Michigan lawmakers OK budget but can’t get deal on tax cuts

LANSING, MI - MARCH 17: The Michigan State Capital building is seen March 17, 2008 in Lansing, Michigan. Negotiations for a re-vote Michigan primary are continuing between the Democratic National Committee, the Michigan legislature, and the two democratic presidential candidates. (Photo by Bill Pugliano/Getty Images) (Bill Pugliano, 2008 Getty Images)

LANSING, Mich. – Michigan lawmakers approved a state budget early Friday that increases money for education but delayed a decision on how to cut taxes, unable to yet bridge disagreement between Gov. Gretchen Whitmer and Republican legislative leaders.

Michigan is flush thanks to federal pandemic relief that fueled higher resident income and consumer spending, but the Democratic governor and the GOP-controlled Legislature disagree on how to cut taxes in response.

Lawmakers aimed to approve at least the K-12 state spending plan by the end of June, because it’s the start of school districts’ budget year. The state’s fiscal year doesn’t start until October, but fall elections created a strong incentive to wrap up budget planning by Friday.

The spending plan that passed both chambers was the result of broad budget talks between the governor and GOP lawmakers.

State Sen. Jim Stamas, a Republican from Midland who chairs the Senate's budget committee, said negotiators produced a spending plan making “significant investments to educate our children, improve our infrastructure, protect our communities, and build a stronger economy.”

Lawmakers approved a $450 per student increase in base funding for K-12 schools, about a 5.2% increase. The Michigan Department of Education said the $9,150 commitment per student marks the highest total in the state's history and Superintendent Michael Rice called the spending plan a “win” for Michigan kids.

“After years of school underfunding, the FY23 budget has the potential to be the budget to which we point in the future as the pivot point in the strengthening of public education in Michigan, the year when we made the most substantial strides toward adequate and equitable school funding,” Rice said in a statement.

Lawmakers also committed to $575 million for programs intended to increase teachers in the state, a priority in Whitmer's original budget proposal.

Negotiators couldn’t come to terms, though, on how to cut taxes and agreed to develop a broader state spending plan without resolving that dispute. The $76 billion proposal includes $6 billion toward state and local roads, bridges and other transportation projects.

Lawmakers also agreed to put about $2.6 billion toward public pension systems. House Republicans made that a particular focus during budget discussions this year, and the chamber's budget committee chairman Rep. Thomas Albert, of Lowell, called it an essential support for schools and local government.

Leaders said talks will continue about how to cut taxes and estimate that $7 billion remains available for tax changes.

Whitmer proposed targeted tax changes, including a reversal of 2011 cuts to the earned income tax credit and lower taxes on pensions. Republicans, though, wanted broader tax changes including lower individual and corporate income tax rates.

“Let us continue in this spirit of collaboration to invest the billions of dollars in additional revenue we still have on the table and offer real relief to families right now, especially as they face rising prices on groceries, gas, and other everyday expenses,” Whitmer said in a statement released Thursday as lawmakers prepared for the budget votes. “I will work with anyone to put Michiganders first and get this done.”

The education and general budgets now go to Whitmer for her review.


Foody reported from Chicago. Cappelletti is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.