Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
Gov. Gretchen Whitmer Tuesday signed an $81 billion Fiscal Year (FY) 2026 budget behind the locked doors of her ceremonial office with the four legislative leaders who crafted the final deal.
A total of 14 bills that made up the mechanics of the $1.85 billion road funding package and other assorted changes were also signed with the omnibus, HB 4706, and the School Bus, SB 166. With the Natural Resources Trust Fund projects also signed, the Governor signed as many bills Tuesday as she did the prior nine months combined.
The message coming from the Governor’s Office — outside of crafting a long-term funding deal and expanding the RX Kids cash payment program for pregnant mothers and their newborns — was on the tax cuts baked into the 375-page spending plan.
As has been done at the federal level, the state budget eliminates state taxes on tips, overtime pay and Social Security income, saving “hundreds of thousands” of seniors and working families in taxes. The Governor’s office is also roping in the phase-in of the Earned Income Tax Credit (EITC) increase and the retirement income tax exemption phase-in passed two budgets ago into Tuesday’s messaging.
“This balanced budget delivers on the kitchen table issues that make a real difference in people’s lives,” Whitmer wrote in the lead quote of the press release announcing the bill signing. “Our budget fixes the damn roads, cuts taxes for seniors and working families, funds first responders, secures core health care services that millions of Michiganders rely on, protects our air, lakes, and land, and increases government efficiency to saves taxpayers time and money.”
Democratic lawmakers are highlighting changes made in the state’s Medicaid taxing system that will allow it to continue to collect federal matching funds, despite reforms made in the One Big Beautiful Bill. It preserves the free school lunch and breakfast programs. It will send checks to pregnant women to help them prepare for their new child while also providing them with a monthly stipend for their infant’s first year of life.
The Republicans and the Governor are trumpeting the $1.85 billion road funding plan, the elimination of 1,800 state employee positions that were on the books and the defunding of the Governor’s job-creation pot called the Strategic Outreach and Attraction Fund (SOAR) Fund.
The bill signing Tuesday was closed to the press. Speaker Matt Hall (R-Richland Township) said in his press conference later that “there were people in the bill signing that should not have been in the bill signing, and then there were people that were not at the bill signing that should have been there.”
Hall said he believes there’s another 3,000 ghost employees to eliminate next year, and if people think the Fiscal Year 2027 budget should come earlier than FY 2026, then “we need to get to work on identifying more ghost employees.”
Hall said earmarks in this year’s budget are down to $168 million, compared to last year’s $1.3 billion. He said Democrats were forced to choose between pork spending and maintaining programs under the Whitmer administration for another year. He gave the example of the Arts Council and said someday that funding won’t be there anymore, and that program will end, which is part of the trajectory to eliminate more spending and “waste, fraud and abuse” in the future.
“I know the Democrats, OK? And what I’ll tell you is, the Democrats will spend every dollar available if you let them, and we wouldn’t let them in the negotiations,” Hall said.
No line-item vetoes in either budget were registered by the Office of the Great Seal.
“I’m so grateful to legislators on both sides of the aisle for coming together to get this done,” Whitmer said. “Amidst so much uncertainty caused by a chaotic tariff strategy and a national government shutdown, Michigan is showing everyone how to get things done. In the weeks and months ahead, we will build on this momentum and come together on commonsense tools to create and retain good-paying jobs.”
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