LANSING, Mich. — One week after the new fiscal year for the state of Michigan began, Governor Gretchen Whitmer signed the new budget that totals $81 billion.
The signing on Tuesday, October 7, came after a contentious debate over the state's spending and taxes for the next 12 months. For months Republicans in the state house and Democrats in the state senate refused to budge on budget proposals.
Instead, lawmakers and the governor spent the final few weeks of September to push through negotiations on the budget, even passing a 7-day spending plan to keep the state government open to give themselves enough time to pass a compromise.
The budget was due to be passed by October 1, when the new fiscal year begins. Lawmakers also failed to pass the school aid fund for the 2025-2026 school year by July 1, a soft deadline that helps public school districts plan out their own budgets.
The state legislature approved the budget and school aid fund in late night votes last Thursday. Whitmer signed the bills on Tuesday.
“This balanced budget delivers on the kitchen table issues that make a real difference in people's lives,” said Governor Whitmer. “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."
“While this budget cycle featured unprecedented challenges, it also provided us the opportunity to show the rest of the country what leadership can look like in divisive political times,” said Senate Majority Leader Winnie Brinks (D - Grand Rapids).
“Our state government spending has grown way beyond its means, and it’s time to rein it in," said Speaker of the House Matt Hall (R - Marshall). "This budget makes a significant difference in eliminating waste, fraud and abuse to lower state spending and give the taxpayers better value for their dollars. That’s how we were finally able to get our local roads fixed and pass the public safety trust fund, all while eliminating taxes on tips, overtime and social security. You can do a lot when you take the time to evaluate state spending and set better priorities.”
Among the changes for the fiscal year 2026 budget are:
- Roll back on the retirement tax
- Extension of the Working Families Tax Credit
- Elimination of state taxes on tips, overtime pay, and Social Security income
- Almost $2 billion in spending on state and local roads over 4 years
- $417 million for water infrastructure projects, including lead service line replacements
- $50 million for affordable housing needs
- $17 million for the Pure Michigan marketing campaign
- $439 million for workforce development programs
- $1.6 billion in revenue sharing with municipalities to support first responders, transportation, and water infrastructure needs
- $95 million to help municipalities with public safety
- $26 million for upgrades at Selfridge Air National Guard Base which recently was named the home of a new air wing
- $29.8 billion for core Medicaid services
- $1.8 billion to support behavioral health programs
- $150+ million for recovery from the northern Michigan ice storm
The new school aid fund features a record $10,050 per student for public schools, a 4.6% increase from last school year. It also includes continued funding for free breakfast and lunch for all K-12 students to the tune of $248.1 million.
Other education investments include $657 million to expand free pre-K to all 4-year-olds in Michigan, $190.9 million for special education programs, $1.8 billion for Michigan's 15 public universities, $375 million for the 28 community colleges in the state, and more than $544 million in tuition scholarships and support, including tuition-free entry to community colleges.
This was Whitmer's seventh state budget she's signed into law. She'll have one more in 2026 before being term-limited out of the office.
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