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State Budget Process Clears Additional Hurdles in House and Senate

Advocacy News – May 12,2023

This week, the state House and Senate acted on their respective budget proposals and passed them without Republican support. The budgets were single department bills instead of the typical omnibus style, which combines all state departments into one large budget bill.  

Each of the budget bills are sponsored by Democratic representatives and were passed over two days. The budget bills garnered no Republican support despite over 100 Republican amendments to increase road funding, address needs for additional public safety, and adjust how the Strategic Outreach and Attraction Reserve fund, or “SOAR” fund, operates. There were no large-scale changes to the budgets based on what was reported last week. Despite these opposing views and consternation on the respective House and Senate floors, the leaders are still expressing a commitment to working together to complete the fiscal year (FY) 2024 state budget prior to July 1, a deadline required by the Michigan statute.  

Of note, both the House and Senate crafted budget proposals that spend more than Gov. Whitmer’s proposal by utilizing additional federal American Rescue Plan (ARP) dollars received during the COVID-19 pandemic and require obligation by 2024 or Michigan will forfeit these funds. While the Governor’s proposal totaled $79.38 billion, the Michigan House proposed spending $81.3 billion, and the Senate crafted a total budget of $80.7 billion. With the state sitting on a multi-billion-dollar surplus post COVID, the Legislature and Governor are all proposing leaving less than $1 billion on the balance sheet after the FY2024 budget.   

The next step in the budget process is the state’s economic forecast May 19, where State Treasurer Rachael Eubanks, State Budget Director Chris Harkins, and the House and Senate Fiscal agencies will assess the state finances to determine the resources available to build a state budget. This includes tax revenue after April’s 2022 tax filing deadline, various tax collection projections, and an additional conversation on how the income tax reduction to 4.05% impacts the state’s fiscal health in 2024. As a reminder, the income tax tables were not updated to reflect this change, but the Michigan Treasury assures taxpayers they will receive refunds when they file their 2023 taxes next spring. The economic forecast is necessary for the Legislature and Governor to begin their final deliberations with firm numbers on future state finances. If they continue this momentum, the state will see a complete state budget in June. The question remains whether the Republicans will be brought back into the fold and if there will be enough consensus to implement the new budget Oct. 1, 2023. 

As this process develops, please reach out to Becky Burtka at bburtka@michamber.com with any questions.