Honigman Capitol Report

Legislature Works through the Night to Approve Budget

Michigan’s Democratic-led Legislature worked through the night to approve a budget deal of $82.5 billion early in the morning, last Thursday, June 27. The Fiscal Year 2025 budget is an increase from the 2024 budget, however it does appropriate less from the General Fund. The budget leaves over $600 million on the balance sheet, money that could be used later for the Strategic Outreach and Attraction Reserve (SOAR) proposal from House leadership and the Governor’s office. The Governor had hoped to spend on large economic development projects such as transformational housing and transportation projects with Detroit’s Renaissance Center. Linking the proposal to the budget proved too challenging with skeptics on both sides. However, the budget does include $500 million in corporate income tax for SOAR but does not require any further SOAR money beyond that. Because of this, many of the economic development expansions proposed by the Governor didn’t make it into the final budget.

Affordable Housing Projects

The final budget includes $100 million for affordable housing projects. Democratic legislators added the funding which will be allocated to general and specific housing initiatives. This includes $15 million for Ingham County support programs, $5 million for teacher housing in Traverse City and $5 million for mixed-income housing in Portage.

Local Governments

The Governor asked for a boost in state revenue sharing for local governments and the Legislature delivered. The final budget includes a $34.2 million increase to revenue sharing for cities, villages and townships along with $20.7 million for counties.

Special Projects

The final budget includes more than $334 million to fund specific projects in lawmaker districts. Highlights of the projects funded include $17 million total for Potter Park Zoo and the Detroit Zoo, $10 million for a sports complex in Frankenmuth and $3.2 million for land acquisition in Mackinac Island.

Vehicle Rebates and Landfill Cleanup Fees Rejected

The Legislature declined to fund Whitmer’s $20 million proposal to support local governments, colleges and airports in replacing existing vehicles with electric versions. Her plan to fund $25 million towards consumer incentives for buying new vehicles was also rejected. Governor Whitmer’s initial budget also proposed raising $80 million in new revenue by increasing taxes paid by landfill owners. The fees would have funded contaminated site cleanup, landfill mediation and preparing sites for economic development. The legislature ditched the proposed fee hike, a win for Republicans who argued that higher fees would lead to higher costs for Michigan residents and businesses.

Flurry of Policy Legislation Pushed through by the Democratic Legislative Majority

While budget work went on through the night, the Democratic majority worked through a flurry of legislation after months of inaction, especially prior to the April special elections that restored democrats’ control of the House. Legislation that passed last Wednesday evening and in the early morning hours of the next morning included:

• Expansion of the Freedom of Information Act to include the governor's office and the Legislature;
• Moving the state health insurance marketplace to a state exchange instead of the federal exchange;
• A package of bills designed to improve maternal health;
• Prohibiting discrimination in housing based on income;
• Extending the prevailing wage law to solar and wind energy projects;
• Allowing home care workers to unionize

Looking Ahead

With the legislature adjourned for summer recess, the major political focus will shift to the fight for control of the House of Representatives. While we may soon see how judicial activity related to Michigan’s Senate districts may shake things up in that chamber, Senate elections will not be held until 2026. For now, all eyes fall on the House. Most recent polling shows tepid support in Michigan for both parties’ likely presidential nominees. Recent history suggests it is nearly impossible to predict what twists and turns the race may take at the top of the ticket over the coming months. We expect an expensive and hard fought campaign for the House. This seems particularly likely for two reasons: the current slim two-member House majority; and the present uncertainty over voter turnout. Legislative activity will slow to a near halt over the next month until after August primary elections.