DEEP DIVE: THE GOVERNOR’S 2026 STATE BUDGET PROPOSAL
When state budgets continually focus on the needs of residents — centering kitchen table issues that allow workers, children and families better access to opportunity — they can be transformational. The last few years have shown us the positive benefits of removing barriers to healthcare access, strengthening education systems from cradle to career, and ensuring families have what they need to make ends meet. However, Gov. Gretchen Whitmer’s fiscal year (FY) 2026 budget proposal comes in the middle of a lot of uncertainty, with divided state government and chaos and possible drastic budget cuts coming from the federal government. Despite this uncertainty, the governor’s budget builds on the successes of the current and prior years’ budgets, maintaining the things we know work while taking a “center of the lane” approach to new investments. The governor’s budget prioritizes investments in education, talent, infrastructure, public safety and making government work better.
The governor’s budget proposal, which was presented to the Legislature on Feb. 5, 2025, contains the details of her plan to allocate the state’s resources for the 2026 budget year, which begins on Oct. 1, 2025, and ends on Sept. 30, 2026. For 2026, the governor recommends $83.5 billion in total spending from state and federal sources. About $19.5 billion of our School Aid Fund (SAF) dollars are spent across pre-K-12 schools, community colleges, and colleges and universities. Spending from the state’s General Fund — the portion of the budget over which lawmakers have the most control — is expected to be $15.3 billion. Federal funds continue to make up the largest portion of the state budget, at nearly $34.9 billion or 41.7% of the state budget.
Somewhat surprisingly, the governor’s budget is a slight increase over the current year’s budget, which benefited from a significant one-time surplus. In fact, at the January Consensus Revenue Estimating Conference, the post-COVID economy was deemed to be strong and stable and revenues were estimated to be coming in slightly ahead of what we projected last year. This provided budget crafters with some additional cushion in both one-time and ongoing funds. The governor’s budget recommendation includes about $1.53 billion total ($648.7 million General Fund) in one-time allocations, including the deposit into the Budget Stabilization Fund (often called the Rainy Day Fund); this represents only about 1.8% of total appropriations, or about 4.2% of the General Fund.
As has been the case in past budgets, the vast majority (81%) of the overall state budget supports health and human services, education — including child care, pre-K, K-12 and postsecondary education — and public safety. The same is true for the state’s General Fund budget, with 82.3% of the budget allocated to these three core categories. Overall, health and human services, which provides funding for Michiganders’ basic needs like healthcare, basic cash assistance, food assistance, child welfare, and behavioral health supports, remains the largest department in both overall funds and General Fund appropriations.
The executive budget recommendation also relies on the passage of several new or increased revenue streams, including a new tax on vape and non-tobacco nicotine products. Despite long-term declines in the percentage of children using tobacco, use of tobacco products — including cigarettes, e-cigarettes, vaporizing devices and other tobacco products — among Michigan youth remains too high, especially among high school students. At the same time, Michigan ranks at the bottom of states — and nowhere near what the Centers for Disease Control and Prevention recommends — in our state spending on tobacco prevention and cessation programs. The governor’s budget recommends implementing a new tax on vape products to raise revenues to support youth mental health, smoking and cancer prevention, and healthcare access programs.
The governor’s budget allocates nearly all of available one-time and ongoing funds in her recommendation. Based on the governor’s recommendation, the state budget office estimates our state General Fund would end the 2026 budget year with only $11.7 million on the balance sheet, and our state School Aid Fund would end the year with only $18.6 million on the balance sheet. These figures do create some hesitancy as it provides little opportunity to make investments beyond what the governor recommended without reducing or eliminating other proposed investments, and a mild economic downturn, small tax reduction or any other change affecting revenues could easily result in a midyear deficit or shortfall.
However, one of the largest and most real threats to Michigan’s budget is what is happening in Washington. The week before the governor released her budget, the stability of essential programs was shaken when a federal Office of Management and Budget memorandum mandated a funding freeze in alignment with President Donald Trump’s executive orders and simultaneously programs like Head Start and all state Medicaid Systems could not access their payment systems. While the funding freeze has been temporarily halted, since then, congressional leaders in Washington have released a budget blueprint that slashes vital programs like Medicaid and food assistance in order to provide deep tax cuts for wealthy households. This will have stark consequences on Michigan’s state budget, as several departments rely on significant amounts of federal funds.
Work now turns over to the Legislature to craft their budget proposals, which brings its own risks. Statutorily, the Legislature has a goal of getting a budget to the governor’s desk by July 1, 2025, but, there is no real penalty if the state fails to meet this deadline. However, if the state fails to have a budget in place by October 1, 2025, the state government shuts down. For the first time since the 2009-2010 legislative session, the Legislature is divided, with a Republican-led House and a Democratic-led Senate, which will likely slow down negotiations.
As Michiganders, we all deserve strong schools, attainable housing, safe drinking water, affordable healthcare, and economic security. The state budget provides an opportunity to improve access to the services that Michigan people — kids, workers, and families — need and rely on, and the League will continue to work toward a People’s Budget that works for all Michiganders.
Betsy Zobl-Tar 
Jay Cutler joined the League in March 2026 as the Kids Count Senior Data Analyst, where he collects, analyzes, and prepares data for Kids Count in Michigan.
Danielle Taylor-Basemore joined the League as the Development Data and Stewardship Coordinator in June 2025. She brings with her five years of nonprofit experience with a special focus on community engagement, data visualization and strategic programming. Prior to joining the League, Danielle served as the Business District, Safety, and Digital Manager at Jefferson East, Inc.
Scott Preston is a Senior Policy Analyst with the Michigan League for Public Policy, where he leads the organization’s immigration and criminal justice reform portfolios. In the three years prior to joining the League, Scott facilitated the Southeast Michigan Refugee Collaborative and managed a small business economic development program at Global Detroit. His work included launching Michigan’s first Refugee Film Festival and building on a trusted connector model that linked marginalized communities with crucial resources. Scott’s work at the League is informed by his background in journalism and research. He spent four years covering the Syrian refugee crisis in the Middle East for publications such as The Economist, and later worked with unaccompanied refugee minors through Samaritas. Scott holds a master’s degree in international migration and public policy from the London School of Economics and Political Science.
Kate Powers joined the League as the Chief Development Officer in February 2025. Prior to joining the League, Kate held leadership positions at many Michigan nonprofit organizations, most recently serving as the COO and Chief Development Officer of Ele’s Place. Kate has spent the bulk of her career in fundraising, with a short stint in the state Legislature as a legislative aide to members in both chambers. Kate is a graduate of Michigan State University’s James Madison College with a Bachelor of Arts in Social Relations and has a certificate in fundraising management from the Lilly Family School of Philanthropy at Indiana University. Additionally, Kate served on the East Lansing Public Schools Board of Education and is a past President of the Junior League of Lansing. In her free time, she enjoys traveling with her husband and her son and saving outfit of the day and home decor ideas on Pinterest. 
Nicholas Hess joined the League as the Fiscal Policy Analyst in September of 2024. In this role, Nicholas focuses on tax policy, government revenue, and their impact on working families and racial equity, including the effects of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Nicholas values the role that judicious fiscal policy can play in the improvement of people’s lives and the economy, alleviating inequities along the way.
Audrey Matusz joined the League as the Visual Communications Specialist in September 2024. She supports the team with implementing social media strategies and brainstorming creative ways to talk about public policy. She brings with her nearly a decade of experience in producing digital products for evidence-based social justice initiatives. 
Jacob Kaplan 
Donald Stuckey 
Alexandra Stamm 
Amari Fuller
Mikell Frey is a communications professional with a passion for using the art of storytelling to positively impact lives. She strongly believes that positive social change can be inspired by the sharing of data-driven information coupled with the unique perspectives of people from all walks of life across Michigan, especially those who have faced extraordinary barriers. 
Yona Isaacs (she/hers) is an Early Childhood Data Analyst for the Kids Count project. After earning her Bachelor of Science in Biopsychology, Cognition, and Neuroscience at the University of Michigan, she began her career as a research coordinator in pediatric psychiatry using data to understand the impacts of brain activity and genetics on children’s behavior and mental health symptoms. This work prompted an interest in exploring social determinants of health and the role of policy in promoting equitable opportunities for all children, families, and communities. She returned to the University of Michigan to complete her Masters in Social Work focused on Social Policy and Evaluation, during which she interned with the ACLU of Michigan’s policy and legislative team and assisted local nonprofit organizations in creating data and evaluation metrics. She currently serves as a coordinator for the Michigan Center for Youth Justice on a project aiming to increase placement options and enhance cultural competency within the juvenile justice system for LGBTQIA+ youth. Yona is eager to put her data skills to work at the League in support of data-driven policies that advocate for equitable access to healthcare, education, economic security, and opportunity for 0-5 year old children. In her free time, she enjoys tackling DIY house projects and trying new outdoor activities with her dog.
Rachel Richards rejoined the League in December 2020 as the Fiscal Policy Director working on state budget and tax policies. Prior to returning to the League, she served as the Director of Legislative Affairs for the Michigan Department of Treasury, the tax policy analyst and Legislative Director for the Michigan League for Public Policy, and a policy analyst and the Appropriations Coordinator for the Democratic Caucus of the Michigan House of Representatives. She brings with her over a decade of experience in policies focused on economic opportunity, including workforce issues, tax, and state budget.
Simon Marshall-Shah joined the Michigan League for Public Policy as a State Policy Fellow in August 2019. His work focuses on state policy as it relates to the budget, immigration, health care and other League policy priorities. Before joining the League, he worked in Washington, D.C. at the Association for Community Affiliated Plans (ACAP), providing federal policy and advocacy support to nonprofit, Medicaid health plans (Safety Net Health Plans) related to the ACA Marketplaces as well as Quality & Operations.
Renell Weathers, Michigan League for Public Policy (MLPP) Community Engagement Consultant. As community engagement consultant, Renell works with organizations throughout the state in connecting the impact of budget and tax policies to their communities. She is motivated by the belief that all children and adults deserve the opportunity to achieve their dreams regardless of race, ethnicity, religion or economic class.
Emily Jorgensen joined the Michigan League for Public Policy in July 2019. She deeply cares about the well-being of individuals and families and has a great love for Michigan. She is grateful that her position at the League enables her to combine these passions and work to help promote policies that will lead to better opportunities and security for all Michiganders.
Megan Farnsworth joined the League’s staff in December 2022 as Executive Assistant. Megan is driven by work that is personally fulfilling, and feels honored to help support the work of an organization that pushes for more robust programming and opportunities for the residents of our state. She’s excited and motivated to gain overarching knowledge of the policies and agendas that the League supports.
