Executive Budget Presented, Adjusted to Meet Budget Gap

Today, before a joint hearing of the House and Senate Appropriations Committees, Budget Director Jen Flood presented the executive budget recommendations for FY27. The budget totals $88.1 billion, including a general fund total of $13.6 billion and a school aid fund budget totaling $21.4 billion.

Due to multiple external pressures, the upcoming fiscal year is facing a $1.8 billion gap, and the proposal includes reductions and steady funding in a number of areas to respond to the decline. It also relies on a number of new and increased taxes and a withdrawal of $400 million from the state’s budget stabilization fund.

Specifics within the proposal include:

$780.4 million in new funding to stabilize Medicaid:

• • The proposal makes the following tax changes in new funding:
    • $232 million from increasing Michigan’s tobacco tax
    • $73.6 million from taxing vaping and non-tobacco nicotine products
    • $282 million from a tax on digital advertising across all media platforms
    • $192.8 million from updating the state’s internet gaming, sports betting, and online gaming tax structure
  • An additional $150 million will be identified in efficiency savings

Saving Michiganders Money Plan:

• • Property tax relief to 335,000 seniors through an expanded tax credit that refunds approximately 10% of their property taxes
  • A sales tax holiday on back-to-school supplies
  • A complete rollback of the retirement tax

$625 million to support student literacy and achievement, including:

• • $181.1 million for free universal pre-K
  • $135 million expanded before- and after-school programs
  • $100 million for tutoring
  • $100 million in grant funding for schools to purchase literacy programs
  • $50 million to continue implementing LETRS training for educators
  • $33 million to expand the Michigan Learning Channel

Public Education:

• • A 2.5% increase in base per-pupil funding
  • $200 million to continue free school meals
  • $2.2 billion to sustain university and community college operations

Additional funding proposals include:

• • $351.8 million to preserve and raise direct care worker wages.
  • $5.8 billion for roads
  • $429.1 million in continued funding for workforce development programs and grants
  • $50 million for the Michigan Housing and Community Development Fund
  • $1.7 billion to sustain revenue sharing for counties, cities, villages, and townships
  • $50 million to fund public safety revenue sharing grants
  • $42.4 million for drinking water and environmental health programs
  • $17.3 million for the statewide judicial case management system
  • $43.2 million to strengthen the Election Equipment Reserve Fund, which helps local election administration and lifecycle maintenance of election equipment

Please click here for more information and details on the budget proposal.