May 16, 2025 | This Week in Government: State Has Less Money to Work With in Upcoming Budget

The House and Senate fiscal agencies are estimating revenues for the 2025-26 fiscal year are lower than what officials agreed upon in January as lawmakers continue to work on the budget this year.

Revenue and economic outlooks were published by both the House Fiscal Agency and the Senate Fiscal Agency ahead of Friday’s Consensus Revenue Estimating Conference on Friday where the two agencies will finalize the figures with the Department of Treasury.

The Senate Fiscal Agency is revising revenue downward more steeply than the House Fiscal Agency, though both are recommending reductions compared to the January consensus numbers.

The SFA in its report revised revenues downward for the current and upcoming fiscal year. For the current 2024-25 fiscal year, SFA said General Fund and School Aid Fund revenue is $393.2 million below the January estimate.

The HFA is recommending a reduction of $42.2 million for the 2024-25 fiscal year for the General Fund and School Aid Fund combined, essentially unchanged from January

For the 2025-26 fiscal year, SFA said combined revenue is down $561.2 million from the January estimate.

The HFA is recommending a reduction of $375.8 million for 2025-26 revenues, combined for both funds.

SFA is projecting healthy year-end balances in the General Fund and School Aid Fund at the end of the 2024-25 fiscal year: $507.7 million and $1.3 billion, respectively.

The HFA is in line with those figures, as well. It is projecting $705.9 million in the General Fund and about $1.3 billion in the School Aid Fund.

The Senate has moved its budget proposal, while the House has not yet taken action in subcommittees. SFA said the current Senate budget proposal would lead to a negative $968.5 million balance in the General Fund due to the revenue revisions in the SFA outlook. For the School Aid Fund, $197.7 million would be left over under the Senate budget.

SFA figures show limited growth in the state’s revenue in the coming year.

Both agencies discuss the national economic outlook as well. The SFA predicts slowing growth in the economy in 2025 and 2026, “reflecting both declines in cash balances consumers built up during the pandemic and uncertainty created by changes in federal policy that will slow both consumer spending and investment.”

HFA also wrote national economic growth will slow during the next two years, though there are uncertainties in that forecast as well.

“The scope and uncertainty of federal policy changes around tariffs and trade, immigration,

industrial policy, and tax and fiscal policy creates significant uncertainty in the forecast,” HFA wrote.

Senate Democrats and Republicans had sharply differing views of the state’s fiscal health and what is being prioritized ahead of future negotiations with the House.

After passing the chamber’s final five budget bills on Wednesday, majority Democrats praised the work of members in passing what they called a fiscally responsible plan for the 2025-26 fiscal year targeting key priorities for residents statewide.

“As a state, when we invest our resources, wherever we put them, this says everything about who we are and what we stand for, and that’s why I am proud of the budget that we passed out of this chamber,” Senate Appropriations Committee Chair Sen. Sarah Anthony (D-Lansing) said following Wednesday’s votes. “We got the budget done here in the Senate on time, because we understand the seriousness of time in this moment, because passing a budget on time is not just about checking a box. It’s a responsibility we owe to every school district, every municipality, and every community that counts on us for stability and clarity, and it’s also the law.”

Republicans, by contrast, called the budget bloated and rife with wasteful spending. Over two days they offered 90 floor amendments, all of which were defeated, as a budget totaling about $84.6 billion was passed and moved to the House.

Senate Minority Leader Aric Nesbitt (R-Porter Township) in a statement said state spending has grown 40% since Gov. Gretchen Whitmer took office, saying Democrats have irresponsibly sought to grow government.

“Senate Democrats continue to show their true priorities lie with criminals and their out-of-touch radical agenda over hardworking Michiganders who are counting on them for actual leadership,” Nesbitt said. “Michiganders deserve a state government that operates responsibly, cuts back on wasteful spending, prioritizes common goals and delivers results. Unfortunately, the budget passed by Senate Democrats fails to do this. The good news, however, is there is still an opportunity to make things right as the House and Senate work to finalize this legislation. It’s time to get to work and put Michigan first.”

Passing by 19-17 votes along party lines Wednesday were the budget for school aid (SB 166), the Department of Corrections (SB 169), the general government budget (SB 173) and a fiscal-year 2024-25 supplemental appropriations bill (SB 184).

The lone budget to receive Republican support was SB 172, the Department of Natural Resources budget, with Sen. Jon Bumstead (R-North Muskegon) voting yes. The vote was 19-16, with Sen. Dayna Polehanki (D-Livonia) not voting. Polehanki later said she would have voted yes if she had been on the floor when the vote was taken.

The Senate budget is larger than the governor’s $83.5 billion proposal. Anthony told reporters the additional Senate spending is targeted throughout the budget, including in health care, education and small businesses.

“We think that they’re sound investments, and I might also add that we have still been fiscally responsible, putting money into our rainy day fund as well, so it’s not like we’re breaking the bank,” Anthony said.

Various transparency and accountability proposals in the governor’s budget were also not included in the Senate budget.

“We decided to go a different direction in our budget,” Anthony said. “Obviously, a part of negotiations is to figure out how we can meet somewhere in the middle. We obviously know that accountability is really important.”

Another proposal by the governor left out of the Senate budget was a plan to tax electronic cigarettes the same as other tobacco products.

“We just didn’t think that at this juncture that that was something that was necessary,” Anthony said. “We can through different discussions and negotiations, maybe we’ll get to that point. … Anytime that we’re contemplating a tax increase, that’s something we take really seriously, and we didn’t want to do that at this juncture.”

Republicans again on Wednesday came up empty while offering an array of floor amendments.

Among the 19 failed GOP amendments offered to the school aid budget included multiple attempts to restore funding for various programs for charter or nonpublic schools or to increase funding to equal that of public schools.

Other proposals that failed included a reversal of a change in what traditional public schools pay into the Michigan Public School Employees’ Retirement System, funding to combat chronic absenteeism in schools, increased special education funding and increased per-pupil funding for the Great Start Readiness Program.

Sen. Lana Theis (R-Brighton) offered an amendment to SB 166 that would have allowed for the revocation of funds from schools that allow transgender athletes to participating in girls’ sports.

“If even one girl is denied a place on the team, denied the opportunity to play, denied a place on the winner’s podium, denied their collegiate scholarship opportunity, or worse, injured due to playing against a biological male, it is one girl too many, and it should never happen,” Theis said.

Sen. Jeremy Moss (D-Southfield) objected, stating that according to the Michigan High School Athletic Association, there are currently no transgender students with waivers and participating in high school sports.

“This is literally a non-issue,” Moss said. “I also don’t believe crocodiles should be barbers, but I don’t write up an amendment to place it in the budget. … I do not support enshrining this rhetoric in a budget document.”

Sen. Thomas Albert (R-Lowell) in opposing SB 166 said the budget “doubles down on the same mistakes that have been repeated, year after year.”

“I am all for investing in education, but the spending must support a plan that truly benefits our kids, and helps them achieve,” Albert said. “This budget falls short.”

Amendments offered by Republicans to SB 169 included the proposed removal of requiring local jails to provide in-person visits; to provide $6 million to cover the cost of unpaid ambulatory services and a 10% raise for corrections staff to address the shortage of corrections officers.

Albert, in opposing the MDOC budget, said his primary rationale is his belief in a need for new leadership and the ongoing shortage of corrections officers.

“The department’s current leadership did not create this problem, but it has also not done enough to correct it,” Albert said. “Change is needed.”

Within the general government budget, Albert offered an amendment that would have required the Department of State to submit a report on the steps it has taken to address its campaign finance reporting website.

The campaign finance website, which currently has far less transparency and functionality than the version it replaced, is said to be updated further ahead of the July quarterly campaign finance reporting deadline but has been widely panned by those who use it (See Gongwer Michigan Report, May 2, 2025).

This week, the Legislature passed (See Gongwer Michigan Report, May 13, 2025), and on Wednesday the governor signed, bills that would delay Thursday’s personal financial disclosure deadline to June 13 to allow more time for elected officials to submit their information to the site (see separate story).

“The state invested millions of dollars to supposedly upgrade this website, and apparently things are getting worse, not better,” Albert said. “At some points within the last month or so, the site was not providing access to some reports or allowing for some simple online searches. This is completely unacceptable.”

For the budgets passed Wednesday, there were amendments adopted this week offered by Democratic appropriations subcommittee chairs to some of the bills.

A $100 placeholder was added to the school aid budget (SB 166) for a district or intermediate school district to work with education group Launch Michigan to develop the Michigan Education Guarantee program.

For the MDOC budget (SB 169) several changes were made. One change was an addition to boilerplate language governing critical incident reports requiring an investigation to include deaths determined to be from a drug overdose.

Boilerplate was included in SB 169 dealing with reporting requirements of information on MDOC employees who have committed criminal offenses during work hours as well as reporting requirements dealing with medical parole.

Changes were also made to the general government budget, SB 173. One provides $18 million in additional spending for Detroit for addressing public safety.

Sen. John Cherry (D-Flint) told reporters the change was part of an initiative included in the Senate budget to provide more flexibility for public safety funding from the state. The carveout for Detroit was to ensure it has the same flexibility provided elsewhere in the state under the proposal.

To SB 184, the 2024-25 supplemental, multiple changes were made. One was to provide authorization for the use of $129.1 million in federal Inflation Reduction Act monies to implement several renewable energy initiatives. The Department of Environment, Great Lakes and Energy was awarded the funding last year (See Gongwer Michigan Report, July 26, 2024).

Another $15 million in restricted parks funds was authorized for capital outlay for use in several state park projects. A total of $62,000 in grant funds was included for the Department of Attorney General for use by the Michigan Commission on Law Enforcement Standards Track for professional training.

For the Department of Military and Veterans Affairs, a shift in funding between line items would be authorized to allow for a land purchase for the planned new Marquette veteran’s home.

It also included language providing for the Department of Health and Human Services the necessary technical authorizations needed to be able to secure remaining American Rescue Plan Act monies for Home and Community Based Services.

Statements following session consisted of a mix of praise or opposition to the Senate’s actions.

“I’m proud of our collaborative efforts to pass another intentional, fiscally responsible budget that continues investing in the priorities that matter most to Michiganders – from affordable housing, public schools, and child care to workforce development, public safety, and small business support,” Senate Majority Leader Winnie Brinks (D-Grand Rapids) said. “This budget is a testament to our values, demonstrating our commitment to equity, sustainability, economic growth, and prosperity for every Michigan community.”

Zach Rudat, advocacy director for the Michigan Freedom Fund, laid into Senate Democrats for including boilerplate language that would enable the state to withhold funding to actions taken by local leaders deemed to be violating federal immigration law (See Gongwer Michigan Report, April 30, 2025).

“Senate Democrats just voted to give Dana Nessel the unilateral authority to be judge, jury and executioner against local communities who dare to cooperate with federal authorities to keep their communities safe,” Rudat said. “Michigan voters were clear in 2024: they want all levels of government to step up and get tough on illegal immigration. Lansing Democrats are refusing to listen to voters, choosing instead to embolden an activist Attorney General to make every corner of Michigan a sanctuary city.”

Matthew Sahr, president of the Michigan Professional Fire Fighters Union, praised the Senate general government budget for including $100 million for public safety funding.

“By investing in firefighter staffing, training, equipment and mental health support, this budget recognizes the essential role fire service professionals play in keeping Michigan communities safe,” Sahr said. “These are not just investments in fire departments, they are investments in every Michigan family, business and neighborhood.”

Detroit Federation of Teachers President Lakia Wilson-Lumpkins was pleased with the per-pupil funding levels and increased money to assist at-risk students.

“We cannot pout and complain about test scores without putting dollars where they are need the most – improving the amount and quality of services that our students so rightfully deserve,” Wilson-Lumpkins said. “Michigan will be able to not only retain and recruit educators to the profession but also retain and recruit new Michiganders looking for homes in a state that is committed to its future, which is our students!”

The Senate Regulatory Affairs Committee reported SB 229, which seeks to amend the General Sales Tax Act as it relates to delivery network companies. The bill was reported 11-0.

Sen. Jeremy Moss (D-Southfield) explained that when third-party shipping companies such as DoorDash and Instacart process items to be delivered, they are required to remit sales tax on orders as they are processed in their apps and then are delivered to customers.

Moss said major retailers and big box stores can modify their point-of-sale software systems to turn off the collection of the sales tax when a driver arrives to pick up their order because it was already remitted when an order was processed on an app.

“But there’s smaller retailers like your hometown grocery store that cannot modify or don’t have the capabilities to afford a system to modify their existing point-of-sales system, so as a result, the sales tax is collected and remitted, again, a second time when the item is actually picked up,” Moss said.

Moss said the bill is an attempt to eliminate the burden for smaller retailers to have expensive point-of-sales systems like larger retailers. Instead, the third-party delivery company would be able to claim the second set of sales tax if collected by the retailer on its yearly tax return.

Raj Lapsiwala, a senior manager for Instacart, was in favor of SB 229. He said the changes in the legislation would ensure the state is collecting the proper amount of taxes, not the excess taxes from the second remission of taxes.

Evan Marolf with DoorDash also supported the bill.

“This is a thoughtful, common-sense solution,” Marolf said. “We believe this represents a fair approach that maintains the integrity of Michigan’s sales tax system and the benefits of the marketplace facilitator rules while avoiding unintended double-taxation on businesses and the costs that that ends up imposing indirectly on consumers.

The committee also reported SB 157, which would create an act giving protection to families who buried their pets at pet cemeteries from being taken advantage of by the owners. Testimony was taken on the bill in March (See Gongwer Michigan Report, March 20, 2025).

Prior to being reported, an S-2 substitute was adopted making several changes based on input from stakeholders.

These included provisions that the same notice of the sale of property where a pet cemetery is located would have to be provided to those who have bought plots in advance and have not yet buried deceased pets. An existing property tax exemption for pet cemeteries would also be removed.

Owners of pet cemeteries would also need to obtain approval from their local health department.

Removed from the definition of “pet” was big cats. The Michigan Large Carnivore Act prevents the ownership of big cats, which would be leopards, lions, tigers, jaguars, cougars, panthers and cheetahs.

Members reported the bill 7-3 along party lines, with Sen. Michael Webber (R-Rochester Hills) abstaining.

A substituted version of Rep. Mark Tisdel‘s bill to curb cell phone use in schools was reported by the House Education and Workforce Committee Wednesday.

HB 4141, which Tisdel (R-Rochester Hills) introduced in February, came before the committee last month for testimony, but a vote was postponed until the substitute was finalized. The bill passed with bipartisan support Wednesday, but with a notable no vote from Rep. Brad Paquette (R-Niles), who expressed concerns about limiting schools’ ability to teach 21st century tech skills with too restrictive of a cell phone policy.

Rep. Nancy DeBoer (R-Holland), who chairs the committee, said the substitute adopted Wednesday creates exemptions to the bill’s cell phone restrictions for students with medically necessary devices or who require access to them as part of an individualized education program or 504 plan.

“This substitute ensures that in a school that has multiple grade levels, the policy is based on the highest grade level in the school,” DeBoer said. “It exempts medically necessary devices, district owned devices, district designated devices for instructional purposes, devices for lesson-specific assignments, and devices used for special education programming or 504 plans. It puts elementary school students under the middle school’s student policy standard, and it clarifies in the definition of wireless communication devices that it does not include ‘basic telephones.’”

The changes made in the substitute were worked out with stakeholders and committee members who were concerned about medically or educationally necessary devices and the possibility that students who commute to school alone in rural areas might not be allowed to bring a “dumb phone” that doesn’t access the internet or third-party apps with them for safety purposes. Tisdel said in an interview with Gongwer News Service he wanted the bill to make allowances for students to have flip phones.

The Department of Education took a neutral stance on the bill on Wednesday, having previously stated it was a “one-size-fits-all solution” that would not work in Michigan schools. Tisdel said he views the department’s change in stance as a positive sign for the bill’s future.

Also neutral on the bill was the ACLU of Michigan, which Tisdel said came after the organization requested some changes to the bill’s language.

“MDE came out neutral, which was a good thing, and we met with the Michigan ACLU, and we made a couple of clarifications, some simple but specific language changes that they wanted, and they came out neutral,” Tisdel said. “These are all very positive signs.”

As for the bill’s future on the House floor, Tisdel said he’s optimistic it will have bipartisan support after being praised by House Speaker Matt Hall (R-Richland Township) and gaining the affirmative vote of Rep. Regina Weiss (D-Oak Park), who chaired the panel last session, in committee.

Looking beyond the House, the bill may face an upward climb in the Senate, where an alternate version, SB 234, has been passed. Tisdel said he hopes his colleagues recognize that while the bill, sponsored by Sen. Dayna Polehanki, is “better than nothing,” it would fall far short of the regulation and support from the state he believes schools need to properly address cell phone and social media dependencies among young people.

“The Senate bill uses language like ‘seek to limit’ and ‘may reduce,’ and then on the second or third page, under the list of exceptions, (it provides for) any exception at the discretion of the of the local principal or senior administrator,” Tisdel said. “Well, any exception – that’s a non-policy.”

Tisdel referenced the state of New York’s recently adopted policy instating a bell-to-bell ban on smartphones as the ultimate goal – he hopes to see children and teens be able to spend a day away from their phones without feeling the compulsive need to check social media or anxiety about not being plugged in.

“Once you wrap your brain around the fact that the social media algorithms are designed to addict you, to grab your attention, hold it and keep you coming back, (you must ask) where do you allow an addicted individual to carry the product that they’re addicted to? It’s just that simple,” he said. “Kids will get 200 to 400 app notifications a day, and the majority are on social media four and a half hours or more, and many are on seven hours or more a day.”

The House Election Integrity Committee discussed legislation Tuesday that would require the secretary of state to ask those who have not voted in 10 years or longer to confirm their voter registration status.

The bill, HB 4356 , was presented to clean up Michigan’s Qualified Voter File.

Both Republicans and Democrats on the committee were supportive of legislation that would empower the secretary of state and clerks to improve their list of voters.

“We have to provide tools to the Department of State … for them to navigate their duties and their roles and provide us with a more secure voter roll list,” Rep. Jay DeBoyer (R-Clay) said.

The bill is sponsored by Rep. Mike Hoadley (R-Au Gres).

“I view House Bill 4356 as being a first step forward to what we need to do to clean up our voter rolls,” he said. “Several other steps are needed to … reinstall that confidence in our voting public.”

DeBoyer, who testified in support of the legislation, said that it was important for lawmakers to take action to boost the confidence of the electorate in election results.

“That confidence of the electorate in the outcome of an election is what matters. That confidence, whether it’s founded or unfounded, still matters,” he said. “Having clean voter rolls – that really only have the individuals that are eligible to vote on those rolls, to the best of our ability – is the first step in instilling confidence in the people of the state of Michigan in the results of their elections… Our behavior as legislators, and specifically with regard to election law, should always be from the premise of establishing a safer and more secure system.”

The bill would simply provide another check to make sure that people who should no longer be on the QVF are removed, DeBoyer said. For example, DeBoyer said when people die, the death certificate is shared with the Department of State and then with the local clerk so the dead person can be removed from the voter roll. If, however, a person dies in another state, the death certificate is not always shared in a timely manner.

“If you die in Florida, if you’re a snowbird, and you pass away in Florida, there’s a chance that that death certificate could make it back to a county clerk or a local clerk, or the Secretary of State’s Office for that matter, but in a large number of cases, that does not occur,” he said. “At some point, we have to have a provision in place that allows for those individuals to validate their eligibility to vote and allows them to demonstrate that they’re still interested in voting.”

Rep. Matt Koleszar (D-Plymouth) said that he supported cleaning up the voter rolls and had introduced similar legislation, but he wondered if the legislation should be in line with four-year presidential election cycles.

Hoadley said he originally wanted eight years, but 10 is required by federal law.

“Of course, coming to committee, what we want to do is massage these out,” he said. “I’d much rather (have) seen the legislation say eight years plus the other two required by federal law, making it those increments as you suggest.”

Rep. Mai Xiong (D-Warren) asked if the legislation would violate the Voter Registration Act of 1993, which prohibits states from removing voters for not voting. She also inquired why the card would be returned to local clerks rather than the Department of State.

Hoadley clarified that the federal law prevents people from being removed until after receiving notice for two general election cycles and sending the card back to local clerks would act as a check and balance.

“We have the secretary of state, who’s our chief election authority, and our clerks have their fingers on the pulse of their local electorate,” he said. “They’re the ones who are going to be responsible for the QVF of their local precinct.”

Rep. Stephen Wooden (D-Grand Rapids) said that although Michigan has a great track record for removing ineligible voters from the voter rolls, there is always room for improvement.

He also asked if it would be worth considering extending the legislation to a greater number of years.

“The average length of stay someone resides at one address, according to the American Community Survey Redfin analysis of county records, is roughly 12 to 13 years,” he said. “Wouldn’t it be reasonable to suggest that we could try to find… there’s essentially a Venn diagram of a time that’s after the median length of stay, but also within the four-year presidential cycle?”

Hoadley said he was open to the conversation.

“Everything is worth considering,” he said.

Erin Schor, legislative policy director for the Department of State, said the department shares the goal of maintaining accurate voter lists.

“We do believe there are a certain number of voters in the Qualified Voter File that have not voted or otherwise interacted with their clerk’s office in a very long time because they have likely moved,” she said. “Short of other proof like this bill would provide, we currently lack a legal reason to begin the cancellation process for these voters.”

Schor said that the department had concerns about the time frame because 10 years was too short a period. The department also is concerned about sending cards back to local clerks, she said.

“That’s tremendously logistically difficult, knowing that we have something like 1,800 jurisdictions across the state,” she said. “That increases the risk of errors, increases the cost and increases the chance that those cancellations would be handled in an inconsistent manner across the state.”

Schor went on to say that if legislators felt strongly about having clerks process the cancellations, the department’s position was that the clerks should begin the mailing process.

“We do see the language in HB 4462, Rep. Koleszar’s bill, is just a little bit stronger in terms of establishing a lack of voting history as reliable information that a voter has moved, just to make clear that we’re not running afoul of the (National Voter Registration Act),” she said.

No further action was taken on the legislation during Tuesday’s committee meeting.