Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
Michigan government crossed the Rubicon into Fiscal Year 2026 without a budget Tuesday night – a dynamic that presumably should result in a government shutdown.
But Gov. Gretchen Whitmer Tuesday afternoon, anticipating this situation, issued a press release declaring that everything was fine. The Legislature is working toward implementing a deal. Budget or no budget, “state government operations will continue providing services to Michiganders,” she wrote.
Whitmer issued an order late Tuesday night to Budget Director Jen Flood that reads, “As governor, my constitutional duty is to protect the health and welfare of Michiganders. The legislature has not fulfilled its constitutional obligation to pass a budget by the end of fiscal year 2024-2025.
“It is critical to maintain continuity of government operations and services to support public health and welfare. Until a fiscal year 2025-2026 budget is enacted, I hereby authorize you to take the necessary steps to release payments to support those continuing government operations.”
Historically, it’s been the opinion of state officials that state government isn’t authorized to spend any money without a budget, although it can accumulate debt and receive bills.
“Without a budget of some sort in place Oct. 1, however, the administration has no legal authority to fund essential services,” wrote then-House Fiscal Agency (HFA) Director Mitch Bean in a Sept. 10, 2007 memo. “The Office of Financial Management has determined that in order to make critical payments due Oct. 1, and to avoid violating the state Constitution provision prohibiting payments without an appropriation, a budget of some type needs to be in place when the Legislature adjourns.”
Leadership in the Republican House, Democratic Senate and Democratic Governor’s office were locked in a cone of silence from sunup to sundown Tuesday. Neither the House nor the Senate took any action before midnight. Senators and House members popped in and out of their chamber, but took no votes on any bills.
Before adjourning for the day, the Senate discharged onto the floor a continuation budget, HB 4161. The Legislature does plan on voting early on Wednesday on several bills, however. The Senate is planning to take up the wholesale marijuana tax, a critical piece to the $1.85 billion road funding deal. A continuation budget is also on the agenda.
“You can’t will a budget into existence with press releases. Believe me, we tried,” said Peter Spadafore, executive director of the Michigan Alliance for Student Opportunity.
When the Senate takes up a new marijuana wholesale tax for road funding, they will consider a Sen. Stephanie Chang (D-Detroit) amendment tie-barring it to wholesale taxes on vapes possibly reaching 57 percent over time based on changes that were being prepared Tuesday evening.
The amendment is not expected to pass, however.
The Democratic-controlled Senate is expected to take up HB 4951, which passed in the House on Sept. 29 to subject weed to a 24 percent wholesale tax creating more money for road projects. Chang will be offering an amendment that brings down the weed tax to 20 percent.
It also says HB 4951 cannot become effective until the passage of SB 582. As is, the Chang bill subjects nicotine items that are chewable or ingestible, as well as vapor products, to a 32 percent wholesale tax.
MIRS learned that while the tax under SB 582 will begin at 32 percent, the same as cigars and non-cigarette tobacco items, it will grow to 57 percent under a substitute to the Chang bill that is currently being prepared, making the concept similar to a Senate Democratic proposal from early 2024. The funding could both be spent on the state’s prevention efforts around nicotine addiction, and legislators “could reroute some to road funding.”
As of 10:03 p.m. Tuesday, votes and amendments still had not been taken up.
In a statement issued after 5:15 p.m., Whitmer, Majority Leader Winnie Brinks (D-Grand Rapids) and Speaker Matt Hall (R-Richland Township) said their bipartisan budget will, among other things:
- Fix state and local roads
- Decrease taxes for working families
- Protect Medicaid and hospitals
- Record per-pupil education funding that will include free breakfast and lunch
- Provide public safety investments
- Modernize Selfridge Air Force Base.
No numbers were attached to the release.
As part of the bipartisan agreement, both the House and Senate will pass budget implementation bills. Both chambers have adopted greater transparency measures as part of their earmark process.
“Tomorrow, state government will continue and work will go on in the Legislature to finalize a balanced, bipartisan state budget this week,” Whitmer wrote. “Meanwhile, state government will continue providing uninterrupted services and all state employees will work tomorrow, getting things done for their fellow Michiganders. We’re almost there. Let’s get it done.”
Earlier in the day Tuesday, Whitmer sent a letter to state employees to assure them their jobs would be maintained because there is an agreement between the Senate and House to pass the state budget.
While the letter doesn’t explicitly state that a budget would be signed before Oct. 1, the letter does state that state government would “continue as normal” as the budget will be finalized “in the coming days.”
“While the full budget is finalized, your jobs will not be impacted. Your work will continue. You will get paid,” the letter from Whitmer stated.
The letter stated that state employees’ work was important and would continue.
“Even as the federal government hurtles towards a shutdown, the state government will stay open and operational. Thank you for your continued service to the people of Michigan,” the letter stated.
Steve Liedel, an attorney with Dykema, said he isn’t a big fan of the “shutdown” label and said the Oct. 1 deadline makes the government’s ability to spend money “severely limited.”
“They can be like Wimpy from the old Popeye movies, ‘I would gladly pay you Tuesday for a hamburger today’,” he said.
Liedel said if the budget isn’t signed by Oct. 1, the government will continue to compile bills but until the appropriation is signed, there wouldn’t be any money going out. That means people could still work, but as long as the appropriation was not signed, employees would be on back wages.
“A lot of people asking for hamburgers around state government for a little while, until the appropriations can get enacted,” he said.
He said anything that incurred an immediate expense would need to be shut down, such as the liquor control commission’s ordering and delivery system.
He said Whitmer signing the appropriations bill into law would be like Wimpy getting the money in his pocket to pay for the hamburger he had already eaten.
“The only problem with this is I don’t think anyone under 50 is going to understand the Popeye reference,” he said.
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