Following marathon sessions Thursday into Friday, the House and Senate passed two omnibus budgets appropriating funds for the 2025-2026 Fiscal Year. This year’s budget made significant cuts, especially to legislatively directed spending items, which were reduced by nearly $600 million from FY24 levels. Additionally, it changed the way such requests were handled, with both the House and Senate adopting rules to post such requests on public websites along with detailed information. Several departments are headed into the fiscal year with reduced budgets after cuts to staffing levels and programs.
Key Points:
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- Per-pupil funding will increase to $10,500, a new record high.
- The continuation of the free school meals program for all K-12 public school students.
- $321 million for school mental health and safety grants.
- Higher education funding increases by 0.5%, while community colleges will see a 6.8% increase.
- The budget includes nearly $2 billion in new ongoing funding for roads and bridges.
- $95 million from the new Public Safety Trust Fund will go directly to local law enforcement agencies.
As part of the overall budget process, budget implementation bills were passed, including:
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- Decoupling Michigan from the recently enacted Federal tax reforms.
- Eliminating state taxes on tips, overtime pay, and social security income.
- Enacting a 24% wholesale tax on marijuana, which is projected to generate over $400 million per year in new revenue.
- Redirecting taxes paid at the fuel pump to roads.
The budgets will be sent to Governor Whitmer for her consideration. Following passage, in a press release, she said, “Today’s balanced, bipartisan budget is a big win for Michiganders. We brought members on both sides of the aisle together to provide tax breaks to seniors and working families, protect access to affordable health care, feed every child free meals at school, help our students succeed academically, and ensure Michiganders are safe in their communities.”
