Honigman Capitol Report

Alert

Feb 7, 2025


Governor Whitmer Proposes $83.5 billion Budget Governor Whitmer's proposed budget for fiscal year 2026 includes a $15.3 billion general fund and a $21.2 billion school aid budget. The budget focuses on several key areas. In terms of lowering costs, it continues the working families tax credit and allocates $676.1 million for universal preschool, along with $200 million for free school lunches. For job creation, the budget proposes $4.9 billion for road funding, $10 million for talent recruitment in key industries, and $54.8 million for worker training grants. In education, there is a 4.1% increase in per-pupil funding, with $202.4 million dedicated to special education and $258 million for student mental health. Supporting seniors is another priority, with plans to roll back the retirement tax and increase funding for elderly care. The budget also addresses infrastructure and environmental concerns, allocating $80 million for clean drinking water and $46 million for state parks. To improve government efficiency, $46.2 million is set aside for IT upgrades, and $7.2 million is allocated for trial court operations. The budget relies on both state and federal funds, with some uncertainty about federal contributions. The legislative process will refine the budget before it is finalized by July 1, with the new fiscal year starting October 1.


Proposed Paid Sick Time Fix under Review The Senate Regulatory Affairs Committee held a hearing Wednesday on SB 15, a proposed amendment to the paid sick time law set to take effect on February 21. Supporters of the original law argued against changes, stating they would strip benefits from many Michigan workers. Small business owners, however, called for more flexibility and a small business exemption, citing potential financial burdens. Sen. Jeremy Moss emphasized the importance of allowing workers to care for themselves without fear of job loss. The proposed legislation would redefine small businesses and adjust the cap on accrued sick time, allowing employers with fewer than 25 employees to offer less paid sick time. The Michigan Supreme Court previously ruled that the Legislature cannot amend a petition in the same session it is adopted, raising concerns about the costs of the original laws. Opponents fear the impact on businesses, while supporters argue the benefits to workers' health and finances. Sen. Sam Singh noted that similar laws exist in 18 other states but stakeholders highlighted the potential negative impact on vulnerable populations if the law is amended and business owners expressed concerns about the practicality and financial impact of the law without amendments. The hearing included discussions on potential compromises and ongoing legislative negotiations. Lawmakers are considering the balance between supporting workers and addressing business concerns, with further testimony and discussions expected.


Several Potential Candidates Emerge after U.S. Sen. Gary Peters’ Announcement regarding Reelection Following U.S. Sen. Gary Peters' announcement that he will not seek reelection, several potential candidates have emerged for the 2026 U.S. Senate race in Michigan. On the Democratic side, state Senator Mallory McMorrow from Royal Oak is considering a run for either governor or U.S. Senate and former U.S. Transportation Secretary Pete Buttigieg, who now resides in Traverse City, is also contemplating a Senate bid. Michigan's Lieutenant Governor, Garlin Gilchrist II, has significant backing from the Democratic Lieutenant Governors Association, which is prepared to support his candidacy financially. U.S. Representative Hillary Scholten from Grand Rapids and Michigan's Attorney General Dana Nessel have also been flagged as possible candidates. On the Republican side, U.S. Representative John James from Shelby Township and former Republican nominee for the Senate, Mike Rogers, have been mentioned. Auto dealer Kevin Rinke, who previously ran for governor, has expressed interest in the Senate seat, suggesting that Michigan is "open for the taking” and Tudor Dixon, the 2022 gubernatorial nominee is also considering a run, following an outpouring of support. State Senator Jonathan Lindsey, who was endorsed by Trump, has been mentioned as a potential candidate along with U.S. Representative Bill Huizenga from Zeeland. Political strategists are closely watching these developments, as the open seat presents a significant opportunity for both parties. The race is expected to be highly competitive, with candidates from both sides bringing diverse backgrounds and political support to the table.


Looking Ahead With the executive budget recommendation now available for public review and Senate hearings underway on mandatory paid leave reform, the 2025-26 legislative session may soon gain momentum. The Senate has already begun advancing a supplemental spending bill, which not only finalizes the previous fiscal year’s accounts but also could address key funding priorities for various stakeholders. Among them is a critical $50 million allocation needed to reconcile Medicaid HMO reimbursements. Whether closing out last year’s budget or allocating new funding, negotiations between the Republican-controlled House and the Democratic-led Senate and Governor’s office will be essential for progress. We are closely monitoring these developments, particularly to see how much can be accomplished before the Governor’s State of the State address at the end of the month.