Updates About Budget

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.

The House Oversight Committee heard testimony on Michigan’s Rx Kids program, which provides direct cash assistance to pregnant women and new mothers in participating eligible Michigan communities.

Under the program, participants receive a one-time prenatal payment of $1,500 and monthly payments of $500 for the first six or more months following the birth of a child. The program receives funding through Temporary Assistance for Needy Families (TANF) dollars, the Healthy Michigan Fund, and private philanthropic contributions.

Throughout her testimony, Rx Kids Director Dr. Mona Hanna outlined the program’s identity verification, residency and pregnancy documentation requirements, fraud detection measures, and birth certificate verification that occur before funds are issued. She also testified that roughly 85% of the program’s funding goes directly to the participants, and the remaining 15% is used for operating and administrative costs. Dr. Hanna cited research that shows the program has led to improvements in prenatal care utilization, reductions in premature births, low-birth-weight births, and neonatal intensive care admissions among participants.

Republican members of the committee raised questions around the sustainability, oversight, and funding of the program as well as the long-term goals and eligibility requirements. Another point of concern House Republicans addressed was the lack of safeguards to ensure funds are strictly used for child and family-related expenses.

Hanna responded that the program is designed as an unrestricted cash assistance model and does not monitor individual purchases, instead placing the trust in the recipient. She also stated that taxpayer funds are not used to provide benefits to undocumented immigrants, but that private philanthropic dollars may be allocated for these families.

Discussions surrounding the program and its funding are expected to continue.

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.