"The right to criticize government is also an obligation to know what you are talking about."

-Lent Upson, first director of Citizens Research Council

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May 22, 2025

The Long and Winding Road to a State Budget

State economists last week finalized state revenue estimates that will establish guardrails for deliberations on the size of Fiscal Year (FY)2026 state budget appropriations.  The bad news for state appropriators: for only the second time in the last eleven revenue conferences dating back to August 2020 state revenues were adjusted down, rather than up, from the previous set of estimates. Importantly, the Governor’s budget proposal released in February is based on these older and rosier estimates from January.

The downward adjustment immediately became a point of contention in the Legislature. Within hours of the Research Council posting its paper on the issue, it was picked up by the media, with Gongwer News Service reporting:

"The escalated tension between the House and the Senate comes as the Citizens Research Council of Michigan released a new report showing an $800 million General Fund gap between Governor Gretchen Whitmer's budget recommendation for the 2025-26 fiscal year and the anticipated available General Fund revenue.

"'For the first time in a long time, we have a little bit of a budget problem that we need to solve,' said Robert Schneider, senior research associate for the CRC. "This year's budget deliberation's will be the most challenging since the Great Recession era,' the report said."

IN A NUTSHELL

 -- State economists downgraded projections for state GF/GP revenue – a critical source of discretionary funding within the state budget – at last Friday’s Consensus Revenue Estimating Conference.

 -- This comes while a number of critical budget issues are still being debated, including competing road funding proposals and federal reforms within Medicaid and safety net programs that will impact future state budgets.

 -- These factors mean the Governor’s February budget proposal will need to be scaled back – likely by a lot depending on the outcomes of these policy debates; meaning this year’s budget deliberation’s will be the most challenging since the Great Recession era.

Catch Up On More Recent Reports:

• Is Michigan Getting the Most Out of its Road Funding? A Closer Look at the Data.
• Michigan's Options in Response to Cuts in Federal Research Grants
• Federal Education Block Grants Could Be Opportunity for State Lawmakers to Address Inequities

Craig Thiel, left; Bob Schneider, right.

Budgetary frustrations grow between House, Senate as CRC reports $800M GF gap; Dems call out Hall for games, Gongwer (May 21)

Detroit's mayoral mansion gets $347K in upgrades under Duggan — but donor list is secret, Detroit Free Press (May 21)

Tariffs to cost Michigan 13,000 jobs, UM economists predict, but overall growth seen, Detroit News (May 16)

Detroit Mayoral Forum Talks Taxes, Post-Bankruptcy Pensions, Neighborhood Investments, MIRS (May 15)

Family-friendly policies can help keep people in Michigan and create economic opportunity, The Kresge Foundation (May 15)

Midwest schools' May bond referendums result in poor outcomes, Bond Buyer (May 14)

Hackel: PA 51 Reform Would Be Too Heavy of a Lift In Road Funding Plan, MIRS (May 12)

Road study raises questions, Traverse City Record-Eagle (May 12)

Michigan has more ‘good’ roads, but repairs still can’t keep up, MLive.com (May 12)

Please join us at the Suburban Collection Showplace in Novi on Wednesday, September 17, to honor Former Governor Rick Snyder and Former Senator Debbie Stabenow with the Eugene A. Gargaro Public Service Award. Sponsorship opportunities are available!