The big news for July was supposed to be that the Legislature and Governor managed to complete the FY 2027 budget well before the end of the current fiscal year – a vast improvement on last year’s efforts.  However, that was overshadowed by the bombshell Governor Whitmer dropped on every public sector worker in the state on Friday, July 10.  That was the day that Governor Whitmer vetoed 9 bills that had been passed by the House and Senate in 2024 but held up from being presented to the governor.  Her decision to veto these bills, which had been the subject of a 16-month court battle, sent shockwaves through every labor organization in the state – especially those that had been fighting so hard to get these bills enacted. 
 
More on this issue and the budget agreement below.
 
 
Primary Election Sets the Stage for Competitive November
 
The enthusiasm of young progressive voters made itself felt in the Democratic primary election.  Left-leaning Democrats won the majority of competitive primaries up and down the ticket on August 4.  There were far fewer surprises on the Republican side, as in most cases winners came from established candidates. 
 
At the top of the ticket, Republican John James handled a challenge from billionaire Perry Johnson to face Democrat Jocelyn Benson in the race for governor.  Benson herself posted a strong victory over her primary opponent, Genesee County Sheriff Chris Swanson.  Former Congressman Mike Rogers was unopposed in his Republican primary for US Senate, while on the Democratic side the race between Abdul El-Sayed and Congresswoman Haley Stevens captured national attention.  El-Sayed has been declared the winner in a nail-biter of a race, and he will face Rogers in November. 
 
Elsewhere on the ballot, Democratic primaries were dominated by progressive-leaning candidates.  In the 7th Congressional District, William Lawrence outpaced two more moderate candidates Bridget Brink and Matt Maasdam to win the Democratic primary.  Lawrence will face incumbent Congressman Tom Barrett in November.  Congressman Shri Thanedar was ousted by the more progressive State Representative Donovan McKinney in the 13th Congressional District.  The 13th District is overwhelmingly Democratic so McKinney is all but assured of becoming a member of Congress next year.
 
 
Whitmer Vetoes Vital Legislation
 
Just over eighteen months ago, during the infamous lame duck portion of the 2023-4 legislative session, the House and Senate passed dozens of bills in the waning hours that Democrats had control of both chambers.  The 2024 election had determined that Republicans would take the majority in the Michigan House starting on January 1, 2025, so any partisan legislation had to be passed and sent to the Governor before the session adjourned for the year.  When the Legislature adjourned just before Christmas, the House and Senate clerks had just under two weeks to enroll and present that multitude of bills to the Governor for her approval. 
 
Among that multitude were four separate legislative packages consisting of nine separate bills.  Those packages included a reform of the so-called “80/20” law that hampered the ability of public sector unions to collectively bargain for health care benefits; a package that would allow certain state workers to opt into the State Police retirement plan (seen as an improvement over the plans offered to other state workers); a set of bills protecting low-income families from having benefits confiscated by bill collectors; and bills to allow Detroit-area museums to seek a millage to improve their funding levels. 
 
For reasons that were never adequately explained, when the clock ticked over into the new year and the leadership in the House switched from Democrats to Republicans, those nine bills had yet to be presented to the Governor for her signature.  Suspicions arose immediately that this was not an administrative accident, and some even saw Governor Whitmer’s hand in the failure to present the bills.  While she had not publicly announced opposition to any of those bills, it was obvious during efforts to pass them through the House and Senate that the Governor’s office had concerns about the bills impacting public workers. 
 
Despite the bills failing to be presented before the end of 2024, it was expected that the new Speaker of the House – Representative Matt Hall – would follow the constitution and forward the bills to the Governor.  He did not.  Instead he held off so that his legal team could review the issue to determine if in fact he was required to forward the bills at all.  After several weeks, it became clear that the Speaker had no intention of submitting the bills to the Governor.  The Michigan Senate, led by Senate Majority Leader Winnie Brinks, then initiated litigation in order to force the Speaker’s hand. 
 
That set off one of the stranger legal actions in Michigan history.  The case first went to the Michigan Court of Claims, where Judge Sima Patel ruled in favor of the Senate, stating that the Speaker was required by the Michigan Constitution to send the bills to the Governor.  Surprisingly, though, Judge Patel held off on issuing a court order to compel the Speaker to act.  The lawsuit was then appealed to the Michigan Court of Appeals.  Their ruling was even more specific.  The three-judge panel agreed with Judge Patel on the case, but also instructed her to issue a court order to force the Speaker to send the bills to the Governor. 
 
The Michigan House appealed that ruling to the Michigan Supreme Court, which began taking oral arguments on the question of whether or not to hear the case just over two months ago.  On Thursday, July 9, the Michigan Supreme Court issued a statement that they refused to hear the appeal, thereby upholding the rulings of the lower courts.  This was a massive win for the Michigan Senate and for the numerous public sector unions that had supported the litigation. 
 
On July, 10, however, elation at the court ruling turned to horror when the Governor announced that she had vetoed all of the nine bills.  She explained her action by arguing that the 18 months that had elapsed between passage of the legislation and presentment to her made them administratively impossible to implement.  She claimed that the effective dates contained in the bills had long since passed, and would result in costs to the state that were unaccounted for in the budget.  She also claimed that signing them into law would likely result in lawsuits from local units of government as to how they should be applied retroactively.  She blamed House Republicans for holding the bills up for so long and forcing her to veto the bills. 
 
These excuses did not play well with other Democratic leaders and labor organizations that had fought so hard to pass the bills in the first place.  Statements from Democratic lawmakers and union leaders contained words like “betrayal,” “backstab” and “tragedy .”  Republican leaders were much more exuberant, with Speaker Hall hinting that if Democrats really wanted these bills, they should have sent them to the Governor when they were in control. 
 
As stated above, the Governor’s vetoes also invigorated theories that it was the Governor herself who had pulled strings to avoid having the bills presented to her in a timely manner.  While no one from the Governor’s office, the House clerk’s office or former Speaker Tate’s office have admitted to this, the vetoes are one more piece of circumstantial evidence that the Governor played a larger role in the eventual defeat of these bills than she portrays in public statements.  The action also lends more credence to the theory that Governor Whitmer does not plan on seeking any other offices after she leaves the Governor’s office.  If she felt she would face the voters again, this saga might have ended much differently.
 
 
Legislature and Governor Come to Agreement on FY 2027 Budget
 
Last year, the House and Senate went right down to the wire (and actually, a little over it) before agreeing on a budget for 2026.  This year, leaders in Lansing passed the budget well ahead of the October 1 start of the next fiscal year.  Just as importantly, finishing the work on the K-12 budget before July 4 will give school districts a better understanding of their funding levels before they have to adopt their own budgets for the upcoming school year. 
 
The budget totals just over $75 billion, a slight reduction from the current year budget numbers.  Much of the budget is a continuation from the current year, with few new programs being added.  There were some adjustments in the MDHHS budget due to passage federal changes to Medicaid and Medicare funding.  The K-12 budget saw an overall increase due to higher property tax revenues, and schools will see a 2.5% increase in their foundation allowance. 
 
Below is a brief summary of various departmental spending:
 
Agriculture
 
Overall 6.8% decrease in funding.  Much of that comes from a reduction in the Double-Up Food Bucks program and the loss of $5.4 million in federal funding for the USDA reforestation program.
 
 
Attorney General
 
Overall 1% increase in funding.  No major changes.
 
 
Civil Rights
 
Overall 3.5% increase.  No major changes.
 
 
Corrections
 
Overall 1.5% increase in funding.  Skilled Trades/Career Readiness programs and Contraband Prevention programs received small increases.  The bulk of the increase in spending comes from economic adjustments based on wage and benefit costs.  That was offset somewhat by reductions in facility maintenance costs for housing units that have already been shuttered.  The Senate had included $33 million to account for costs of corrections staff shifting into the State Police Pension system, but those funds did not survive the final agreement.  The Governor’s veto of those bills made the issue moot for the time being.
 
 
Education
 
Overall 3.1% reduction.  The reductions primarily stem from a loss of available federal funds, and the transfer of the School for the Deaf and Blind to the School Aid budget.
 
 
Environment, Great Lakes and Energy
 
Overall EGLE received a 30% reduction in funding, although that number is misleading since the department actually gains 4 FTEs.  The vast majority of the reduction stems from the $270 million loss of federal funds used for the Water State Revolving Fund used to provide low interest loans to local water utilities for infrastructure upgrades.
 
 
Executive Office
 
Overall 2.9% increase.  No major changes.
 
 
Health and Human Services
 
Overall 2.3% increase.  This budget had major shifts due to changes in federal funding.  Most of the larger line-item changes were reflecting caseload adjustments in areas such as Medicaid, Medicare and Child Welfare programs.  There were also reductions in areas such as SNAP benefits due to federal changes.  There was also an additional $27.8 million added for operational costs for the new Southeast Michigan Psychiatric hospital which is set to replace Walter Reuther and Hawthorne. 
 
 
Insurance and Financial Services
 
Overall 3.7% increase.  No major changes.
 
 
Judiciary
 
Overall 1.6% reduction.  The reduction stems mainly from a decrease in fee revenues. 
 
 
Labor and Economic Opportunity
 
Overall 7.8% reduction.  The reduction primarily stems from reductions in federal revenues in areas such as unemployment insurance and workforce development. 
 
 
Legislature
 
Overall 2.9% increase.  No major changes.
 
 
Legislative Auditor General
 
Overall 3% increase.  No major changes.
 
 
Licensing and Regulatory Affairs
 
Overall 2.1% reduction.  The reduction is due to a $24 million reduction for Michigan Indigent Defense Commission grants.
 
 
Lifelong Education, Advancement and Potential
 
Overall 13.7% increase.  Most of the increase is reflected in an $88 million bump to Child Development and Care Public Assistance grants. 
 
 
Military and Veterans Affairs
 
Overall 9.2% reduction.  The reduction is almost completely due to the elimination of one-time funds for the Selfridge Air National Guard base. 
 
 
Natural Resources
 
Overall 5.6% increase.  The increase mainly comes from increases in gas tax revenue that will go toward improvements in snowmobile and recreational trails as well as other funds going to improve state park maintenance. 
 
 
State
 
Overall 1.8% increase.  No major changes.
 
 
State Police
 
Overall 1.7% reduction.  Reductions stem from reduction of 100 FTEs, reduction in post overtime costs, and the elimination of the Michigan State Police Cadet program.
 
 
Technology, Management and Budget
 
Overall 6.3% reduction.  The bulk of the reduction stems from reductions in Interdepartmental Grant Funding (fees for services provided by DTMB) by $100 million.  The department adds 22 FTEs despite the reduction.
 
 
Transportation
 
Overall 2.9% increase.  The budget includes large increases in distribution to cities, villages and county road commissions.  The budget also provides significant increases for public transit programs. 
 
 
Treasury
 
Overall 0.2% reduction.  No major changes.