Honigman Capitol Report

Governor's Office

Governor Releases Statement on State Budget

Governor Gretchen Whitmer issued a statement following the Michigan Legislature's passage of a bipartisan state budget, emphasizing its balanced nature and long-term sustainability. The budget includes a road funding deal, tax breaks for seniors and working families, and record investments in education and healthcare. Governor Whitmer highlighted the bipartisan collaboration that led to these achievements, noting the benefits such as affordable healthcare access, free student meals, and community safety measures. She also reiterated her commitment to infrastructure, citing the repair of 24,500 lane miles and 1,900 bridges over the past seven years. The budget secures significant investment in state and local roads, expected to create and protect thousands of jobs. Governor Whitmer expressed gratitude to legislative leaders and members from both parties for their cooperation in passing the budget.

Committee News

State’s Budget Bills Approved

Michigan lawmakers passed a new state budget for the fiscal year 2025-26 in the early hours of Friday morning, following months of delays and negotiations that extended beyond the constitutional deadline.  The budget, totaling over $75 billion, includes $51.8 billion for general government spending and $24 billion for education, marking a decrease from the previous year's $82.5 billion budget.   The budget bills are now awaiting consideration by Governor Gretchen Whitmer, who was involved in the negotiations alongside House Speaker Matt Hall and Senate Majority Leader Winnie Brinks. A significant feature of the budget is the introduction of a new 24% wholesale tax on marijuana, expected to generate approximately $420 million annually for road funding starting January 1.  This tax, in addition to the existing 10% excise tax on retail sales, has faced strong opposition from the cannabis industry, which argues it will severely impact small businesses and increase consumer prices.  Additionally, business groups have criticized changes to the state's corporate income tax, predicting a $2 billion tax increase over the next five years and warning of economic destabilization. The budget also aims to address government waste by eliminating 2,000 unfunded "phantom employee" positions and preventing the authorization of 900 more, projected to save over half a billion dollars.  It mandates increased in-person work for state departments to reduce spending on empty office space.  Despite a 4.6% increase in per-pupil funding to $10,050, critics argue that education funding remains insufficient, falling below the national average and not keeping pace with inflation.  The budget also faced criticism for reallocating some School Aid Fund dollars to higher education. The final budget, which passed with bipartisan support, ensures permanent government funding and prevents a shutdown after contentious negotiations and two missed deadlines.

Election News

GOP Hosting Debate Forums for Gubernatorial Candidates

The Michigan Republican Party has announced that it will host three "debate forums" for the gubernatorial race in the 2026 election cycle, providing Republican candidates a platform to share their messages with voters.  The debates are scheduled to take place in Sparta on October 29, Roseville on November 4, and at the Great Wolf Lodge in Traverse City on November 18.  According to Republican Party Chair Jim Runestad, these debates are crucial for the success of the 2026 election cycle and will allow voters across Michigan to hear directly from the gubernatorial candidates.  Previously, at the Mackinac Republican Leadership Conference in September, an "issues panel" was held for the four declared Republican candidates and two potential candidates, but they were not allowed to discuss their candidacy.  The upcoming debates will differ as they will be true gubernatorial debates, allowing candidates to engage directly on issues without limitations.  Participants in the debates will include U.S. Rep. John James, Sen. Aric Nesbitt, former Speaker of the House Tom Leonard, former attorney general Mike Cox, Anthony Hudson, Pastor Ralph Rebandt, and AxMITax leader Karla Wagner, all of whom have declared their intention to seek the Republican nomination.  The party is in the process of finalizing "conservative-leaning moderators" for each event.

On Point

Client Alert: “Catch Up” on Year-End Action Items for Retirement Plans

Looking Ahead

At the conclusion of the budget the focus now turns to policy bills that have been sitting in each chamber waiting for votes. Some House bills have moved out of the Senate; however, the House has not taken any Senate policy bills on the floor. Speculation is that the House will begin to move bills between the middle of October and the beginning of hunting break in mid-November. Speaker Hall has not given any direction on where he will guide his chamber post budget. It can be expected that advocates of important policies will push for the floodgates to open.