prolonged partisan stalemate early Friday, approving a new state government budget that boosts funding for roads and schools but cuts vacant jobs and money for a high-profile business incentive program.
The spending plan totals nearly $81 billion when counting about $5 billion in Medicaid provider tax revenue that was moved into contingency funds. That’s less than the $82.5 billion version Whitmer signed last year, but more than the $78.5 billion version pushed by House Republicans.
The budget was finalized at 1:47 a.m. Friday – two days after the politically divided Legislature missed the constitutional deadline to pass a spending plan but passed a stopgap bill to avoid a state government shutdown. The Democratic-led Senate gave final approval to a key component of the deal — a new 25% wholesale marijuana tax — at 3:15 am.
“This budget proves government can be responsible with taxpayer dollars while still delivering the resources our families, students, and communities depend on,” House Appropriations Chair Ann Bollin, R-Brighton, said in a statement after the final votes.
The votes capped another marathon session in the Legislature, where lawmakers convened early Thursday but did not see the full budget bills until evening.
A general government spending bill passed the Republican-led House 101-8 and the Senate 31-5. A separate education spending bill passed the chambers in 104-5 and 31-5 votes, respectively. Both were heading to Gov. Gretchen Whitmer for expected signature.
“It looked like this was out of reach, getting a budget that made sense for Michigan … but I’m really proud that we were able to come together and get that done,” Rep. Alabas Farhat, D-Dearborn, told reporters.
Here’s a look at winners and losers in the new budget:
Winner: The ‘damned roads’
Nearly seven years after she first won election on a promise to “fix the damn roads,” Whitmer found a Legislature willing to approve a long-term road funding plan, albeit one that is smaller than the $3 billion version she proposed earlier this year.
“I ran for office in large part because I wanted to fix the damn roads,” she said in a statement early Friday morning. “With this budget, we’re locking in a significant, bipartisan investment to fix state and local roads for decades to come, creating and protecting thousands of jobs in the process.”
The deal is expected to eventually generate more than $1.8 billion a year for roads, including about $1 billion this fiscal year as it takes effect. Most of that will go to local roads. Here’s the breakdown in new road spending for fiscal year 2026:
- State trunkline: $179.7 million
- Cities/villages: $246.1 million
- Counties: $456.7 million
- Rail grade separation fund: $40 million
- Local bus operations: $42.4 million
- Infrastructure protection authority: $65 million
- Airport improvement program: $6.8 million
- Detroit airport: $6 million
Loser: Marijuana industry
The roads portion of the budget anticipates $420 million a year from a new 24% wholesale marijuana tax set to begin in January. The House approved the new tax last week in a 78-21 vote, and passed the Senate about 90 minutes later.
Marijuana industry advocates have decried the plan, arguing it will lead to higher prices for consumers, force companies out of business and benefit the illegal black market.
“This is going to drive Michigan customers out of the legal market,” said Sen. Jeff Irwin, D-Ann Arbor, who opposed the bill. “This is telling customers from other states, ‘Stop bringing your money to Michigan.’”
Another large chunk of road funding — $688 million this year, $1 billion by fiscal year 2030 — will come from corporate income taxes. A related bill will delay some state tax breaks that businesses were expecting because of President Donald Trump’s “big, beautiful” law.
Business groups opposed the measure, arguing it amounts to a tax hike on job creators.
Winner: Free school meals
The budget will continue to make school meals free for all students, a top priority of Whitmer and Senate Democrats. It includes $201.6 million to cover meals for students who don’t qualify for no-cost programs through the federal government.
The budget includes a record $10,050 in per-pupil funding for Michigan schools, up from $9,608 this year, and also provides full funding for cyber charter schools. Those changes will cost the state $593.5 million. It also adds $321 million for mental health and safety grants that are available to both public and private schools.
Education groups expressed relief but noted state law had required lawmakers to pass a budget by July 1, which they did not do.
“Educators were left watching the news alongside the general public for details of the budget’s contents, which were released only hours before the vote on a bill more than 400 pages long,” a coalition of school groups said in a statement. “This lack of transparency erodes and undermines the partnership that schools should be able to rely on with their state leaders.”
Loser: Corporate incentives
Whitmer’s flagship corporate incentive program appears to be officially dead. The budget does not include what had been an annual $500 million deposit into the Strategic Outreach and Attraction Reserve Fund.
Created with bipartisan support in late 2021, SOAR became controversial as the Whitmer administration spent more than $2 billion on large-scale subsidies and land development to try and lure job creators to the state. Some deals fell apart, and promised jobs were slow to materialize.
Winners: Earmarks
They had to agree to House-backed reforms, including sponsorship disclosure before the vote, but Michigan lawmakers still got $160 million in earmarks added to the budget through “community enhancement grants” and “legislatively directed spending items.”
The earmarks allow lawmakers to secure funding for no-bid projects in their districts, often in exchange for their votes on the full budget. They’ve proven controversial in recent years, leading to criminal charges in one case and at least two other ongoing investigations.
Among the biggest earmarks in the new budget: $10 million to help Midland mitigate the risk of future floods, $10 million for a bridge project on West Road in Trenton and $4 million for the Jewish Federation of Detroit to implement community safety measures
Loser: Copperwood mine funding
The budget does not include funding for a proposed copper mine near the western Upper Peninsula. Local lawmakers had sought $50 million for Wakefield Township to make infrastructure improvements supporting Highland Copper Co.’s efforts to open a $450 million mine.
The funding was backed by local officials and economic developers, but some legislators and environmental advocates argue the project could threaten the nearby Porcupine Mountains Wilderness State Park and Lake Superior.
Winners: Tipped and overtime workers, seniors
The budget anticipates reduced revenue because of new House GOP-backed tax exemptions on income from tips, overtime pay and Social Security. Those tax cuts, which mirror new federal exemptions pushed by Trump, would last three years and are expected to cost the state at least $188 million annually.
Loser: ‘Ghost’ employees
The budget cuts funding for more than 1,700 full-time equivalent state government employees, a top priority of House Republicans.
Most of that comes from cutting vacant positions, including funding for 870 jobs in the Department of Health and Human Services, 373 jobs in the Department of Corrections and 243 state police post operation positions, according to a nonpartisan House Fiscal Agency analysis.
“That’s a real saving for taxpayers,” said Rep. Ann Bollin, a Brighton Republican who chairs the House Appropriations Committee.
The budget does not require all remote state workers to return to the office, which House Republicans wanted, but instead includes language directing departments to “prioritize in-person work” or “monitor out-of-office workers.” It also directs them to ensure 80% occupancy rates in state buildings or leases may be consolidated, as is common in the private sector.
Winners: Selfridge, ice storm recovery
The final budget fincludes $26 million to support a new fighter mission at Selfridge Air National Guard Base also backed by the federal government, along with $14 million for ice storm recovery money for northern Michigan.
Losers: Going Pro, Pure Michigan
The budget includes several cuts, a $22 million reduction for the state’s Going Pro Talent Fund, which helps employers train and develop employees, and a $9 million cut to the Pure Michigan tourism advertising campaign.
Winner: Arts funding
More than $12 million in annual funding for the state’s Arts and Cultural Program survived negotiations despite opposition from House Republicans, who had proposed eliminating the funding entirely.
House Speaker Matt Hall had called the arts funding an “an example of waste” that Republicans wanted to cut. Arts groups rallied at the state Capitol to try and preserve the funding, which was kept in the compromise budget.
Loser: GOP culture war provisions
Not included in the final budget: House Republican language that would have prohibited departments from using state funds for “for diversity, equity, and inclusion initiatives or programs.”
Such provisions were a hallmark in the initial House-approved budget, which also proposed major funding cuts for the University of Michigan or Michigan State University, which conservative lawmakers had targeted for what they called “woke” policies.
Those higher education cuts did not make the final budget. All 15 of the state’s public universities will see funding increases of between 1.9% and 4.7%. U-M will see a $7.8 million funding increase instead of the $237 million cut proposed by House Republicans. MSU will get an extra $6.9 million instead of a $59.8 million cut.
Loser: Whitmer’s Growth Office
Two years after Whitmer established a council tasked with boosting the state’s sluggish population growth, the budget she is expected to sign will not include $10 million she had proposed to implement recommendations by the council and support her new Michigan Growth Office.
As of 2024, Michigan had 10 million residents and was the 10th most populous in the nation.
Winners: Hunters, anglers and other people who don’t like fees
Hunters and anglers, rejoice: Proposed fee increases for Michigan hunting and fishing licenses were not included in the final state budget.
Whitmer and Senate Democrats wanted to raise fees as a means to establish new programs within the Department of Natural Resources dealing with education, safety and conservation.
Another proposal to automatically sign Michigan motorists up for the state’s $10 recreation passport unless they opted out was also dropped from the budget. It remains an opt-in program, instead.
Also absent from the budget: Whitmer’s proposals to increase fees for trash and hazardous waste dumping in the state, which her administration had called an effort to reduce imports from other states and Canada.
Michigan is among the nation’s leading importers of out-of-state waste — including hazardous waste such as PFAS “forever chemicals,” PCBs and radioactive soil — and this is not the first time lawmakers have considered reforms to slow the industry’s expansion.
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