FY27 Executive Budget Recommendation: New Taxes on Services and Targeted Workforce Investments Define Proposal 

Gov. Gretchen Whitmer’s Fiscal Year 2027 executive budget recommendation outlines a $88.1 billion spending plan, an increase of approximately $7 billion. While the proposal maintains some commitment to economic development tools and workforce training pipelines, it does eliminate a very successful talent development tool, the Going PRO Talent Fund. It also simultaneously introduces significant new tax burdens on service industries and fails to fully restore key talent programs, creating a complex environment for employers navigating economic headwinds.

• Digital Advertising Tax: The Whitmer administration proposes a new 4.7% excise tax on digital advertising revenue, projected to extract $282 million from the economy in FY27. Digital advertising is a critical tool for businesses of all sizes to reach customers and represents a significant new liability for the technology and service sectors.

• Landfill Tipping Fees: The budget recommendation again seeks to raise the solid waste surcharge from $0.36 to $5.00 per ton, a dramatic increase aimed at generating $80 million annually. While intended to fund environmental remediation and reduce out-of-state waste, this hike will raise disposal costs for Michigan industries and commercial operations.

• Gaming Industry Taxes: The proposal includes a new internet gaming tax rate on the largest casinos and eliminates the free play deduction for sports betting, increasing the industry’s tax burden by over $156 million.

• Michigan Reconnect: The Governor recommends lowering the eligibility age for the Michigan Reconnect scholarship from 25 to 21, supported by a $25 million ongoing increase. This expansion is a priority of the Chamber and will increase the number of skilled workers in Michigan.

• Going PRO Talent Fund: This proposal entirely eliminates the Going PRO talent fund, a proven, competitive, and highly utilized grant program that employers rely on for upskilling.

• Dual Enrollment: The budget increases funding for dual enrollment to allow high school students to earn college credit, a strategy critical to meeting the Chamber’s Sixty by 30 goal. Dual enrollment is an easy and free way for high schoolers to earn college credits and reduce the financial burden that may accompany college enrollment.

The budget includes $150 million in one-time funding for Strategic Site Readiness to prepare industrial sites for investment, a crucial tool for attracting large-scale projects. Additionally, programs that were reduced during last year’s budget remain at the reduced amount, such as $59.4 million allocated for ongoing business attraction and community revitalization.

The budget reflects the strain of federal policy shifts, specifically the implementation of H.R. 1. The state must allocate nearly $187 million in General Fund resources to manage new mandates, including Medicaid work requirements and increased administrative costs for SNAP. 

As the budget process moves to the Michigan Legislature, the Chamber will advocate for a final budget that minimizes tax burdens on job providers while maximizing the effectiveness of workforce and economic development investments. The Chamber looks forward to working with the Governor and the Legislature to keep the focus on driving Michigan’s competitiveness.