July 8th-28th, 2025

The House Fiscal Agency’s June 2025 Revenue Report brought positive short-term news, with major tax revenues and lottery earnings totaling $3.3 billion—an 8.3% increase from June 2024 and $64 million above the May 2025 Consensus Revenue Estimating Conference (CREC) projections. General Fund revenues were bolstered by stronger-than-expected individual income and corporate tax collections, contributing to a $71.8 million surplus above forecasts. Individual income tax revenue alone totaled $1.5 billion (up 15.5% year-over-year), and corporate income tax revenue exceeded estimates by more than $30 million. However, revenues dedicated to the School Aid Fund missed projections by $17 million, with an additional $9.2 million redirected to other earmarked funds.

Looking ahead, however, the recently enacted federal One Big Beautiful Bill Act of 2025 (OBBBA) may substantially alter Michigan’s fiscal landscape over the next decade. The act introduces sweeping federal tax changes that are expected to reduce Michigan’s business tax base and, consequently, state revenue. The House Fiscal Agency now anticipates Michigan could lose $677 million in FY 2025-26, $613 million in FY 2026-27, and $444 million in FY 2027-28 due to provisions such as expensing for research and experimental costs, Section 179 expansion, and limitations on business interest deductions. While some of these losses will taper off by FY 2030-31, Michigan is expected to forgo billions in revenue over the long term unless it decouples from the affected federal tax provisions.

As lawmakers head into the next phase of FY 2026 budget negotiations, they will need to balance the strong performance of current revenues with the looming structural changes driven by OBBBA. These federal changes, combined with upcoming reductions in Medicaid and SNAP cost-sharing adjustments, will likely place additional pressure on the state’s General Fund in the years to come.

Review previous revenue estimates and CREC reports here.

Tensions reached a boiling point in the Michigan House last week after Rep. Alabas Farhat (D-Dearborn) was abruptly removed from his post as minority vice chair of the House Appropriations Committee by Speaker Matt Hall (R-Richland Twp). The move followed Farhat’s no vote on HB 4506, a Republican-backed bill that would allow life without parole for 19- and 20-year-olds convicted of particularly violent crimes, and HB 4141, which proposed banning cell phone use by students in schools.

Farhat defended his vote, arguing the policy deserved further debate and that Democrats were given little time to review final language. Speaker Hall, however, claimed Farhat failed to uphold a commitment and pointed to his resistance during budget talks as further justification. The session, which lasted more than seven hours, ended with no bills passed and deepened uncertainty over who will now represent House Democrats in ongoing—and already strained—budget negotiations.

Congressional races in Michigan are beginning to take shape as incumbents prepare for re-election and challengers enter key battleground districts. In Michigan’s 8th Congressional District, U.S. Representative Kristen McDonald Rivet (D-Bay City) has her first Republican challenger in Amir Hassan, a Navy veteran and former federal law enforcement officer. Hassan, a Flint native, has launched a campaign rooted in his personal story and conservative values, positioning himself as a political outsider ready to take on what he calls a “broken system.” The district, which includes Flint, Saginaw, Bay City, and parts of Genesee and Midland counties, is expected to be one of the more competitive races in 2026.

Meanwhile, in the neighboring 4th Congressional District, U.S. Rep. Bill Huizenga (R-Zeeland) announced he will not run for U.S. Senate in 2026, but has yet to confirm whether he will seek re-election. His decision opens the door for a potential reshuffling in what has been a reliably Republican district. State Sen. Sean McCann (D-Kalamazoo) has already jumped into the race, joining two other Democrats vying for the seat. With Huizenga’s plans still unclear, the district could see a more competitive race than in recent cycles.

Attorney General Dana Nessel has joined 21 other states in a legal challenge against the Trump Administration over its abrupt freeze of $6.8 billion in federal education funds. The lawsuit argues the freeze violates federal laws and constitutional provisions by halting already-approved funding for six key programs that support students with the greatest needs—such as English learners, migratory children, and adult learners. In Michigan alone, approximately $171 million is at stake, funding programs overseen by the Departments of Education (MDE), Lifelong Education (MiLEAP), and Labor and Economic Opportunity (LEO). These programs help support summer learning, teacher training, community enrichment, and adult education—many of which are already being disrupted.

Nessel and state education leaders are calling the move both illegal and harmful. Local schools had already made hiring decisions, signed contracts, and planned programming based on funds Congress appropriated and the Department of Education previously approved. Without intervention, school districts and adult education providers will be forced to scale back or cancel vital services just weeks before the school year begins. The lawsuit seeks immediate court action to restore the funding and prevent further disruption to educational programs that serve vulnerable student populations.

Governor Gretchen Whitmer has launched the first round of Michigan’s medical debt relief program, wiping out more than $144 million in medical debt for nearly 210,000 residents. The effort, in partnership with the nonprofit Undue Medical Debt, is partially funded by a $4.5 million allocation in the state’s 2024 budget. It targets individuals with incomes at or below 400% of the federal poverty level or whose medical debt exceeds 5% of their annual income. No application is required and eligible recipients will be notified by mail.

This statewide initiative builds on earlier localized efforts in Wayne, Oakland, and Kalamazoo counties and reflects the Whitmer-Gilchrist administration’s broader commitment to reducing the financial strain of healthcare. State officials cited rising medical costs and recent cuts to Medicaid as key motivators behind the program. The first round of relief prioritized some of the hardest-hit counties, including Macomb, Kent, Genesee, and Ingham. The debt forgiveness program complements the administration’s broader strategy to lower costs for Michigan families, alongside initiatives such as tax relief, expanded early childhood education, and improved access to affordable insurance. Additional rounds of debt forgiveness are expected in the months ahead.

Governor Gretchen Whitmer announced recently that Sandisk, the semiconductor company previously eyeing Michigan’s Mundy Township megasite, has pulled out of the project due to national economic uncertainty. The company, which had applied for CHIPS Act funding, decided not to move forward with building any U.S. plants, citing concerns over tariffs and stalled federal support. Whitmer emphasized Michigan’s continued commitment to attracting advanced manufacturing investment, despite growing headwinds at the federal level. The Mundy site remains available for future development.

Read previous coverage on Michigan’s semiconductor industry here: GOVERNOR WHITMER OUTLINES BOLD VISION FOR MICHIGAN’S SEMICONDUCTOR FUTURE