Michigan’s state budget process is never a dull affair, but this year’s $81 billion deal—signed by Governor Gretchen Whitmer on October 7, 2025—may have set a new bar for drama, bipartisan bickering, and ultimately, compromise. After months of wrangling, missed deadlines, and even a brief government shutdown scare, leaders from both sides of the aisle emerged touting wins for their parties, while also vowing to revisit some contentious issues before the year draws to a close.
Governor Whitmer, flanked by legislative leaders at a private bill-signing in Lansing, called the budget a testament to cooperation in difficult times. “I’m so grateful to legislators on both sides of the aisle for coming together to get this done,” she said in a statement, as reported by Bridge Michigan. The final spending plan, including about $5 billion in Medicaid provider tax revenue set aside in contingency funds, lands at $81 billion—less than last year’s $82.5 billion budget and the $84.5 billion preferred by Senate Democrats, but more than the $78.5 billion sought by House Republicans.
Discretionary spending from the state’s general fund will total $14.1 billion, marking a $760 million cut from last year’s allocation. Notably, Whitmer did not exercise her veto power on any spending items this time around—a marked departure from previous years when she wielded that authority more liberally.
But getting to the finish line wasn’t easy. The budget process was marred by missed deadlines, with the GOP-controlled House not passing its own proposal until late August—months after both the Democratic-controlled Senate and the governor had released theirs. When lawmakers failed to finalize a deal before the October 1 fiscal year start, they scrambled to pass a stopgap bill to keep the government running. That temporary funding was set to expire just a day after Whitmer’s signature brought the drama to a close.
Senate Majority Leader Winnie Brinks, a Democrat from Grand Rapids, acknowledged the hurdles. “The budget cycle featured unprecedented challenges,” she said, but added that officials had managed to “show the rest of the country what leadership can look like in divisive political times.”
One of the most hotly debated elements was the fate of Michigan’s controversial Strategic Operating and Attraction Reserve (SOAR) Fund, a business incentive program that has spent more than $2 billion trying to lure major employers to the state. The new budget completely eliminates SOAR funding, a move that House Speaker Matt Hall, a Republican from Richland Township, hailed as a victory against what he called “cash giveaways.” Yet, both Whitmer and legislative leaders have pledged to hammer out a new approach to economic development before year’s end. According to Whitmer spokesperson Stacey LaRouche, “We are proud of the shared commitment to passing bipartisan legislation before the end of this year that will make it easier to create and retain more good-paying, high-skill jobs in Michigan.”
Hall, in a press conference following the bill signing, didn’t mince words. He repeatedly accused Democrats of a lack of transparency and wasteful spending, blaming them for the hours-long government shutdown on October 1. “The Democrats were willing to shut down the government over not disclosing their pork, and that was ultimately the reason that these negotiations went on as long as they did,” Hall charged, as reported by Michigan Advance. He insisted that Republicans pushed for earmarks—totaling $168 million this year, down from over $1.3 billion the previous year—to be disclosed before the vote, rather than after the governor’s signature.
Despite the finger-pointing, both parties claimed important policy wins. For Republicans, Hall touted the elimination of 2,000 “ghost employees”—unfilled government roles—as a step toward cutting waste, fraud, and abuse. He also emphasized the inclusion of tax relief for working families: “It was really critical that we deliver tax relief for working people, and that we amplify the working families tax cut that President Trump and the Republican Congress have approved so that our tipped workers, our people working overtime, and also our seniors on Social Security, have no tax on their state tax.” These new exemptions are expected to cost the state at least $188 million annually for the next three years.
On infrastructure, the budget and related policy bills are projected to generate more than $1.8 billion a year for roads, including about $1 billion in fiscal year 2026. Most of this will flow to local roads, with specific allocations such as $456.7 million for counties and $246.1 million for cities and villages. Funding sources include a new 24% wholesale marijuana tax, expected to raise $420 million a year starting in January 2026, and additional revenues from corporate income taxes. Hall, however, described the marijuana tax as a “volatile” source of revenue, clarifying that his concern stemmed from debates over a now-abandoned hemp products tax proposal.
Education was another battleground, but ultimately, funding was spared. The budget allocates over $21 billion for schools, with a record $10,050 in per-pupil funding and $201.6 million to ensure free school meals for all students. Mental health and safety grants totaling $321 million will be available to both public and private schools. Senate Majority Leader Brinks highlighted these provisions as key Democratic priorities, saying, “Senate Democrats worked across the aisle to get the job done and deliver another responsible budget that boosts public education, invests in our aging roads, and protects access to health care, all while mitigating the worst effects of the devastating federal cuts.”
Yet, not all programs fared well. The budget includes a $22 million reduction for the Going Pro Talent Fund, a $9 million cut to the Pure Michigan tourism campaign, and a controversial $2 million cut to Autism Navigator—a program connecting families with resources. That last-minute cut drew sharp criticism from Democratic state Rep. Kelly Breen, who promised to fight for its restoration, noting the vital role navigators play for families affected by autism.
Other notable features include at least $160 million in earmarks for community projects—like police Tasers, harvest simulators, and art museum upgrades—with new rules requiring lawmakers to disclose sponsorship before votes. The budget also sets aside $270 million to expand Rx Kids, a cash aid initiative for mothers and babies, and provides funding increases of 1.9% to 4.7% for all 15 public universities, including the University of Michigan and Michigan State University, both of which avoided deep cuts previously proposed by conservatives. On the infrastructure front, $26 million is earmarked for Selfridge Air National Guard Base expansion and $14 million for ice storm recovery in northern Michigan, though funding for a proposed copper mine in the Upper Peninsula was left out amid environmental concerns.
As the dust settles, the 2026 budget stands as a complicated, sometimes messy, but ultimately functional compromise—a reflection of Michigan’s divided government and the high stakes of public policy. Lawmakers on both sides have declared victory, but with promises to revisit economic development incentives and further spending reforms, the story of Michigan’s budget battles is far from over.
