Updates About Budget

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.

Ryan Hunt, CEO of the Michigan Works! Association, provided testimony in the Senate Appropriations Subcommittee on LEO/MEDC this week on workforce impacts related to proposed SNAP and Medicaid work requirements. Hunt’s testimony included a request for $25 million to support implementation, noting that local offices are already experiencing increased demand and may require additional staffing to manage higher caseloads and reduce administrative errors.

Hunt also urged continued funding for the Going PRO Talent Fund at $31.8 million, so that workers who go through the program can continue to receive training and see wage increases.

Following the recently announced executive recommendations, House Republican Appropriation Subcommittee chairs were given budget targets for Fiscal Year 2027. Although House Appropriations Committee Chairwoman Ann Bollin (R-Brighton) did not outline specific numbers, she did share that the highest budget threshold goal is lower than what we saw in the previous budget. House Republicans say they plan to address the projected $800 million January CREC shortfall without raising taxes. Representative Bollin said GOP priorities for the upcoming budget include strengthening Michigan’s businesses and improving the education system, while cutting spending where possible. Republicans also signaled they will push back against any proposals that increase taxes.

Prior to this report, Republican House Speaker Matt Hall (Richland) announced a new 6% sales tax proposal on select services that is projected to garner $4.73 billion for the state. His proposal applies to certain services usually popular with tourists and wealthier residents. Among the services included in the tax proposal are country club memberships, travel agencies, newspaper publishing, performing arts, political advertising, environmental consulting, and recreational activities such as skiing and golf. Speaker Hall stated that his proposal is not aimed at working class families and instead targets out of state visitors.

The proposal is intended to offset Hall’s proposed property tax cuts that currently generate about $5 billion in revenue. Overall, his tax plan would result in approximately a $270 million net tax cut.