Updates About Budget

Today, state economic leaders presented updated revenues during the May Consensus Revenue Estimating Conference (CREC). The report showed Michigan’s revenues are slightly stronger than originally predicted. Current fiscal year (FY26) revenues are up $307.3 million compared to January projections, and FY27 revenues are up $173.8 million, mainly due to stronger Income Tax and Use Tax collections. The School Aid Fund (SAF) remains stable, while the General Fund is still lagging but has improved since the January CREC. This improvement can partly be attributed to tax policy changes shifting revenue to the SAF. These updated estimates will guide lawmakers as they negotiate the FY27 budget ahead of the July 1 deadline.

For a more in depth review of the May CREC, you may access the presentations and materials here.

The Michigan Senate Appropriations Subcommittee on DHHS recently released their budget recommendations for the department for Fiscal Year 2026-2027 (FY 27). The proposal came in at $40.4 billion ($7.6 billion GF/GP), a gross increase from last year of $10.5 billion ($206.9 million GF/GP). The Senate came in $500 million under Gov. Whitmer’s proposal.

Notably, the Senate recommendation did not include new taxes proposed by the Governor on digital advertising, tobacco, vapes, and other nicotine products, or the changes to online gambling taxes, that would generate an estimated $800 million to assist in covering Medicaid costs. While the Senate did not include any identified Medicaid cost savings in its budget, Gov. Whitmer’s proposal included $150 million in savings and House Republicans called for $300 million. The Senate also proposed 485 new Full-Time Employees (FTEs) compared to the 589 new positions recommended by the Governor.

A brief overview of the Michigan House Republicans proposal can be found here.

This week the Michigan House Appropriations Subcommittees released their budget recommendations for Fiscal Year 2026-2027 (FY 27). The Health and Human Services (HHS) portion of the budget recommends $6.6 billion ($1.4 billion General Fund), a 3.5% reduction in spending overall with a 5.9% general fund increase from the current fiscal year. The HHS recommendations also recommended 5% fewer full-time employee (FTE) positions, allocating 855.8 FTE positions for FY 27.

The House Public Health Subcommittee recommended a budget of $1.1 billion ($322 million GF), a reduction of 8.7% in spending overall and 8.2% in the general fund from the current year. They also suggested cutting 123 FTE positions, a 14.3% reduction, for a total of 735.4 FTE’s.

Recommendations for the Medicaid and Behavioral Health portion of the budget include $22.9 billion ($5.9 billion GF), a 4.7% increase in overall spending and a 2.7% general fund increase from FY 26. The recommendation also allocated 44.5 less FTEs, or 1.1% fewer positions, from the current fiscal year.

In total, the House budget recommendations for the department is $30.71 billion ($7.3 billion General Fund), which is a $691.7 million increase ($198.9 million GF). The House recommendation sits about $10 billion ($310 million GF) below Governor Gretchen Whitmer’s executive recommendation.

The Senate has yet to release their recommendations.

Reminder that these are just the initial House budget recommendations. The budget is developed in conjunction with the House, Senate, and Governor, so we do not anticipate that these recommendations will reflect the final budget.