02/12/2026

Governor Whitmer Releases FY 27 Executive Budget Recommendation

On February 11, 2026, Michigan State Budget Director Jen Flood and outgoing Deputy Director Kyle Guerrant presented Governor Gretchen Whitmer’s Fiscal Year 2026-2027 (FY 27) Executive Budget Recommendation before a joint meeting of the Michigan Senate and House Appropriations Committees. This presentation marks the beginning of budget season in Lansing, where the House and Senate use the Governor’s recommendation as a guide to develop their respective budget proposals, negotiate them, and ultimately present a unified budget to the Governor before the statutory deadline of July 1. However, as we saw during budget negotiations for the current fiscal year (FY 26), conversations may continue throughout the summer and into the start of FY 27, which begins on October 1.

The Executive Recommendation proposes a budget totaling $88.1 billion Gross amid the January Consensus Revenue Estimating Conference report indicating that for the upcoming fiscal year (FY 27), revenues were adjusted $1.1 billion below the May 2025 estimate. The recommendation also proposes a $400 million withdrawal from the state’s rainy day fund. Additionally, new revenue streams were proposed in an effort to raise more money to fund the state’s Medicaid program following the passage of H.R. 1, also known as the One Big Beautiful Bill Act (OBBBA).

Of the $88.1 billion budget recommendation, the General Fund totals $13.6 billion and the School Aid Fund totals $21.4 billion. The Governor highlighted the following priorities for strategic investment: 

Saving Michiganders Money

• Expanded tax credit to eligible seniors that refunds approximately 10% of their property taxes
• Establishing a “back to school” sales tax holiday
• Continuing the Working Families Tax Credit
• Rolling back the retirement tax completely
• Continuing free school meals for K-12 students

Every Kid Reads, Eats, and Succeeds

• $625 million to support student literacy and achievement, including, but not limited to:
• $181.1 million for free pre-K for all
• $135 million for expanded before- and after-school programming
• $100 million in grants to school districts to purchase and implement literacy programs
• $50 million to continue implementing LETRS training
• $7.6 million to support adult education
• $325 million to support a 2.5% increase in base per-pupil funding, bringing the total to $10,300 per pupil
• $300 million to continue mental health and safety grants to districts
• $200 million for free school meals (also noted above)
• $123 million to continue expanded support for special education students
• $90 million, a 6% increase, to support academically at-risk students
• $30 million to support early learning partnerships
• $1.5 million increase for Early On services

Protecting Medicaid

• $780.4 million to stabilize Medicaid funding through the following funding mechanisms, including:
• $232 million to increase Michigan’s tobacco tax rate
• $73.6 million from taxing vaping and non-tobacco nicotine products
• $282 million from a tax on digital advertising across all media platforms
• $192.8 million from updating Michigan’s internet gaming, sports betting, and online gaming tax structure
• $186.6 million to prepare for the state to meet new federal requirements through H.R. 1, including:
• $94.3 million in increased SNAP administrative cost-sharing
• $60.3 million for staffing, administration, and implementation to comply with new federal requirements
• $30 million in workforce investments to maintain access to healthcare and SNAP
• $2 million to create a data-sharing platform to meet new federal requirements for Medicaid and SNAP
• $351.8 million to preserve and raise direct care worker wages, consistent with the January 1, 2027, and prior year minimum wage increases, and to provide paid sick leave
• $72.2 million, ongoing, for the state’s new psychiatric hospital
• $21.4 million for cancer prevention, smoking and vaping cessation, and mental/behavioral health support for children through the Healthy Michigan Fund from a portion of the vape tax returns
• $20 million in ongoing TANF funding to support Rx Kids
• $116.2 million to continue the Healthy Moms, Healthy Babies program
• $2 million for the autism navigator program

Fixing Michigan’s Roads

• $5.8 billion for roads
• $1.6 billion in new funding to improve state and local roads

Creating Jobs & Growing the Economy

• $429.1 million for continued workforce development programs and grants
• $155.2 million to continue support for the Michigan Rehabilitation Services
• $150 million in public infrastructure to prepare sites for development or redevelopment
• $50 million for the Michigan Housing and Community Development Fund
• $4 million for the Rural Development Fund Grant Program
• $2.3 million for the Office of Rural Prosperity

Keeping Communities Safe

• $85 million for offender success services, programming, and education
• $50 million to fund public safety revenue sharing grants to local municipalities
• $20.4 million to support trial court programs to address underlying substance use or mental health needs
• $2.5 million to continue the work of the statewide gun violence prevention task force
• $1.7 million for the OK2Say student safety program

Effective & Efficient State Government

• $35 million for the Information Technology Investment Fund to modernize state systems and improve delivery
• $18.8 million for the Department of Civil Rights to continue investigations into discrimination complaints

You can access all budget recommendation materials here, or on the State Budget Office website here.

It is important to note that this budget recommendation serves as a starting point to begin negotiations with the House and Senate. Many priorities the Governor announced will be replaced with those of legislative leaders, especially with all 148 Michigan House and Senate seats up for election this fall.