What Does A Government Shutdown Look Like?

(Source: MIRS.news, Published 08/25/2025) Remembering the state government shutdowns of 2007 and 2009, attorney Steven Liedel recalls around 35,000 state employees being notified of layoffs pending a state budget deal, as well as the Governor's office designating state-operated lift bridges to be left open.

During the four-hour shutdown of 2007, Liedel served as Gov. Jennifer Granholm's deputy legal counsel. He served as her chief legal counsel in 2009 when the shutdown lasted two hours.

On today's episode of the MIRS Monday podcast, Liedel described how it will be up to the Governor to determine what remains open for the imminent protection of public health and safety.

A shutdown occurs when a budget deal is not struck and implemented in time for the start of the new fiscal year. This year in Lansing, a budget deal remains unseen while Fiscal Year (FY) 2026 begins in 37 days.

"There are no winners in that process politically, and obviously from a policy and real-world impact on people (perspective)," Liedel said. "Citizens are just used to the state government doing its job and staying out of its way for the most part. When that doesn't happen, when you get kicked out of a campground, and you can't register a used vehicle you may have bought from someone because the Secretary of State's offices are closed, legislators tend to hear fairly quickly."

He added that additional costs affiliated with shutting down can be incurred.

For example, a continuation budget might be signed ahead of the shutdown to ensure corrections officers are paid increased overtime to ensure prisons are staffed.

"For a few hours, particularly if it's overnight hours, you have sort of the expenses that are incurred and diversions from other work to sort of prepare for that shutdown," he said. "You may incur those obligations to make that pay, but until you have a budget, you may not be able to actually spend the state dollars to pay folks."

Here are some points Liedel made about government shutdowns:

If The Government Shuts Down, Control Is Given To The Governor

In 2007, Granholm chose to pause state construction projects, determining that ongoing construction work was "not imminently necessary for public health and safety," Liedel explained. Her office was also responsible for determining the 66 percent of 53,000 state employees who would be laid off if a budget wasn't implemented in time for the new work week.

In September 2007, Granholm issued a press release detailing what government programs would be shut down. She listed out gas pump inspections, migrant labor camp inspections and food safety inspections outside of livestock vehicle checks at the Mackinac Bridge being halted.

Hate crime reporting with the state's civil rights department was reduced to a leave-a-message system. Furthermore, environmental permits for air quality, surface water discharge, wetlands, dredging and other practices were blocked from being processed. 

"When the Legislature abdicates its responsibility by failing to pass a timely budget, they hand that control to the Governor," Liedel said, describing how constraints and boilerplate restrictions on executive authority could be loosened. "We also know that (Gov. Gretchen WHITMER) doesn't mess around and …. find out what's happening. She will exercise, I expect, bold leadership and seize … the messaging in a public discussion." 

Shutdowns Can Result In Budget Deficits

In 2007, Lansing was debating establishing new revenue for the state. For example, there was the resolution raising Michigan's then-individual income tax rate from 3.9 percent to 4.35 percent (until it hit 4.25 percent in fall 2012). Additionally, $440 million in state spending cuts and a sales tax on services were being negotiated.

The new revenue aimed to fill an anticipated shortfall for the state financially.

While a continuation budget was signed in 2007, the full budget with new revenue streams was a process that continued into November, Liedel described.

"If you spend money at the prior fiscal year's rate for at least a month, you actually create a bigger deficit for the next fiscal year, and a bit of that did happen in both 2007 and 2009," Liedel said.

He added that there's no guarantee a future government shutdown will last two to four hours as it did in the past.

"If you don't resolve the budget by the middle of October, your ability to make the state School Aid payment that typically flows around (Oct. 20) … you won't be able to make that payment …. even if you have a budget by that deadline … it takes time to process that and implement it," Liedel said.

He explained the state's obligatory payments for local government revenue sharing following Oct. 1 could be impacted. Also, if the Governor opts to shut down state lottery operations, money could be temporarily cut off from the School Aid Fund.

"There's quickly a cascading effect. If the Legislature misses its constitutional deadline as a body to appropriate funds for a fiscal year, they are incurring additional costs," he said. "The longer the shutdown goes, the higher those costs will rise."

This year there is a debate about how government spending should be cut, and possibly new tax revenues should be created, to finance around $3 billion in new yearly road funding.

Liedel Sees No Political Winners

In 2007, Liedel remembered that Republican legislators were very concerned about residents facing increased travel time because of the lift bridges that would be left up during the shutdown.

"There were a number of parties in the legislative branch essentially saying, 'Hey, I think we can find some political advantage in this shutdown.' And at the end of the day, I don't think that was the case … there was a significant physical and mental toll on everyone involved," he said.

He said lastly, there is the potential of a federal government shutdown taking place on Oct. 1, and "that will greatly influence the reaction of voters to any sort of state shutdown."

"If they are concerned and frustrated about what's happening at the federal level, that's only going to exacerbate the situation in the state of Michigan and in Lansing. We've not seen that with prior shutdowns in Michigan," Liedel said. "That could further create issues for everyone involved in the process here in 2025."