Michigan lawmakers approve $82.5 billion state spending plan for 2025
LANSING – Michigan state lawmakers on Thursday morning passed an $82.5 billion state budget for fiscal year 2025, with just over $59 billion earmarked for support for state agencies and about $23.4 billion for education.
After a 19-hour session, the budget was approved at 5:10 a.m., effective immediately, despite nearly unanimous Republican opposition, and forwarded to Governor Gretchen Whitmer, who is expected to sign it into law.
While it is a larger budget than the $80.7 billion spending plan proposed by Whitmer in February, state revenues and cash balances have improved somewhat since then.
The biggest drama surrounding the final budget revolved around school funding. The budget’s freezing of the 2025 K-12 per-pupil subsidy at this year’s level of $9,608 caused a rift with parts of the public school community that have been among Whitmer’s strongest allies. Groups like the Michigan Association of Superintendents and Administrators and the K-12 Alliance of Michigan spoke out strongly against the funding plan on Wednesday, saying it would lead to layoffs. This came despite Whitmer’s administration’s insistence that schools would have more money for instruction in 2025 than this year due to a steep cut in school districts’ contributions to the school employee pension fund.
Without assurances that the one-time cut in pension spending will be permanent, the budget “will not provide long-term financial relief and will result in layoffs this fall and in the future as funding for our schools will be insufficient to keep pace with inflation, rising health care costs and the expiration of federal aid funds,” the Association of School Superintendents and Administrators said in a call to action to its members on Wednesday.
Charter schools that do not pay into the Michigan Public School Employees’ Retirement System would receive a 3.9 percent increase in their per-pupil grants, according to an analysis of House Bill 5507 prepared by the House Fiscal Agency.
The education budget passed the House of Representatives early Thursday morning by a vote of 56 to 54 along party lines, and a few hours later in the Senate by a vote of 20 to 18, also along party lines. Senate Republicans did not attempt to block immediate implementation of either budget bill, although they could have done so since neither had the required two-thirds majority.
The Democratic-led House also passed Senate Bill 911, which would reduce school districts’ contributions to the employee pension fund not only for 2025 but for subsequent years as well. Democrats say the cut is justified because post-retirement health insurance for teachers is now fully funded, although other deficits in the pension fund remain.
“Teachers and school employees have more than fulfilled their obligation to cancel health insurance and deserve to get their hard-earned money back,” said Rep. Regina Weiss (D-Oak Park), chair of the School Aid and Education Committee. “This bill ends decades of policies that have led to underfunded classrooms and lost pay for teachers.”
The Senate passed the state government’s main bill just before 4:30 a.m. by a vote of 20 to 17. Only Senator Ed McBroom (R-Vulcan) joined the Democrats in voting yes. The House of Representatives then approved the budget by a vote of 56 to 54 along party lines.
Together, the bills fund the state’s fiscal year 2025, which runs from October 1, 2024, to September 30, 2025.
The Whitmer administration and Democratic lawmakers have crafted the overall budget to continue their administration’s focus on improving education while reducing costs for Michigan’s families, take steps to make Michigan more attractive for large manufacturing projects and improve the equity of state government’s spending priorities to better support communities that have historically been underserved. Sen. Sarah Anthony (D-Lansing), chair of the Senate Appropriations Committee, said the budget is “fiscally responsible and also looks out for every Michigander.” State budget director Jen Flood also called the budget a return to normalcy after several years of sharply increased revenues, largely due to federal COVID-19 relief funding.
Republicans condemned the budget as bloated and accused Democrats of raiding pension funds to spend more money after quickly using up a $9 billion surplus. “They have created an unsustainable budget and are trying to play shell games to just make ends meet,” said Senator Thomas Albert (Republican of Lowell).
As one would expect from a governor whose legislature is controlled, albeit narrowly, by members of her own party, Whitmer got much of what she wanted in the final budget. But she didn’t get everything.
Whitmer’s proposed $25 million Michigan Vehicle Rebate Program was one of the budget items considered in committee, according to a summary of Senate Bill 747 prepared by the House Budget Office. It would have provided point-of-sale rebates of $2,000 for purchases of new electric vehicles and $1,000 for purchases of internal combustion engine vehicles, with an additional $500 for vehicles manufactured by unions.
Also not included in the final budget was Whitmer’s controversial proposal to raise an additional $80 million by massively increasing Michigan’s landfill fees from 36 cents to $5 per ton. The extra money would have been used, among other things, to hire more staff at the Department of Environment, Great Lakes and Energy to clean up the state’s contaminated sites.
The committee also rejected a proposal by Whitmer to raise additional money by requiring motorists to forgo a state parks recreation pass when renewing their vehicle registrations, rather than opting for the additional fee as they currently do. If implemented, the change would have likely raised just over $17 million a year.
And Whitmer’s call in her January State of the State address to accelerate Michigan’s transition to universal, publicly funded preschool by eliminating all income requirements for families to qualify for it also fell short. Under the budget, 4-year-olds in all Michigan families, regardless of income, will be eligible for free preschool. However, if there is a shortage of seats, families with incomes at or below 400 percent of the federal poverty level will be given priority.
The items included in the budget include:
- $100 million will help the Michigan State Housing Development Authority increase housing stock and affordability by building new single-family and multi-family housing, renovating existing units and improving energy efficiency, a $50 million reduction from what Whitmer requested in February.
- $65.1 million for a 15 percent pay increase for child care workers. While this is an increase from Whitmer’s February budget proposal, which called for a 10 percent pay increase, it is less than the 20 percent pay increase for child care workers in the budget version previously passed by the Senate.
- Establish a Michigan Innovation Fund, assuming necessary state legislation is passed and enacted, to support Michigan startups, including through direct financing, technical assistance, and other services. The fund was initially endowed with $60 million.
- An additional $15 million for the “Pure Michigan” tourism promotion campaign, on top of the $25 million it received this year, with $14 million of the additional funding coming from remaining federal COVID-19 funds.
- Nearly $2.1 billion was transferred from the Michigan Transportation Fund to local highway agencies, an increase of $110 million over this year.
- A 2.5% increase in operating costs at Michigan’s community colleges and public universities.
- $45.5 million is intended to help companies locating or expanding in Michigan, particularly with workforce needs. The money will also be used to develop “tailored talent solutions to meet needs in specific industries.” This is an increase from the $20 million Whitmer proposed for this purpose in her February budget proposal. Moreover, neither the House nor the Senate included money for this item in their respective budgets earlier this year. The budget also includes $2 million to increase the number of high-tech talent in Michigan through various programs.
- $335 million in one-time “improvement grants,” including: $12.5 million for the planned Pine Rest Pediatric Behavioral Health Center of Excellence in Grand Rapids; $10 million for the Frankenmuth Youth Sports Complex; $10 million for the Potter Park Zoo in Lansing; $7 million for Detroit Zoo infrastructure; $5 million for downtown Mt. Clemens redevelopment; $5 million for improvements to Plaza Roosevelt Park in Grand Rapids; and $4 million for the Jim Crow Museum in Big Rapids.
- $18 million in grants for museums, including $5 million for the Motown Museum in Detroit, $2 million for the Lakeshore Museum Center in Muskegon, $1 million for the Chaldean Cultural Center in West Bloomfield and $1 million for the Michigan Flight Museum near Belleville. Another $9 million would be awarded on a competitive basis to museums and nonprofit organizations that conduct or otherwise support educational programs in museums.
- $6 million for orchestras in Michigan, $750,000 for the Detroit Symphony Orchestra, and the remainder through a needs-based program for other orchestras.
- $1.5 million for the renovation costs of a community center in Brownstown Township.
- $10 million to support minority-owned businesses, with funds to be allocated in a “geographically diverse” manner.
Shortly after the budget was passed, the MPs went into their summer recess. Their next session is scheduled for the end of July.
Contact Paul Egan: 517-372-8660 or [email protected]. Follow him on X, @paulegan4.
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