Renewed Optimism On Budget Deal As Framework Taking Shape

(Source: MIRS.news, Published 09/23/2025) The rough framework for a Fiscal Year (FY) 2026 spending plan and long-term road funding deal is taking shape behind the scenes among legislative leaders and the administration with only a week to go before the end of FY 2025.

While numerous details need to be worked out and everything could fall apart in seven days, all sides are more optimistic than last week that an agreement can be reached by Sept. 30.

Additional session days in the House are being looked at seriously for Friday, Sept. 26 and Monday, Sept. 29. The Senate is also said to be considering added session days.

Among the major developments is universal agreement on using all state taxes collected at the pump for roads. The belief is there is enough money within the budget to backfill schools and other spending priorities that rely on sales tax revenue from gasoline.

Second, the Strategic Outreach and Attraction Revserve (SOAR) will be defunded, with at least a significant part of that revenue going to road funding, as well. Third, House Republican leadership has not completely ruled out a new wholesale tax on marijuana or a new tax on currently untaxed hemp drinks and other products from synthetic THC.

An adjusted landing spot on long-term road funding is becoming more likely, with a $1.2-$2 billion number for roads seeming more likely than the $3.1 billion attempted by both the administration and House Speaker Matt Hall (R-Richland Township).

Several sticking points still exist, with the size of legislative earmarks being a tough one. The House wants to cap legislative earmarks at $100 million or less, while the Senate allegedly wants a number much larger than that or at least that's the understanding of some.  Behind the scenes, Senate Democrats understand the free-wheeling days of local earmarks-for-all is over and cuts are needed.

The Senate Democrats are also willing to support additional revenue and additional social welfare, neither of which excite House Republicans.

The task of finding common ground remains difficult, but there is a driving, unifying factor. Whether spoken or not, the full-court press to get a budget done is the specter that the political winner of any budget shutdown will be independent gubernatorial candidate Mike Duggan. That, obviously, doesn't benefit Republicans or Democrats.

Democratic gubernatorial candidate and Secretary of State Jocelyn Benson loses in a shutdown if branch offices are forced to close. Lt. Gov. Garlin Gilchrist II loses because he's tied to the administration.

On the Republican side, Senate Minority Leader Aric Nesbitt (R-Lawton) loses because he will be wrapped in the whole budget debacle, even if he's not directly involved. This affects House Speaker Matt Hall (R-Richland Township) because Nesbitt is emerging as a leader for the GOP nomination with the self-inflicted implosion of U.S. Rep. John James (R-Shelby Township). Nesbitt and Hall have been close political allies for years.

Meanwhile, Gov. Gretchen Whitmer is working behind the scenes to make sure a budget gets done. If one doesn't, the Governor is reviewing “all options” to keep the government running as much as possible. Her goal is not to see how many services she can shut down Oct. 1 to put added stress on the House and Senate to finish their work, but to keep open as much of government as possible to prevent conservative Republicans from celebrating the beaching of state government.

This attitude explains, in part, why Whitmer has not issued 14-day layoff notices to state employees, a tactic used in 2019, 2009 and 2007 during potential shutdown situations. Under the labor agreement signed in the Gov. Rick Snyder administration, a governor doesn't technically need to give bargaining units 14 days notice when employees can't be paid, although it's still good practice.

Remember, the Senate has a General Government continuation budget in its possession that the House sent it in March. It could always amend it and send it back to the House for immediate action if needed. Continuation budgets were used in 2007 and 2009.

Also, each chamber has an education budget passed by the other chamber. These bills clear the five-day rule, meaning a continuation budget could be swiftly passed if the mechanics of a final agreement can't be reached by 11:59 p.m. Sept. 30.

Attorney Steve Liedel of Dykema, one of Gov. Jennifer Granholm's lawyers during the 2007 and 2009 shutdown said, “The Governor is under no obligation to lay off anyone.” Michigan does not have a budget deficit as it did during the brief ‘07 and ’09 shutdowns. The Governor could let the government continue to incur spending obligations if a budget isn't passed by Oct. 1.

How those state employees are paid is a detail that can be worked out later.

Certain programs come from federal money. Could the state hold back those payments legally? Act 51 dollars are not subject to the appropriations process. That money should be allowed to be pushed out.

“There's no big switch someone in state government throws at midnight Oct. 1 if there's no budget,” Liedel said. “There's nothing that shuts off all the lights, opens up the prisons and sends all the State Police home.

"The Governor has a lot of options at her disposal and I suspect she's exploring all of those options," he said.

Could the Governor pre-authorize certain spending prior to Oct. 1? Could she challenge the ability to spend money after Oct. 1 and essentially dare someone to sue her? Treasury will continue to collect revenue regardless of a budget agreement reached.

Her use of the Administrative Board to move money around in 2019 shows Whitmer is willing to be creative with spending money.

Word is that Whitmer will make her moves to minimize the pain of operating without a full budget when she needs to do it . . . in the hope that it doesn't come to that.