Oct. 10, 2025 | This Week in Government | Hall: Don’t Like Decoupling? Blame Democrats

Policies like decoupling are “what you get when you support Democrats,” House Speaker Matt Hall said during a press conference on Tuesday.

After the budget passed, business groups pushed back on the plan to separate federal and state tax code, which was an integral part of the plan to provide funding for roads. A coalition of business chambers and stakeholder groups said it would make taxes more confusing and expensive for businesses, thereby making Michigan less competitive.

The legislation, HB 4961, now PA 24, responds to the federal One Big Beautiful Bill Act that allows businesses to pay less in taxes federally, around $677 million less to the state. Now, under state law, the federal tax changes will not have bearing on state taxes.

“These business groups support Democrats. Some of them even endorsed Gretchen Whitmer,” Hall said. “That’s what you get when you support Democrats… If you look at the Republican plan, the Republican plan was to eliminate $3 billion of waste, fraud, and abused. We showed how we could do that and fix the roads.”

He said that any plan that raised taxes for working Michigan residents, such as increasing the gas tax or raising registration fees, was untenable to Republicans.

“Actual working people and seniors don’t have lobbyists,” he said. “One thing we’re never going to have is increases in our hunting and fishing fees… as long as I’m speaker.”

Hall said he was willing to stand up to the interests of business groups.

“They don’t like my position on getting rid of the MEGA credits either,” he said. “The ones that get the MEGA credits and the ones that are affected by decoupling, they overlap a lot.”

Hall also touted other Republican wins in the budget, including no taxes on overtime and tips, record education spending– including money for the school safety and mental health, requiring 80% occupancy in state-owned buildings, eliminating unfilled full-time equivalent employees and putting money into the Public Safety Trust Fund.

“Our priorities were public safety, education and fixing roads. Democrats tried to tell you that you had to pick between fixing the roads and funding education, I always said we didn’t have to,” he said. “Decoupling helped us accomplish those priorities.”

The budget process also brought about greater transparency, Hall said.

“You saw the Democrats do some transparency in this budget,” he said. “The reason that these negotiations went on as long as they did…we were just at a standstill for a very long time over transparency.”

He went on to say that legislation was coming that would make the transparency requirements for public hearings and disclosure prior to the budget passing permanent.

During this budget process, Hall said Republicans achieved what they set out to do when they walked off the floor last term during lame duck, which was earned sick time, tipped minimum wage, and funding for local roads.

Next year’s budget will have more cuts, Hall said.

“We’re right sizing this budget,” he said. “We’re getting value for your dollars, and we’re setting priorities… this is the trajectory we’re moving on to eliminate further waste, fraud, and abuse next year.”

In a post-Strategic Outreach and Attraction Revenue fund Michigan, the question stands: If not SOAR money for economic development, then what’s next?

The SOAR fund was ended in the budget passed early Friday morning, not depositing its annual $500 million. Some lawmakers are calling for a brand-new tool to attract businesses and others want to see other issues addressed in efforts to attract businesses without subsidies.

With the critics of SOAR, one theme stands: getting rid of “picking winners and losers.”

In TV interviews on Friday following the passage, Gov. Gretchen Whitmer said the next challenge facing the state was not ceding the state’s “competitive edge” in creating more jobs in the state (See Gongwer Michigan Report, Oct. 6, 2025).

Stacey LaRouche, press secretary for Whitmer, said Senate Majority Leader Winnie Brinks, D-Grand Rapids, and House Speaker Matt Hall, R-Richland Township, have agreed to pass legislation before the end of the calendar year that would “make it easier to create and retain good-paying, high-skill jobs in Michigan.”

Hall told reporters on Tuesday that his preferred route in economic development would be through a bill not yet introduced by Rep. Mike Hoadley, R-Au Gres, that would change the High-Wage Incentive for Regional Employment program.

Hall also called for eliminating SOAR altogether outside of just defunding it as well as repealing mega credits.

He said the state needs a tool that can prove the jobs are being created and are high-paying, especially with promises from President Donald Trump to help Michigan land deals, and that economic development will take precedence over other conversations.

Hall said one economic development bill from Rep. Alabas Farhat, D-Dearborn, HB 5073, that would raise the tax cap for the transformational brownfield plans, is not a priority he would like to chase now.

Farhat was the first to say early Friday morning after the House passed the budget bills that the Legislature was going to pivot its focus to economic development (See Gongwer Michigan Report, Oct. 2, 2025).

Farhat told Gongwer News Service on Tuesday that the next economic development plan is a mix of addressing seemingly outside issues from direct business, like the roads deal to make infrastructure changes, but also in creating something new for business attraction.

“I’ll continue having these conversations around what that the new tools look like, but I’ll definitely say we’re going to want something that holds developers accountable to any promises they make, keep employers accountable, but it also spurs growth, and that is something that’s going to generate a positive impact,” Farhat said.

Farhat said the state cannot simply “do nothing” and allow families to face economic uncertainty.

But, Rep. Dylan Wegela, D-Garden City, is wary of a new economic development tool in general.

“The best thing that can happen right now is for us not to replace SOAR with anything,” Wegela said. “There are already a million different ways businesses can get help from the state, and we should be repealing those instead of expanding them.”

There are more tax abatements and “tools” that businesses have at their disposal than he can name, Wegela said, making it “absurd” to him that there would be a need to replace SOAR with something else.

He said economic development should not be about handouts, but instead about making life more affordable for Michiganders including addressing public housing, having strong unions, funding roads, in which he said the funding plan probably does not go far enough for all the infrastructure needs, and other “basics” that result in a better economic impact.

The state can’t meet basic functionalities, Wegela said, but is planning again about how to build more tools for businesses.

“To be quite frank, I don’t care about giving businesses more tools, I care about working-class people having things that their taxes paid for first,” Wegela said. “The state hasn’t learned that lesson. I don’t think SOAR going away is going to (teach) that lesson. I guarantee you there is going to be some new magic wand that’s going to make business come here.”

Sen. Mallory McMorrow, D-Royal Oak, said the Legislature is in a “healthy place” where they can acknowledge that while SOAR was well-intentioned, it’s not working and look to the future instead.

She touted her legislation, SB 213 and SB 214 , as something that could change the course of development with the 10-year strategic plan along with a board that would develop and oversee the plan, which would address both underlying issues of access to education, housing, population and others, but then also creating tools that would make sense for the state.

She said there must be this plan before creating more avenues because if not, it may feel like the state is “grabbing copies of tools to put in a toolbox that may not necessarily take us into one singular direction.”

When it comes to Hall’s wishes, McMorrow said she aligns with him on the fact that the state cannot “incentivize our way out of our fundamentals,” like building the talent.

McMorrow said brownfield transformation is essential to avoid businesses passing communities by for other land and there is considerable support in her caucus for that.

Rep. Mark Tisdel, R-Rochester Hills, said his view is that if there were to be a new incentive tool, it should be run on a reimbursement schedule rather than upfront funding, wanting to see more accountability on the backend.

Tisdel pointed to boilerplate language in the recent budget as to what to expect out of a new phase of development that pushes for reimbursement instead of grants and the directives for money only being sent to established businesses or organizations, referencing the 2022 legislative grant for Fay Beydoun and her international business accelerator, Global Link International, which was created only a few days before the money was awarded.

Rep. Steve Carra, R-Three Rivers, said the plan after SOAR should be lower taxes across the board and less regulations so all businesses can thrive.

“Government is getting in the way with too much red tape, paperwork, compliance, data mining by the state, guilty until proven innocent type of governance is suppressing business in general,” Carra said. “If we can have a business-friendly environment with lower taxes across the board for everybody it will be setting our state up for success.”

Alongside the sunsetting of SOAR, lawmakers like Sen. Thomas Albert, R-Lowell, have raised the idea of dismantling the Michigan Economic Development Corporation altogether.

When looking at how the changes in SOAR could affect the MEDC, Wegela said there is still need for some of the uses of the corporation outside of government subsidies. He said there needs to be drastic leadership changes inside the corporation, but that there is no need to get rid of it.

The MEDC was formed in 1999 through an interlocal agreement as a successor to economic attraction efforts housed directly within state government.

He said while people like to blame the MEDC for problems in development, the Legislature ultimately gives the corporation “the green light.”

McMorrow said what she hears from her constituents is a call for decentralizing the economic development arm that may not “accurately reflect the needs or strengths of the different regions,” whether that means resizing or spreading out across the state.

She said Michigan is now in the position that Virginia was in a few years ago, in which their lawmakers were upset with their equivalent of the MEDC, that led to “steep reform” and a plan for development like hers.

On the other hand, Tisdel said there isn’t really a purpose for the MEDC, envisioning the reimbursement incentives he wants to see handled by the Department of Treasury, wanting to push against potential political pressure in these grants that he says the MEDC has. Carra wants to fully abolish the MEDC as well, saying getting rid of SOAR is steps in the right direction.

When asked if there is one correct answer to economic development in the state, Carra said “stop doing it.”

“Let the market run its course,” Carra said.

Danielle Emerson, spokesperson for the MEDC, said in a statement to Gongwer News Service that while SOAR was contemplated to sunset, MEDC will be working with the Legislature on “tools and resources to meet this moment in time while continuing to provide support for Michigan’s small businesses, entrepreneurs, local communities, and more the way we always have.”

The MEDC also released a statement after the budget was signed by Whitmer, saying the corporation would continue work on the “Make it in Michigan” economic development strategy.

“We are encouraged that this budget will sustain investment in job creation and grow our tax base by supporting small businesses and communities on both peninsulas, ensuring continued focus on people, places and projects across the state,” MEDC Chief Executive Officer Quentin Messer Jr. said in a statement. “This budget provides a path forward for Team Michigan, investing in programs ranging from the arts and tourism and hospitality to supporting dual use aerospace and defense activities. While work remains, these budgetary investments ensure Pure Michigan remains a great place to visit, work, create businesses, and put down roots.”

A cannabis industry group has sued the state over a newly passed wholesale tax on cannabis products as part of a long-term road funding deal, arguing the Legislature and executive branch violated the state Constitution.

In a lawsuit, filed Tuesday afternoon in the Court of Claims the Michigan Cannabis Industry Association contends that the Legislature violated the Constitution by passing a law that amends a voter-initiated law without the necessary three-fourths vote required in both chambers.

The bill, HB 4951, now Public Act 23 of 2025, was signed Tuesday by Gov. Gretchen Whitmer moments before the suit was filed.

The suit is against the Department of Treasury and Treasurer Rachael Eubanks in her capacity as state treasurer.

As passed, PA 23 enacts a 24% wholesale tax on cannabis products in Michigan, a move that was staunchly opposed by industry when it began moving through the Legislature late last month. The tax will be collected beginning Jan. 1, 2026.

Member of the House voted 78-21 for the bill on Sept. 25, five votes shy of a three-quarters majority. The Senate early last Friday morning passed the tax 19-17.

In its suit, the group states that the Michigan Regulation and Taxation of Marihuana Act passed by voters in 2018 is the exclusive vehicle for imposing excise taxes on all sales and transfers of marijuana.

“Section 13 of MRTMA provides that “in addition to all other taxes, an excise tax is imposed on each marihuana establishment and on each person who sells marihuana[.]”” the suit states. “The import of this language is clear: while other taxes may generally apply to marihuana, such as the sales tax, MRTMA is the exclusive mechanism for imposing excise taxes. Legislative authority over marihuana excises taxes is exclusive to MRTMA; no other statute may intrude upon or duplicate the marihuana excise tax. Thus, additional excise taxes require a direct amendment to MRTMA itself.”

The Comprehensive Road Funding Tax Act created under PA 23 of 2025 by the Legislature without the three-quarters majorities in both chambers is in violation of Article 2, Section 9 of the Michigan Constitution, the lawsuit states.

It was pointed out that many of the definitions and parts of language in the new act were lifted directly from the 2018 voter-initiated law, meaning that Treasury must rely on the 2018 law to implement and enforce the newly passed law.

“Any ambiguity as to which transaction, products, or entities are subject to CRFTA’s excise tax can only be resolved by reference to MRTMA,” the suit states. “It is impossible to construe CRFTA independently without reference to MRTMA. CRFTA is therefore fundamentally dependent on MRTMA.”

The lawsuit also alleges that the new law violates Article 4, Section 24 of the Constitution, which states that no laws can contain more than one subject, nor can a bill be altered by the Legislature to change its original purpose as determined by its content and not alone by its title.

Further, the new law unlawfully amends the 2018 tax law by reference, the suit adds.

The suit seeks a declaratory judgment that PA 23 of 2025 is invalid and unenforceable. The group also seeks an order that the defendants comply with the court’s order and judgement as well as provide for any other relief the court deems proper.

As part of the deal to pass the state’s budget for fiscal year 2025-26 last week, the Senate Appropriations Committee met on Wednesday to discuss a bill that would enshrine transparency measures around budget earmarks, or legislatively directed spending items, in statute.

The committee took up SB 596, which outlines the requirements for earmark transparency, which would require requests to include the name of the requesting legislator, the total amount of the item and estimated cost of the project, the name of the intended recipient or intended location, the expected outcomes and deliverables of the request, a statement attesting there was no conflict of interest, verification of a recipient’s nonprofit status, or a statement that the recipient was not a for-profit entity. Additionally, the bill would require lawmakers to submit their request before the date the budget bill containing it was passed by their chamber for the first time. The bill would allow each chamber to establish other deadlines.

The bill is similar to the earmark transparency passed by the House earlier this year (See Gongwer Michigan Report June 4, 2025).

“The Senate may add more exposure, and the House may have its own spin,” bill sponsor and chair of the Senate Appropriations Committee, Sen. Sarah Anthony, said. “Ideally, we would have a shared set of disclosure that we would all make sure are contemplated, and then the flavor the Senate does it versus the House, I think ultimately it’s up to this body.”

The goal, ultimately, Anthony said, is for the public to know how their tax dollars are being spent.

Sen. John Damoose, R-Harbor Springs, said he was eager for this form of transparency in the budget process.

“By and large, I want people to know that I have something in the budget. We’re all trying to prove to our constituents back home that we’re effective for them,” he said.

Damoose went on to say having these measures in place also protected lawmakers from having earmarks put into the budget in their name without their knowledge.

“Now that we have this, we can take credit, basically, for the things we did try to get in there and also have proof of the things we didn’t try to get in,” he said.

The bill also includes requirements for recipients to enter an agreement with the state before receiving the funds, and if they are found not to meet the terms of the agreement, the state would be able to cease payments and cancel the grant if a satisfactory correction plan was not submitted.

“Even when we look at the Fay Beydoun incident, it should not have taken that long to retrieve taxpayer dollars,” Anthony said. “This legislation will help address that in the future.”

The Michigan Economic Development Corporation has not reported receiving millions of that grant back to the corporation.

Senators raised questions about the requirement of making grants only for nonprofit or not for profit entities, which Anthony said could be discussed further.

Anthony said she also didn’t want to create a cumbersome process for organizations that are traditionally overlooked in the state budget.

She said she had little interest in taking up some of the other transparency legislation passed by the House, such as the cooling off period for lawmakers before becoming lobbyists. Instead, Anthony said it would be better to pass legislation that would open the House, the Senate and the Governor’s Office up to FOIA requests, and other legislation that would get the public more involved in transparency.

“It would be great if your average Michigander was interested and involved in (the budget) process. I have always been committed to lifting up the voices of men and women across our state, so I’m looking for ways to make the process not just more transparent, but more accessible,” Anthony said. “I would be thrilled if the Speaker started with FOIA reform. When we talk about transparency, shining a light on how decisions are made in this place is something that I think the speaker has supported in the past. It was one of the first things that came out of our Senate majority this year. It all starts with FOIA reform and making sure that we have a process. From there, I think we build upon that.”

Anthony also briefly discussed the path forward for economic development, now that the budget is passed and transparency legislation is moving.

She said that people on both sides of the aisle were tired of incentives that didn’t yield results for taxpayers.

“I hope that we can get to a place that we can have strong tools to make sure that we are competitive on not just a national stage, but a global stage,” she said. “What we don’t need to do is pay corporations and not get much back in return.”

Revenues collected during September were down nearly $200 million from projections for the month despite being higher overall compared to the same period one year ago, the Senate Fiscal Agency said on Thursday.

In its monthly revenue report, the agency said total collections to the state’s major taxes and lottery revenue for September were $3.8 billion. This was $191.8 million less than anticipated but also 0.6% above what was collected the previous September.

For the fiscal year to date, total General Fund collections were $267 million less than expected, based on the May consensus revenue estimate, while School Aid Fund collections were $76.5 million above projections.

General Fund collections for September were $183 million less than expected and School Aid Fund collections were $19.6 million less than anticipated.

The agency said despite the fiscal year ending on Sept. 30, the state’s use of accrual accounting means that from a revenue basis the fiscal year basically runs through the end of October. This means that the fiscal year-to-date numbers reported Thursday were based on 11 months of collections.

Net income tax collections were at $1.6 billion in September, which was up 0.5% from the same period one year ago as well as $62.6 million less than expected. Withholding payments that make up most of the gross income tax revenue were 0.6% above September 2024 levels as well as $3.9 million less than estimated.

Sales tax receipts were at $919.3 million for the month. This was up 2.4% from the previous September and $9.9 million less than anticipated. Use tax collections came in at $206.4 million, which was down 9.7% from one year ago and $25.8 million less than expected.

Net revenue from the repealed Single Business Tax, Michigan Business Tax, and the Corporate Income Tax were at $224 million. This was 32% less than the previous September and $77.4 million below estimates.

State Education Tax collections in September were 16.7% above those of last September. They were also $21.7 million less than projections. Most State Education Tax collections are gathered in September and October.