Michigan Budget Deal Averts Shutdown, Boosts Road Funding

Gov. Gretchen Whitmer and legislative leaders announced a tentative bipartisan state budget agreement this week intended to avert an Oct. 1 government shutdown by passing the state and School Aid budgets. The deal commits significant new road funding, with reports varying from $1.5–$1.8 billion spread across years to some accounts putting nearly $2 billion in 2026. To help pay for repairs, the Michigan House approved a 24% wholesale marijuana tax projected to raise about $420 million annually for roads, prompting strong backlash from cannabis businesses that warn the levy could force closures, layoffs and push consumers to black- or gray-market sources. Lawmakers also advanced a “decoupling” from recent federal tax changes to phase in credits and avoid an immediate roughly $677 million revenue hit, and included temporary state income-tax exemptions for tips and overtime; leaders said they would eliminate some corporate incentive funding and pursue transparency and anti-waste reforms. Negotiations continue on detailed school funding formulas and other allocations, and the package still must be formally passed by the Legislature and signed by the governor before the deadline.