Michigan Unveils $88.1B Budget Proposal Amid Federal Funding Shifts

Plan includes new taxes, education boost, and challenges from Washington

Published on Feb. 11, 2026

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Michigan Gov. Gretchen Whitmer unveiled an $88.1 billion budget proposal for fiscal year 2027 on Wednesday, addressing challenges posed by federal program changes while pushing for increased education funding and tax relief. The budget includes $13.6 billion in general fund spending and $20.3 billion in school aid, with federal dollars accounting for 41% of the total. However, the state faces additional costs from changes to SNAP and Medicaid, requiring staff and system upgrades.

Why it matters

This budget proposal reflects the complex fiscal landscape Michigan is navigating, with the state grappling with significant changes to federal programs that impact healthcare coverage and social services. The plan's focus on education funding and tax relief aims to address the needs of Michigan residents, while the new revenue sources highlight the state's efforts to address budgetary challenges.

The details

The budget proposal includes a $250 increase in base per-pupil funding to $10,300, as well as new tax relief measures like a back-to-school sales tax holiday and a Senior Property Tax Credit. To generate new revenue, the plan proposes a tobacco tax, a vape tax, a new internet tax rate on the largest casinos, a per-wager sports betting tax, eliminating the free play deduction, and a digital advertising tax.

  • Michigan Gov. Gretchen Whitmer unveiled the $88.1 billion budget proposal on Wednesday, February 11, 2026.
  • The fiscal year 2027 budget is set to take effect on October 1, 2026.

The players

Gretchen Whitmer

The Governor of Michigan, who unveiled the $88.1 billion budget proposal.

Jen Flood

The State Budget Director, who announced details of the budget proposal during the presentation.

Jim DeSana

A Republican state representative who criticized the proposed tax increases in the budget.

Alabas Farhat

A Democratic state representative who defended the budget proposal as a necessary response to fiscal challenges.

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What they’re saying

“Tax increases are not going to fly this year. We need to cut state spending.”

— Jim DeSana, State Representative, R-Carleton (clickondetroit.com)

“Today's budget proposal was a reality check for a lot of folks. We are facing a $1.8 billion deficit, but Governor Whitmer has put forth a smart plan.”

— Alabas Farhat, State Representative, D-Dearborn (clickondetroit.com)

What’s next

The $88.1 billion budget proposal sets the stage for potential budget negotiations between the governor and state lawmakers. Both Republican and Democratic lawmakers have expressed a desire to avoid the contentious battles that characterized last year's budget process, which missed the October 1 constitutional deadline to have a budget signed into law.

The takeaway

Michigan's budget proposal reflects the state's efforts to navigate a complex fiscal landscape, balancing the challenges posed by federal program changes with the need to invest in education and provide tax relief for residents. The plan's mix of new revenue sources and spending priorities highlights the state's commitment to addressing its budgetary challenges while supporting the well-being of its citizens.