Last night, Governor Gretchen Whitmer, Senate Majority Leader Winnie Brinks (D-Grand Rapids), and Speaker Matt Hall (R-Richland Twp.) announced they reached a budget framework agreement for the 2025-26 Fiscal Year. This marks a significant step forward in preventing a government shutdown, which would have started on October 1. According to the governor, the agreement ensures that top priorities for both Democrats and Republicans are included in the bipartisan budget.
Key Points:
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- The agreement includes nearly $2 billion in additional funding per year to fix local and state roads.
- To raise the additional revenue, all taxes paid at fuel pumps will be dedicated to roads, marijuana taxes will more than double, and the state will decouple from federal tax policy.
- $500 million that was appropriated for the Strategic Outreach and Attraction Reserve fund will not be deposited, with $250 million of that will be diverted to public health care.
During Thursday night’s session, the House passed legislation that enacts portions of the agreement reached, including:
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- A 24% excise tax on the wholesale price of marijuana. This is projected to generate $420 million annually in new revenue, which will be used for a Neighborhood Road Fund.
- Repealing a $600 million earmark to the Michigan Transportation Fund and diverting it to the Neighborhood Road Fund.
- Decoupling Michigan from five of the tax changes in recent Federal tax policy reforms.
Appropriation Subcommittee chairs are expected to receive their budget targets on Friday morning and will work throughout the weekend with their counterpart in the other chamber to finalize each department’s budget. These plans may be presented to leadership as early as Sunday evening or Monday morning. The House and Senate have scheduled session for Monday and Tuesday to finalize the budget.
