Legislative Report - March 2025

Despite a slow start in January, the Michigan Legislature is back up to full speed as House and Senate committees are hitting their stride.  In addition to policy work being done by standing committees, we are also in the middle of budget season so the Legislature’s workload is exceedingly high.  Speaker Matt Hall (R-Richland Twp.) has stated that the budget process could go well into September this year, which creates a fear of a possible government shutdown should an agreement not be reached by October 1. 
 
To prepare for that possibility, the House has also already passed initial versions of the school aid budget and the omnibus state budget – something unheard of this early in the process.  The budgets are bare-bones and make severe cuts to both public schools, universities and state government in general.  Republican leaders say that they are modeled after the “essential services” proposal issued by former Governor Jennifer Granholm the last time the state missed the October 1 deadline in 2008.  Regardless, the impact on public services should the Legislature and Governor fail to reach a budget agreement prior to October 1 would be devastating. 
 
While we are observing a new federal constitutional crisis on a daily basis as the Trump administration ignores court order after court order, we are also seeing a Michigan constitutional crisis as Speaker of the House Matt Hall continues to refuse to present several bills passed in 2024 to the Governor for her signature.  Among these bills are HB 6054 which reforms the so-called “80/20” law, and House Bills 4665-4667, which would allow certain classifications of state workers to opt into the Michigan State Troopers Retirement System.  The resolution to that crisis is ongoing, and there are more details on it below.
 
 
Legislation in Limbo Despite Court Ruling
 
Nine bills that passed at the end of the 2023-4 legislative session remain in the hands of the Michigan House clerks due to a constitutional battle between House Speaker Matt Hall and Senate Majority Leader Winnie Brinks.  Several of these bills are of interest to public sector workers, especially state employees.  Those bills include legislation that would provide increased retirement benefits for certain state workers, and major reforms to PA 152 (the “80/20” law) that would help public sector workers have a fairer chance to negotiate over their health care benefits.
 
Despite the fact that these bills passed the House and Senate, the House clerks failed to present the bills to Governor Whitmer for her signature before January 1 when a new Speaker of the House took control.  Speaker Matt Hall has consistently refused to forward the bills to the Governor, creating a constitutional crisis that has resulted in litigation filed by Senate Majority Leader Winnie Brinks.  A lawsuit initiated by the Michigan Senate asked the courts to compel Speaker Hall to present the bills to Governor Whitmer as the Michigan Constitution requires. 
 
The case was referred to the Michigan Court of Claims, where in February Judge Sima Patel ruled that the Speaker of the House had a constitutional responsibility to present bills to the Governor no later than 14 days before they would normally take effect (in this case, that date would have been March 19, 2025).  However, Judge Patel stopped short of issuing an order for the House to present the bills. 
 
On March 11, the House passed a resolution indicating that they have no intention of presenting the bills at all.  Moreover, Speaker Hall stated his intention to file an appeal to Judge Patel’s ruling at the Michigan Court of Appeals.  On March 20, the day after Judge Patel’s deadline passed with no action from the House, the Michigan Senate filed a motion with Judge Patel asking her to enforce her ruling and direct the House to present the bills to the Governor. 
 
It looks more and more like this issue will continue to drag on, possibly for several months.  It will likely end up at the Court of Appeals and after that the Michigan Supreme Court.  No matter who wins in the end, the actions by the House all but ensure that it could be 2026 before this issue is finally resolved.
 
 
Budget Talks Overshadowed by Competing Road Funding Plans
 
In February, Governor Whitmer presented her annual budget proposal.  The document lays out a plan to spend approximately $80 billion in the 2025-6 fiscal year.  While the proposal contained a few enhancements and increases to some of her signature programs such as Michigan Reconnect and free school lunches, it was what many longtime observers would call a “continuation” budget.  Most programs were adjusted for inflation and caseload adjustments and it overall reflected the modest increase in tax revenues currently projected for 2025, but it did not break much new ground.  Moreover, actions at the federal level have greatly upset economic forecasts which could lead to the state having less revenues for the next fiscal year than have previously been predicted.
 
The budget process is expected to be much more contentious this year now that Republicans have a majority in the state house.  The last two years featured the Governor negotiating with fellow Democrats in the House and Senate, and even that led to some contentious moments such as the debate over retiree health care for public school employees.  The first four years of Governor Whitmer’s administration, she negotiated with a House and Senate that were both controlled by Republicans.  This year will be more complicated still, as the budget talks will have a tripartite element as the Governor, the Senate Democrats and the House Republicans may all have different budgetary priorities.
 
That has been reflected most clearly so far by discussions of a major transportation funding package.  Governor Whitmer has alluded several times this year to the positive discussions she has had with House Republicans on a possible road funding deal.  The Governor and the House Republicans have each unveiled their own packages which are similar in many ways.  Both plans would raise approximately $3 billion new funds for transportation programs.  Both proposals would cut approximately $750 million from the School Aid fund to pay for roads, while backfilling those cuts from the Michigan General Fund.  Both plans would achieve approximately $500 million from cutting “unnecessary” programs and earmarks. 
 
However, a large portion of the House’s package would come from the elimination of tax credits and economic development funds that have been at the center of Governor Whitmer’s policy goals.  By contrast, Governor Whitmer’s proposal would increase taxes on tech companies to help pay for her road package.  Governor Whitmer’s proposal also sets aside a much larger amount for public transportation: $250 million compared to the House package’s $50 million.  The Senate has not weighed in with their own proposal, so they might have very different ideas than either the Governor or the House. 
 
The outcome of the transportation funding negotiations will have a massive impact on the remainder of the budget.  Governor Whitmer and House Republicans have made road funding a top priority, but both plans come at the potential expense of several other budget priorities ranging from infrastructure improvements, revenue sharing for local governments, public benefit plans and many others.  This added complexity in an already uncertain time is doubtless why Speaker Hall has advised members of the House to prepare to work through the summer and right up to the October 1 budget deadline.