The long and drawn-out 2025 state budget battle is finally complete, as Governor Whitmer signed both the omnibus state budget bill and the school aid bill into law on Tuesday, October 7.  While the initial budget proposals from the House and Senate were miles apart, in the end the final product was something about which both sides expressed mixed feelings.  The budget included $1.8 billion in new money for transportation funding (mostly aimed at road and bridge construction) which was obtained through a mix of spending cuts and new revenues. 
 
The final budget deal was essentially crafted by a handful of legislative leaders and staff and was not presented to the public (or even the rest of the Michigan Legislature) until approximately 24 hours before it was put before them for a final vote.  Several legislators complained about being kept in the dark and the very small amount of time they had to review a 1,000+ page appropriations bill before having to vote on it.  There was a mad scramble in the last few days before passage to include various pet projects for numerous lawmakers, but in the end, no one seemed very happy about the final result.
 
Republicans had generally wanted to make much deeper cuts in state spending, but consoled themselves with reducing state expenditures overall and also passing a road funding plan.  Most Democrats were relieved to stave off the deep cuts proposed by their Republican colleagues, but expressed concerns about sustaining education and health care funding into the future.  Feelings were mixed on both sides of the aisle about using a tax increase on wholesale marijuana sales to help fund road construction.  That part of the budget agreement turned out to be the toughest to pass, as it very narrowly passed in the Senate and was the last piece of the puzzle to be approved.
 
 
State Budget Stands at $81 Billion for FY 25-6 – Road Funding Plan at Center of Negotiations
 
After nearly a year of press conferences, finger pointing and a very brief state shutdown, Governor Whitmer signed the Omnibus Budget into law on October 7.  It concluded a standoff wherein House Republicans and Senate Democrats advocated for starkly different visions for state spending.  It also included a road funding agreement that will add $1.8 billion in new road and transportation funding.
 
Initially, the road funding issue and the budget had been argued separately.  However, as the year wore on and the budget deadline loomed, it became clear that the two issues were inextricably linked.  The Governor and the House Republicans had both proposed plans that would raise approximately $3 billion for road funding.  The Governor’s plan had relied on a few spending cuts and new taxes to pay for it.  The House proposal paid for the plan entirely with budget cuts.  By August, it was clear that neither plan was politically viable.
 
As the October 1 budget deadline loomed, leaders from the House and Senate met with the Governor to work out a compromise plan that would include some budget cuts but also some new revenues.  In the end, a scaled down road funding plan totaling approximately $1.8 billion was passed, along with several tax bills that raised – or in some cases lowered – various taxes.
 
The most controversial of these was a new proposed tax on marijuana.  The 24% wholesale tax was loudly opposed by the marijuana industry, and it narrowly passed the Senate over that opposition.  Other bills were also passed to increase revenue, or more precisely, to prevent the loss of revenue.  The Legislature passed legislation that uncoupled the Michigan Corporate Income Tax from the federal tax so that it would not automatically be reduced at the end of the year.  The House and Senate also passed legislation reauthorizing the Insurance Provider Assessment that is used to match federal Medicaid funds.  The Corporate Income Tax and Insurance Provider Assessment bills prevented the loss of hundreds of millions of dollars to the state general fund and to state Medicaid support. 
 
As for the Omnibus Budget, the final version contains the elimination of approximately 2,000 FTEs for state departments.  Governor Whitmer stated that these positions are currently unfilled and will not result in any layoffs.  However, in areas such as state psychiatric hospitals and corrections facilities, those unfilled positions represented staffing needs that might now go unmet.  In the end, the budget did include funding for wage increases that had been approved by the Civil Service Commission, something that had been strongly advocated for by MSEA leaders.  It also included an additional $17 million in the Michigan Department of Corrections for a 5% wage increase to corrections officers for all steps. 
 
 
 Court of Appeals Rules on 80/20 and State Pension Bills that are Still Awaiting Enactment
 
As the end of 2025 is only a few months away, legislation that passed at the end of 2024 is still trapped in legal limbo.  Several bills that passed both the House and Senate in the Lame Duck session last year have yet to be sent to the Governor for her signature due to a refusal by Speaker of the House Matt Hall.  Despite a court ruling stating that the House must present the bills, the House has held onto them, defying both the Michigan Constitution and Michigan courts. 
 
This week, the three-judge panel of the Michigan Court of Appeals in a 2-1 ruling affirmed the ruling of the lower court and took it a step further.  Not only did it agree that the lower court was correct in the position that the Michigan Constitution requires the Speaker of the House to present these bills to the Governor for her signature, they sent the case back to the lower court and ordered the court to issue a writ of mandamus compelling the Speaker to present the bills to the Governor by a date to be determined by the lower court.   
 
The result of this is that many state workers, specifically those in law enforcement roles such as corrections officers, conservation officers, capitol police and motor carrier offices, could finally be granted access to improved retirement options if the bills are finally presented to and signed into law by Governor Whitmer.  In addition, all public employees will have their collective bargaining rights restored when it comes to negotiating over health care benefits.  The refusal to follow the constitutional requirement to transmit the bills to the Governor is costing Michigan public employees millions of dollars annually.
 
Speaker Matt Hall, the defendant in the litigation, has not made any public comments as of this writing about the case.  Most observers expect the House to appeal the case yet again, this time to the Michigan Supreme Court.  However, seeing that the Court of Appeals judge who wrote the opinion against the House was appointed by Governor Rick Snyder, and the fact that the current makeup of the Michigan Supreme Court is six Democratically nominated justices and one Republican nominated justice, the odds are that the courts will continue to side against Speaker Hall in this matter. 
 
On the other hand, if this year has taught us anything, it is that the balance between the executive, legislative and judicial branches of government is more tenuous than ever.  Just a decade ago, the idea that a member of the legislative or executive branches of government would ignore or even openly defy a court order was unthinkable.  Now it is not only a possibility, it is indeed likely that Speaker Hall will continue to hold onto the bills as long as is legally possible.  And perhaps even longer.