June 13th-26th, 2026

After a slight delay in finalizing budget targets, a recent late night negotiation session has resulted in a framework agreement for the 2026-2027 (FY 27) fiscal year.

With broad targets reached, lawmakers remained in Lansing through the weekend to continue their negotiations. Latest reports indicate negotiations are moving along in department funding but have not yet reached funding for Legislatively Directed Spending Items (LDSIs). In total, lawmakers have requisition over $4.3 billion in these special projects. Under a law passed last November, all LDSIs must now be made public at least 45 days before the budget is approved by the Legislature. Due to this new law, any requests submitted after May 18 cannot be included if the budget passes by July 1.

The budget is expected to be smaller than last year’s and will reportedly not include new revenue streams or tax increases, meaning spending cuts are likely in some areas. Though Speaker Hall has made property tax cuts a top priority, indications show it is unlikely to be packaged in with the budget.

Another item that could be negotiated as the budget moves along are the House or Senate version of medical debt relief bills. Both chambers introduced identical legislation, HB 5254 and HB 5255, equivalent to SB 701 and SB 702 would cap the maximum interest rate on medical debt and prohibit wage garnishment or home foreclosure due to medical debt.

While many were hopeful that the budget would be done by July 1, it is becoming more likely that we will see a completed around July 3, just ahead of Independence Day weekend.

Governor Gretchen Whitmer announced last week that the state’s Director of Health and Human Services (MDHHS), Elizabeth Hertel, will be stepping down at the end of June.

Elizabeth Hertel has served as the top MDHHS official since 2021. She oversaw the department’s transition out of the COVID-19 pandemic as well as the development of two state psychiatric hospitals, expansion of substance use disorder programs, and the state’s response to recent federal Medicaid and SNAP changes. One of her major priorities has been restructuring Michigan’s behavioral health system, including efforts to rebid the state’s prepaid inpatient health plans, though implementation of those changes has been delayed following court rulings.

Her successor, Amy Epkey, will begin the role on July 1. Epkey is currently the senior deputy director of the financial operation administration within MDHHS. Hertel said that she plans on relaxing post-budget and spending time with family during the summer months before figuring out what comes next in her career.

President Donald Trump recently announced his endorsement of U.S. Representative John James’s campaign for Governor. Shortly following the endorsement, Michigan’s Republican Senate Minority Leader Aric Nesbitt ended his campaign and endorsed James as well. The other Republican candidates, businessman Perry Johnson and former Attorney General Mike Cox, choose to remain in the race.

James has so far defended his early frontrunner status against the rest of the field, but it remains to be seen if Trump’s endorsement will help with Republican primary voters. The endorsement came as absentee ballots are beginning to reach voters ahead of the August primary. In recent GOP gubernatorial primaries in Georgia and Iowa, voters did not choose the President’s endorsed candidate.

After the endorsement, the James campaign shifted their focus away from his primary competitors, instead attacking likely Democratic opponent and current Secretary of State Jocelyn Benson, as well as Governor Whitmer. Meanwhile, Cox criticized James’s statewide electability and loyalty to Trump, while Johnson pushed back against Trump’s endorsement.

The Michigan Senate has passed a package of bills that would create a state-based healthcare exchange in Michigan. Similar legislation was also passed by the Senate last session. If passed, Michigan would move away from the federal healthcare exchange to a newly created exchange run by the state by January 2028.

SB 973 would create the Michigan Health Insurance Exchange and outlines the creation of a 12-member governing board, which would create and oversee a non-profit corporation that provides the health plan marketplace. It also outlines governance, oversight, funding, reporting, and enrollment requirements for the exchange, while requiring the Department of Insurance and Financial Services (DIFS) to certify the qualified health plans according to State and Federal law and the provisions of the legislation.

SB 974updates insurance code definitions to align with the state-based health insurance exchange created under SB 973.

SB 975 requires DIFS to contract with the state-based exchange to certify qualified health and dental plans.

SB 976 would require insurers to provide enrollment information required by the state-based exchange.

SB 977 requires DIFS to apply for a federal waiver to create a state-based reinsurance program and report funding needs to the Legislature’s appropriations committees.

SB 978 repeals a law requiring certain health insurance plans to cover specific emergency and early prescription refills.

Each bill passed along party lines (20-16). The bills need to be passed by the Republican controlled House and signed into law by the Governor before the current session ends in December or would need to be reintroduced again next session.

The Senate Fiscal Agency (SFA) recently released the Monthly Revenue Report for May 2026. The report detailed that tax collections came in at $2.7 billion, $368.4 million above expectations and 3.8% higher compared to last May.

Leading the pack in revenue was net income tax, which totaled $1.2 billion, and came in $214.3 million higher than expected. Combined sales and use tax was a close second bringing in $1.1 billion, a slight decline from last May, but still coming in $52 million above expectations. Two surprises, first collections from the repealed Single Business Tax, Michigan Business Tax (MBT), and Corporate Income Tax (CIT) which was 89% higher than last year, totalling $146.6 million. Second, Individual Income Tax refunds were $147.1 million lower than expected.

General Fund (GF) collections were $285.1 million above the estimated number, and the School Aid Fund exceeded the predicted number by $72.9 million.

In other economic news, the Michigan Department of Technology, Management and Budget has released its latest jobs report. Michigan’s unemployment has risen to 5.1% compared to the national average of 4.3%. Despite this, Michigan has added over 17,000 payroll workers since February, with manufacturing seeing the largest increase. Since last May, Michigan has experienced its largest job losses in the transportation and utilities sector, which lost 9,000 jobs, followed by manufacturing (-8,000) and leisure and hospitality (-6,000).

The U.S. Department of Justice, the Michigan Department of Attorney General, and the City of Romulus have filed a joint status update that formalizes the federal government’s decision to abandon plans to convert a Romulus warehouse into an ICE detention center. The agreement is to instead sell the property and adjourn the scheduled July 1 court conference and submit another status update to the court by July 17. Attorney General Dana Nessel issued a statement praising the agreement to abandon plans for the immigration detention center.