Advocacy News – Feb. 5, 2025
Governor Whitmer presented her Fiscal Year 2026 budget recommendation to a joint session of the House and Senate Appropriations committees Feb. 5. The proposed budget totals $83.5 billion — a nearly $3 billion increase from the current budget.
Why it matters: The budget is the executive branch’s blueprint for key policy priorities and initiatives for the coming fiscal year. This proposal contains a few cuts and some significant spending on new programs, such as cost-free preschool for all four-year-olds and tuition-free community college for all graduating high school students, as well as some new taxes in the form of tipping fee increases and a tax on non-tobacco nicotine products.
The Governor’s outlined investment priorities include:
- Workforce Development – $54.8 million to continue Going Pro job training grants to businesses to support training for current and new employees in high-demand, skilled trades industries, resulting in an estimated 35,200 new hires and current employees trained.
- Rainy Day Fund – $50 million deposit into the state’s Budget Stabilization Fund. These resources are restricted by statute and can only be used in the event of a significant economic downturn to support vital government functions. With this investment, the state will have a robust savings account with a balance of $2.8 billion.
- Cost-Free Preschool – $676 million to continue funding free preschool programming for all 4-year-olds in the state, including an additional $25 million to provide startup funding for new or expanded classrooms. In addition, $61 million to continue and expand programs that pilot free preschool for eligible 3-year-olds.
- Tuition-Free Community College – $50 million investment in the Postsecondary Scholarship Fund to continue fully phasing in costs of the Michigan Achievement Scholarship, providing a tuition free pathway for full time community college students, and two out of three full-time students at public or private 4-year universities up to $27,500 toward a 4-year degree.
- Electric Vehicles – $10 million for deploying electric vehicle charging stations by providing grants for the installation of EV charging stations in local communities to facilitate the adoption of low emission vehicles.
- Permitting – $39 million to streamline EGLE’s permitting process and increase transparency by digitizing and indexing department documents
- Tipping Fee Increase – $80 million in new revenue through an increase in the tipping fee for state landfills – moving the surcharge from $0.36 to $5 per ton – a 1,288% increase. This added fee represents a tremendous burden to industry and could increase the cost of trash pickup for Michigan households and businesses.
- New Tax Non-Tabaco Nicotine Products – $57 million in revenue generated from a new tax on vaping pod systems, vape pens and e-cigarettes, set at 32% of the wholesale product price.
- Economic Development –
- $35.8 million in Federal funds to create a Transmission Siting and Economic Development program in a fiscal year 2025 supplemental that will support an apprenticeship program for utility infrastructure employees, weatherization efforts to lower energy costs for low-income residents and workforce training.
- $25 million for Employer Assisted Housing which will leverage investments from employers to support a range of housing projects targeting those households earning under 120% of the area median income.
- $22.7 million for Auto Supplier Retooling Grants (federal funds) in a fiscal year 2025 supplemental to provide grants to small and medium sized auto suppliers for retooling efforts to help Michigan develop a domestic and diversified supply chain and retain high quality, good-paying jobs.
- $10 million for Small Business Support Hubs to enhance a statewide network of service providers that offer comprehensive resources and support to Michigan’s small businesses.
Keep In mind: Critics were quick to voice several concerns with the Governor’s proposal. Specifically, both Democratic and Republican lawmakers voiced concern that no plan was provided around new dedicated funding for roads and infrastructure.
- Republicans also underscored concerns around what they see as a lack of transparency in the budget process, particularly around discretionary enhancement grants awarded to Whitmer political allies and a removal in the requirement that executive departments provide performance metric data on the websites to the public.
- Other stakeholders questioned how the proposal for education funding would lead to reforms. Only 24% of the state’s 4th graders are proficient in reading, well below the national average.
What’s next: As the budget process evolves, the Legislature will hold committee hearings to dive into the Governor’s proposal as well as propose their own state funding solutions. It is largely expected that the budget debate in what is now a divided government is expected to take longer than typical years and could go through the summer season.
- The Michigan Chamber will be watching to push for fiscally responsible budgeting practices as well as investments that advance a growing economy and stronger Michigan for all.
Learn more: View more details of the Governor’s recommended budget. If you have any specific budget questions or feedback, please reach out to Mike Alaimo at malaimo@michamber.com.