LANSING — Governor Gretchen Whitmer released her spending recommendation Wednesday for next year’s state budget, the start of a months-long process with more than $80 billion at stake.
The governor’s proposal also comes as the state of Michigan is going into the next fiscal year nearly $2 billion short of projected revenue levels.
The recommendation is for fiscal year 2027, which kicks off on Oct. 1 of this year.
The governor put forward an $88.1 billion proposal that includes new taxes on sports betting, vape products and cigarettes.
The proposal also includes a 10% property tax reduction for seniors and sales tax breaks on school supplies.
Jen Flood, the state’s budget director, says that a large portion of the shortfall can be attributed to President Trump’s 2025 policy bill, also known as H.R. 1.
“Heading into fiscal year ‘27 we’re managing a $1.8 billion gap,” she said. “This is largely driven by declines in revenue, rising healthcare costs, the direct fiscal impacts of H.R. 1, persistent inflation across sectors. And this budget also includes a narrow set of must do investments that will preserve access to health care, create jobs and keep communities safe.”
Flood says that cuts in federal assistance have forced the state to pick up the slack with numerous programs. She says that healthcare costs alone account for nearly $1 billion.
“We can’t wish these pressures away,” she said. “We have to solve them, and as families across Michigan are tightening their belts, the state is too the budget recommendation we present today makes the most of every dollar we have.”
The top-line figure of $88 million will likely be negotiated down in the process, since the governor will be working to win the votes of Republicans who control the State House.
House Speaker Matt Hall and other Republicans have already voiced their opposition to new taxes, despite the significant shortfall in revenue.
“We need real property tax reform, real property tax cuts for across the board, for everybody, not just one group,” said Rep. Jim DeSana, (R) District 29, Carleton. “We need property tax cuts for young families, for seniors, for working families. It has to be across the board, and I believe raising taxes in Michigan this year will not happen.”
Lawmakers say they’re so far confident that the divided government can avoid another standoff over this year’s spending.
Last year, the state government briefly shut down after an agreement wasn’t reached by midnight on Oct. 1.
The budget will be the last put forward and led by Whitmer, who will finish her second full term as governor at the end of this year.