Michigan Gov. Gretchen Whitmer unveiled an $88.1 billion budget proposal for fiscal year 2027 on Wednesday, addressing challenges posed by federal program changes while pushing for increased education funding and tax relief.
The budget includes $13.6 billion in general fund spending and $20.3 billion in school aid, State Budget Director Jen Flood announced.
Federal dollars account for a major share of the plan—Michigan expects $35.99 billion in federal funding in FY27, representing about 41% of the total budget.
“This year we face a unique and challenging budget landscape, rising costs, changes coming from Washington D.C.,” Flood said during the budget presentation.
The proposal comes as Michigan grapples with significant changes to federal programs.
The state faces an additional $94 million annual cost to administer SNAP food assistance benefits.
Meanwhile, new federal Medicaid rules requiring more frequent eligibility checks could impact approximately 200,000 Michiganders’ coverage and necessitate additional staff and computer system upgrades.
“That’s why we are dialed in and doing what we can to make sure people maintain access to healthcare,” Flood said.
Education remains a key priority, with the budget proposing to increase base per-pupil funding to $10,300 — a $250 increase per student.
The proposal includes new tax relief—a new back-to-school sales tax holiday for three years and a new Senior Property Tax Credit expected to help 335,000 seniors with average savings of $345—while also proposing new revenue through a tobacco tax (forecast $232 million in FY27), a vape tax ($95 million), a new internet tax rate on the largest casinos ($135.5 million), a per-wager sports betting tax ($38.8 million), eliminating the free play deduction ($21.1 million), and a digital advertising tax ($282 million).
The $88.1 billion proposal represents a $7 billion increase over this year’s budget and has drawn criticism from Republican lawmakers.
“Tax increases are not going to fly this year. We need to cut state spending,” said State Rep. Jim DeSana, R-Carleton.
Democrats defend the proposal as a necessary response to fiscal challenges.
“Today’s budget proposal was a reality check for a lot of folks. We are facing a $1.8 billion deficit, but Governor Whitmer has put forth a smart plan,” said State Rep. Alabas Farhat, D-Dearborn.
While the proposal sets the stage for potential budget negotiations, lawmakers from both parties have expressed a desire to avoid the contentious battles that characterized last year’s budget process.
Last year, state lawmakers missed the Oct. 1 constitutional deadline to have a budget signed into law.