Updates About Economy

The ongoing Federal Government shutdown is expected to affect many areas in Michiganders lives. Notable impacts include the following:

• Nearly 30,000 civilian federal employees will be either ordered to work without pay or furloughed until Congress reaches a deal. Those ordered to work will receive back pay after the shutdown is over

• All active-duty military personnel, including the National Guard, will carry out their duties without pay

• Short term funding has been made available to both food assistance programs SNAP and Women Infants Children (WIC). Each state has received contingency funds that have estimated to be sufficient for one week of operations, however states may have additional dollars to spend. In Michigan, we are expected to have funds to continue the program for a couple weeks.

• Michiganders on Medicare and Medicaid will continue to receive benefits, but communication delays from the agency are expected

• The Veterans Health Administration, which falls under the Department of Veterans Affairs and is also Michigan’s largest employer, is expected to be 97% operational

• Retirement, disability, veterans, and health care benefits that are covered under federal programs will continue, but delays are expected due to reduced staffing

• The US Postal Service will remain open and mail is expected to arrive on time

• The Michigan Department of Education will also remain open. In a memo, State Superintendent Michael Rice explained that any issues the state needs to elevate to federal officials for guidance will likely be delayed until normal operations resume. He also noted that federal reimbursement-based funding to local schools will be delayed

Governor Gretchen Whitmer delivered a major address on Michigan’s economy last week, underscoring the vital role that middle class jobs have played in the state’s success. She pointed to recent progress that includes adding or retaining nearly 1,000 jobs across multiple municipalities that led to a $200 million boost to the state economy. Whitmer also spoke on securing a fighter mission for Selfridge Air National Guard Base protecting 30,000 jobs and nearly a billion dollars in statewide commerce. She outlined long term investment projects in infrastructure, childcare, housing, and education made possible through bipartisan cooperation, noting that more than 1,500 bipartisan bills have been signed to support working families and strengthen communities.

The governor also raised concerns about what she called a “man-made storm of uncertainty” caused by chaotic national tariff policies and delays in finalizing a state budget. Consequences of this storm include rising prices on groceries and household goods for families, while steep costs, outsourcing, and lower sales threaten Michigan farmers and automakers. Without action, she warned, progress on roads, schools, and public safety could be rolled back, putting thousands of good-paying jobs at risk. Whitmer closed her speech by reminding lawmakers of the value in working across the aisle to sign a balanced budget. What should this compromise look like? According to the governor, a signable budget covers Senate priorities to protect Medicaid, feed kids at school, and support moms and babies and also includes House priorities like cutting spending, fixing local roads, and increasing transparency.

According to the Senate Fiscal Agency’s July 2025 Revenue Report, Michigan’s major taxes and net lottery revenue totaled $2.9 billion in July, down 1.6% from last July and about $130 million short of their May prediction. General Fund revenues came in $125.9 million less than forecasted, while School Aid Fund revenues missed expectations by $15.7 million.

Contributing factors included individual income tax refunds that were larger than originally anticipated, paired with smaller corporate income tax receipts and lower net lottery revenue. Stronger results from real estate transfers, the sales tax increase of 4.5%, and wagering taxes helped, but not enough to offset. So far this fiscal year, General Fund and School Aid Fund revenues remain $53.0 million and $3.6 million below expectations, respectively.