Governor Whitmer’s FY 2026 Budget Proposal

Governor Gretchen Whitmer has introduced an $83.5 billion budget recommendation for FY 2026, emphasizing infrastructure, workforce development, and economic growth.

Budget Overview

• Total Budget: $83.5 billion
• General Fund: $15.3 billion
• School Aid Fund: $21.2 billion
• Federal Funds: $34.8 billion (41.7% of total budget)

Key Budget Priorities

1. Lowering Costs
2. Creating Jobs
3. Investing in Education
4. Supporting Seniors
5. Enhancing Public Safety
6. Improving Government Efficiency

Major Infrastructure & Transportation Investments

• $4.9 billion for road funding (federal, state, and restricted funds)
• $112.2 million to secure Michigan’s full $1.8 billion in federal highway aid
• $98.9 million in new funding for state and local roads, highways, and bridges
• $767 million for transit and rail programs
• $7.8 million for a road usage charge study and pilot program
• $10 million for expanding statewide EV charging stations
• Primary revenue sources: Fuel taxes and vehicle registration fees

Water & Environmental Infrastructure

• $80 million for clean drinking water projects, including:
  • Lead service line replacements
  • Stormwater management systems
  • Water infrastructure upgrades

Housing & Workforce Development

• $25 million for employer-assisted housing programs
• $3 million for rural development grants
• $10 million for initiatives aimed at growing Michigan’s population
• Over $100 million for workforce growth programs, including:
  • $19 million for apprenticeship expansion
  • $40.4 million for pre-employment transition support for students with disabilities
  • $7.5 million for transportation and childcare assistance for low-income workers

Technology & Disaster Relief

• $20 million to modernize the Unemployment Insurance Agency IT system
• $43.6 million in federal disaster recovery and storm mitigation funds
• $35.8 million for utility infrastructure apprenticeships and energy efficiency programs
• $22.7 million in federal funds for automotive supplier retooling grants

Governor Whitmer’s $3 Billion MI Road Ahead Plan

Alongside the budget, Governor Whitmer has proposed the $3 billion MI Road Ahead Plan, a long-term strategy to address Michigan’s infrastructure challenges with sustainable revenue sources for state and local road funding.

Key Components of the Proposal

1. Redirecting Fuel Taxes to Roads ($1.2B)
   • The 6% sales tax on fuel would be removed and replaced with an equivalent fuel tax increase to ensure all taxes paid at the pump go directly to road funding.
   • $1 billion backfill would compensate schools and local governments that rely on fuel tax revenue.
2. New Wholesale Marijuana Tax ($470M)
   • A new wholesale tax on marijuana, similar to the existing tobacco tax, would generate an estimated $470 million for road improvements.
   • Michigan’s marijuana tax rates are among the lowest in the country, prompting arguments for increased contributions from the industry.
3. $500 Million in Budget Cuts
   • The plan includes $500 million in state budget reductions, though specific cuts have yet to be identified.
4. New Taxes and Fees ($1.6B)
   • A combination of corporate tax hikes and new fees, including:
     • A possible increase in the 6% Corporate Income Tax (CIT)
     • A new digital advertising tax targeting companies like Amazon, Facebook, X (formerly Twitter), and TikTok
     • Higher fees for heavy trucks, potentially introducing a weight-distance fee expected to raise over $100 million annually
5. Public Transit Investment ($250M)
   • An additional $250 million for transit projects, with funding sources yet to be finalized.

Impact on ACEC/Michigan Members

• Sustainable Infrastructure Funding: The MI Road Ahead Plan could provide long-term stability for state and local projects, ensuring steady opportunities for engineering firms.
• Legislative Debate: The proposal seeks bipartisan support by balancing fuel tax reforms with corporate and marijuana tax increases.
• Speaker Matt Hall (R-Richland Township) supports redirecting fuel taxes but prefers using existing funds rather than imposing new taxes.

Legislative Update – Key Engineering & Business Developments

House Committee Assignments & Legislative Priorities

• House Transportation & Infrastructure Committee (Chaired by Rep. Pat Outman) will focus on road funding and transit investments.
• House Regulatory Reform Committee (Chaired by Rep. Joseph Aragona) will address business regulations, construction permitting, and environmental policies.

Major Legislative Proposals & Actions

• Minimum Wage & Earned Sick Time Act (ESTA) Revisions
  • HB 4001 & HB 4002 passed with bipartisan support.
  • The Senate is reviewing companion bills with a February 21 implementation deadline.
  • Senate Democrats seek to keep small businesses (under 50 employees) subject to paid sick leave requirements, though negotiations are ongoing.
• Speaker Matt Hall’s Alternative $3 Billion Road Funding Plan
  • A competing proposal reallocates existing state funds rather than increasing taxes:
    • $500 million from eliminating outdated MEGA tax credits
    • $500 million from restricting legislative earmarks
    • $600 million from surplus general funds
    • $500 million from discontinuing automatic SOAR Fund deposits
    • $945 million by dedicating all fuel taxes to road funding

AESLC Legislative Meet & Greet Recap & Upcoming Events

• January 23 Event: AESLC hosted a Legislative Meet & Greet with Reps. Julie Brixie and Angela Witwer at Colliers Engineering, discussing engineering policy collaboration.

Upcoming Events

• February 24 – AESLC Legislative Meet & Greet (Bloomfield Hills)
• February 26 – Governor’s State of the State Address
• March 10 – AESLC Legislative Meet & Greet (Grand Rapids)

Final Takeaways & Next Steps

• Legislative Budget Process: The Governor’s budget serves as a starting point—House and Senate versions will be developed over the next few months.
• May Consensus Revenue Estimating Conference: This will influence final budget negotiations.
• Final Budget Deadline: September 30, though divided government may cause delays.
• Key Issue to Watch: The Governor’s transportation funding proposal vs. competing legislative plans.

Stay Engaged

We will continue to monitor these developments and advocate for Michigan’s engineering and business communities.