THE STAKES ARE HIGH FOR MICHIGAN

The OBBBA will have a massive impact on Michigan’s state budget. From tax revenue losses to federal funding cuts, every state is now forced to make challenging trade-offs and decisions about how to continue serving residents. 

The business tax breaks will impact Michigan’s revenue stream, particularly the ability for businesses to expense domestic research and experimental costs as well as qualified properties used along the production process. Since Michigan is “coupled” with these federal tax changes, these business tax exemptions will reduce the tax base.

Additionally, these numbers do not factor in the recent Consensus Revenue Estimating Conference (CREC) changes, thus Michigan will be able to use less money than previously forecasted.

According to the Michigan Department of Health & Human Services, the state will face new annual costs of around $410 million for SNAP, depending on caseloads: $90 million for the increased administrative cost share and $320 million for the new benefit cost share.

And while total Medicaid spending in Michigan is projected to decrease over the next decade, in part because of federal policy changes such as new work reporting requirements and more frequent eligibility checks known to cause significant coverage losses, that doesn’t mean Michigan will see savings.

In fact, the opposite is true. By limiting tools like provider taxes that Michigan and most other states use to draw down federal funding to support their Medicaid programs, Michigan will have to use more General Fund dollars to maintain existing health care coverages. Additionally, because the federal government is cutting back its share, Michigan could lose billions in Medicaid funding, leaving the state to use more General Fund dollars to keep Medicaid programs afloat or to decide what services or eligibility categories to scale back.