Updates About Appropriations

The Michigan Senate voted unanimously, 35-0, to pass earmark transparency bills SB 596 and HB 4420. The House and Senate equivalent bills would require all legislative earmarks to be submitted at least 45 days prior to being voted on. Earmarks are requested by legislators and are directed to an organization through grant funding in the state budget for a specific project.

House Speaker Matt Hall (R-Richland Township) previously led the charge to set the period at 60 days after the Senate had passed the bill with a 10-day period prior to voting. In addition to the 45-day compromise, SB 596 also specifies that any earmark proposal done in the first year of a two year legislative session can be funded in both fiscal years. Earmarks proposed in the second year would still only apply to the final fiscal year of the budget cycle.

Both bills passed the House with a 101-0 vote before being presented to the governor. On November 18th, both bills were signed by Governor Whitmer with immediate effect.

In response to the initial pause, Democrats in the state House announced a five-bill package to give benefits to Michiganders receiving SNAP. Key bills in the package include HB 5193 (Myers Phillips, D-Detroit) which would create emergency funding to backfill SNAP benefits for two months, HB 5194 (Edwards, D-Eastpointe) allocating $12.5 million to support food pantry programs, and HB 5195 (Coffia, D-Traverse City) to provide $12.5 million to the Food Bank Council of Michigan.

The Michigan Senate also took action by passing $71 million in supplemental funding to backfill some of the cost for SNAP benefits. Specifically, the appropriation allocates $50 million for emergency food assistance, $10 million for the agricultural surplus system, $10 million for food bank grants, and $1 million to expand the Double Up Food Bucks program.

In an all-hands-on-deck approach, Governor Whitmer also announced that the state will be giving $4.5 million to the Food Bank Council of Michigan. This funding will go toward providing food delivery to residents in all 83 counties who have been impacted by the SNAP benefits pause.

In a recently released report by the Citizens Research Council (CRC) of Michigan, they outlined how both Michigan schools and local governments took a significant revenue hit during the state budget process. Due to the fuel exemption from sales tax, funding for K-12 schools is set to lose $680 million per year. To offset this loss, included in the budget is an ensured additional sales tax revenue equal to the School Aid Fund revenue estimated loss that will be placed directly in the School Aid Fund. The budget also increased the School Aid Fund appropriations given to colleges and universities by $400 million, therefore reducing the amount given to K-12 schools by that amount. Around $280 million of the $680 million reduction to the School Aid Fund was backfilled for schools. Local governments will also lose $93 million because of the fuel sales tax exemption, though no funds were added in the budget to offset this loss in revenue sharing money.

Lawmakers resolved the roughly $1.1 billion budget gap projected over the summer by the CRC, which stemmed from federal tax and spending changes. They averted a $450 million loss in Medicaid funding by preserving insurance provider assessments and codified federal business tax updates at the state level, preventing an additional $670 million hit to revenues.

Also included in their report is an outline of the new revenues for road infrastructure in the budget. With the 6% sales tax on fuel no longer in effect, a flat 20 cent per gallon increase in the motor fuel tax rate was introduced. The revenue difference is minimal, as will be the effect on consumers at the pump. This approach shifts approximately $1 billion to transportation infrastructure. The budget also includes a 24% tax on the wholesale price of marijuana, which is projected to generate $420 million in road infrastructure. The $600 million annual income tax earmark for roads was also replaced with a new corporate income tax earmark, starting at $688 million in FY26 and growing to $1 billion by FY30. Although road funding in FY26 will dip due to delayed tax reform implementation, the plan is expected to generate a total of $2 billion in new annual transportation revenue starting in FY30.