Austere Omnibus Budget Rolls Through The Night After Long, Complex Journey

Article courtesy of MIRS for SBAM’s Lansing Watchdog newsletter

The era of free-flowing COVID-19 money is officially over as a blurred-eyed House and Senate Friday passed a $75 billion Fiscal Year (FY) 2027 budget that rolled back federal spending authorizations, axed one-time appropriations and scratched alleged “ghost employees.” 

The end product is $6 billion lighter than the current year’s $81 billion spending document, the product of what House Speaker Matt Hall (R-Richland Township) boasted was effectively sniffing out $3 billion of “waste, fraud and abuse.” 

While proud of the final product, Senate Appropriations Committee Chair Sarah Anthony (D-Lansing) recoiled at the phraseology. Asked how much waste, fraud and abuse was cut from the budget, Anthony answered sharply, “Zero.” 

“What we found were meaningful efficiencies,” she said. “I can say there’s always ways that we can tighten our belts and do better, but that kind of political term of ‘waste, fraud and abuse’ is not one that I would hang my hat on.” 

Told of this response, Hall’s eyes widened, “Interesting. That’s a strange thing for her to say.” 

Outside the loss of COVID-19 money, Michigan and other states are looking at ways to make up for projected Medicaid funding losses due to changes made in the One Big Beautiful Bill Act of 2025 that banned the use of provider taxes to draw down additional federal money. Senate Majority Leader Winnie Brinks (D-Grand Rapids) said that the state had relied on this money “for generations.” 

“This was a very challenging budget negotiation, mainly because of the $1 billion deficit that we had to address,” Anthony said. “But being able to do so without reducing any benefits for folks who are receiving Medicaid or food assistance is probably the proudest thing that I can say has come out of this process.” 

Several one-time spending programs were reduced or discontinued, pilot programs ended and earmarks slashed. Many new spending programs were out of the question, although $10 million was added for work assistance for Medicaid and SNAP recipients, presumably in preparation for federal work requirements. 

Hall spoke to the press about how one department head asked him for 300 full-time equivalent employees (FTEs) just in case some federal grants came through. He told the person that the FTEs were going away and if the grants came in, to reach back out. 

“There’s a lot of over-budgeting habits all over the place,” Hall said. “So, we got rid of that.” 

House Appropriations Committee Chair Ann Bollin (R-Brighton) referred to it as “good stewardship.” 

“Good stewardship means spending wisely, demanding accountability, and making sure state government lives within its means,” she said. “Michigan families have to live with their budgets every day, and state government should do the same. That’s the approach we took.” 

Regardless of the terms used, the consensus from this year’s budget process is that its creation was highly complex and layered due to the parameters lawmakers and staff forced themselves to work within. 

Even though the House passed their preferred budget on April 22 and the Senate followed suit on April 30, productive negotiations didn’t start immediately, MIRS has learned. Instead, weeks passed without any real progress being made on a compromise. 

Once Hall made it clear that his caucus wouldn’t support a budget based on a tax increase or a Rainy Day Fund withdrawal, legislators and staff began digging under sofa cushions for unused federal spending authorization, stagnant pots of money, and fund shifts to make ends meet without cutting services. 

In June, the pressure built due to compounding factors. Both chambers wanted the budget completed by July 4 with the realization that if the Republicans didn’t keep the House – a very real possibility considering President Donald Trump’s 33% popularity – lame duck would fizzle. Leaders realized that these first days of July would become the year’s functional lame duck. 

On top of the 18 months of policy proposals members wanted addressed was the limited amount of legislative “pork” that was available. In the Senate, members were spoiled with enough COVID-19 money to address $1 billion in local needs. This year, Hall said the House, Senate and the Governor’s office were limited to a combined $120 million in special projects, equal to .1% of the $4.3 billion in requests House members and the Senators put on the table. 

Priorities like $30 million for a Grand Rapids aquarium that Brinks would have liked in the budget were left on the cutting room floor. 

Negotiations, themselves, became its own labored process. Once Hall and Brinks were ready to start putting together a framework of a budget deal that included some policy bills, Gov. Gretchen Whitmer was on an economic development trip in Europe. The impression among House Republican leaders, at least, was Budget Director Jen Flood was limited to what she could negotiate. The delays pushed negotiations deeper into June. 

Once the framework was set, setting targets became its own challenge as the digging through sofa cushions commenced. Democrats wanted to avoid any hard cuts, so both sides resorted to creative financing to avoid Recession Era-like decisions, but that took time. 

Subcommittee chairs were given targets last weekend, but were given around 24 hours to hammer out what they could negotiate out before the remainder of their budgets were elevated to the leadership level. Participation from the subcommittee chairs varied, and by Sunday the leaders found themselves working through budget details on top of pork requests and outstanding policy bills. 

According to several sources familiar with the talks, Hall, Brinks and Flood rarely negotiated together in the same room, instead relying heavily on staff to carry proposals back and forth. 

With so many moving pieces and parts, a final deal couldn’t affirmatively be announced until Thursday afternoon, after which the Legislative Service Bureau was charged with printing the bills and the fiscal agencies charged with whipping up the analyses. The end product for the education budget (school bus) showed up at the joint House-Senate conference committee shortly after 3 a.m. The omnibus conference committee met at 5 a.m.  

Exhausted, neither the staff nor the lawmakers could muster much of an explanation about what was in the 883-page brick of papers they were carting around. 

The Senate passed the conference report to SB 878 around 8 a.m., 27-9, with Sens. Thomas Albert (R-Lowell), Kevin Daley (R-Lum), Roger Hauck (R-Union Twp.), Michele Hoitenga (R-Manton), Jonathan Lindsey (R-Coldwater), Ed McBroom (R-Waucedah Twp.), Aric Nesbitt (R-Lawton), Jim Runestad (R-White Lake) and Lana Theis (R-Brighton) voting no. 

The House took it up at 8:51 a.m., nearly 21 hours after the House was called to order the day before. Lawmakers had been in the chamber off and on throughout the night and morning passing legislation. After voting on the budget, House members scurried out the door. The budget passed 99-7 with Reps. Steve Carra (R-Three Rivers), James DeSana (R-Carleton), Joseph Fox (R-Fremont), Jaime Greene (R-Richmond), Mike Hoadley (R-Au Gres), Dylan Wegela (D-Garden City) and Regina Weiss (D-Oak Park) voting no.   

“I think this is the first budget since I’ve been here that we’ve passed in the daytime,” quipped the House Democrats’ lead on the budget, Rep. Joe Tate (D-Detroit), the morning sun creeping through the House floor’s shutters. 

“We have a very broken process on how this budget was done,” said Rep. Alabas Farhat (D-Dearborn). “Our subcommittee chairs had a lot of their recommendations disregarded. The conference committees were done in the middle of the night.” 

Farhat blamed the logjam of massive amounts of budget questions and policy bills on “election paralysis” on the part of Republicans. Attempting something bold like property tax cuts, for example, simply wasn’t going to fly in this political environment, creating a fairly bipartisan budget passed alongside a lot of bipartisan policy bills. 

“They’re really terrified of this November election, where they know there’s going to be a backlash to all of these terrible cuts,” he said. “There’s a war on Michigan families right now, and it’s coming from D.C. Republicans, where they’re passing tariffs, trying to raid Medicaid to pay for tax cuts, kicking people off their health insurance . . . because of that, there’s an indecisiveness, especially from my Republican colleagues to do these big things.” 

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