Honigman Capitol Report

Governor Whitmer at the Detroit Auto Show

Governor Gretchen Whitmer delivered a speech at the Detroit Auto Show, proposing a payroll tax cut to encourage auto companies to remain in Michigan. She suggested a mix of new revenue and state spending cuts for long-term road funding. The speech, titled "The Road Ahead," emphasized bipartisan cooperation for economic development and road funding, ahead of negotiations with the Republican-led House and Democratic-controlled Senate.

Whitmer touched on the "HIRE Michigan" payroll tax cut, crediting former Governor Rick Snyder and Senate Majority Floor Leader Sam Singh. She proposed a "Make it in Michigan" job fund to attract factories and tech centers, alongside a strategic site readiness program, housing investments, and transit funding.
Addressing tariffs, Whitmer warned against large tariffs on Canadian products, highlighting potential harm to Michigan's auto industry and national security. She stressed the need for bipartisan solutions to retain automakers in Michigan, amidst competition from other states. The speech received positive feedback for its bipartisan tone, with Macomb County Executive Mark Hackel praising Whitmer's focus on problem-solving over partisan politics.

Tipped Wage and Paid Sick Leave Bills Move Forward

Recent legislative developments regarding tipped wage and paid sick leave involve two key bills, HB 4001 and HB 4002, which have been reported to the House floor with strong bipartisan support.

HB 4001 aims to maintain the tipped minimum wage at 38% of the regular minimum wage, countering a 2018 law set to increase it to the full minimum wage. The bill includes an H-2 substitute that adjusts the wage rate for employees under 18 from 85% to 75% of the minimum wage. This change is intended to protect jobs for young workers, particularly in northern Michigan.

HB 4002 proposes changes to earned paid sick leave. It includes an H-1 substitute that expands the definition of health care workers to include chiropractors and allows employees to carry over more than 72 hours of sick time if permitted by their employer. Key changes include exemptions for employers with fewer than 50 employees and modifications to sick time accrual and notification requirements.

The bills were approved by the House Select Committee on Protecting Employees and Small Business, with HB 4001 passing 14-0-1 and HB 4002 unanimously. A House floor vote is expected next week. Statements from political figures highlight the bipartisan effort, while MI TIPS Spokesperson John Sellek praised the support for tipped workers. Senate Minority Leader Aric Nesbitt expressed confidence in Republican leadership to support hospitality workers.

The legislation is anticipated to move to the Senate soon, with hopes for continued bipartisan cooperation.

Nesbitt Joins Governor Race

Republican Aric Nesbitt, the current Senate Minority Leader, has announced his candidacy for Governor of Michigan in 2026. He is the first Republican to formally enter the race. Nesbitt has a strong political background, having served two terms in the state Senate and three terms in the House. He was also the state's lottery commissioner, appointed by former Governor Rick Snyder, and has experience as a legislative director in the U.S. House.

Nesbitt's campaign platform focuses on supporting taxpayers, empowering parents, ensuring safety, and reviving Michigan's manufacturing industry. He aligns himself with former President Trump and aims to "Make Michigan Great Again."

Nesbitt has demonstrated fundraising capabilities, having spent significantly on legislative races in the past. His West Michigan roots may help him access business community support. His announcement has been positively received by some, including former Michigan Chamber of Commerce Executive Rich Studley, who praised Nesbitt's leadership and commitment to Michigan's progress.

Looking Ahead

While House Republicans are yet to announce final committee Chairs and member assignments, the House has been quick to act on policy related to minimum wages for tipped workers and paid sick leave requirements. After having moved through the House Select Committee on Protecting Employees and Small Businesses, chaired by Midland-based Representative Bill Schuette, these measures are expected to receive wide support on the House floor. We think this issue will remain at the center of all legislative and political discourse in Lansing over the coming weeks. Whether in negotiations related to unfinished business from last year, such as supplemental spending and closing the books on the previous fiscal year, or efforts to champion forward looking proposals in the coming year’s budget, it seems like the first test for bipartisanship is successful passage of legislation on wages for tipped workers and reform to paid sick leave mandates. With the State of the State address taking place much later than usual on February 26, this means the first major step from the Whitmer administration will be the presentation of the executive’s budget recommendations in early February. Typically, major initiatives are broadly rolled out to the public and a joint session of the legislature during the State of the State. This forum allows the Governor to use her platform for maximum marketing impact to sell the administration agenda. Absent that platform for the Governor, the legislature may have a greater voice for the first two months of the session, and they are already moving priority legislation. Sequencing aside, we are watching closely how the Democrat Governor and Senate and Republican-led House navigate these first measures. There is no way around it, everything done this session will require bipartisanship. The minimum wage and paid sick leave legislation appears poised to offer our first look into how effectively leaders can manage their competing agendas while still arriving at common ground.