By Mary Pollock
February marked two big events in life at the Capitol: The Executive Budget release on February 11 and Governor Gretchen Whitmer’s final State of the State Address on February 25. Plus, two of the bills we support moved to the Governor’s desk for signature!
EXECUTIVE BUDGET
Where you spend your money reveals your values. The proposed State budget for Fiscal Year 2027 of $88.1 billion is a blend of very targeted tax relief, including for seniors, and expanded social programs, even as the State must deal with a $1.8 billion funding gap because of federal cutbacks on Medicaid and food assistance and State revenue declines. The budget proposes a general fund total of $13.6 billion, roughly $500 million less than the current Fiscal Year budget, and a school aid budget totaling $21.4 billion. The remainder of $53 billion is federal funding.
Seniors Benefit – The biggest tax relief is a proposed 10 percent property tax refund for about 260,000 seniors 65 and above who own homes in Michigan. It is unclear if there is an income limit to the tax refund or if there is some tax relief for the same group who are renters as no legislation has yet been introduced.
According to the Governor’s statement about the proposal, over the last few years, inflation has caused property taxes to increase consistently, sometimes by the maximum amount allowed under Michigan law, 5 percent. The projected annual average savings to seniors would be $345 a year. It is estimated to deliver $90 million in tax relief to eligible taxpayers.
This 2026 tax year the 4.5 percent State income tax on Social Security will end, saving 40,000 seniors about $500 a year. And the full rollback of the “pension tax” will occur this year for those born in 1953-58. It saved about 500,000 seniors an average of $1,000 a year.
Other Tax Proposals – The Executive Budget proposed Michigan’s first-ever sales tax holiday for back-to-school supplies, covering in-person and online purchases of clothing, computers, and classroom essentials. Also proposed is maintaining the elimination of State income taxes on tips and overtime pay, a policy that currently benefits over 640,000 workers.
Education and Childcare – The State continues to rank very low in reading among the states. The Governor’s Every Child Reads Plan, which would mark the largest literacy investment in State history, is proposed at a cost of several hundred million dollars. The plan calls for expanded pre-K access, statewide use of evidence-based reading instruction, and additional tutoring support. More than 6,000 educators have completed LETRS literacy training (phonics), which would be expanded statewide under the proposal.
The Governor wants to make permanent the free breakfast and lunch programs for all 1.4 million public school students, which saves families $1,000 per child annually. And continued funding for free pre-K education and community college tuition for two years is supported in the proposed budget.
Raising Revenue – To balance the budget while funding new programs amid revenue declines, the administration has proposed a mix of revenue-generating measures and a $400 million withdrawal from the State’s Rainy-Day Fund currently sitting at $2.3 billion. The proposal includes raising taxes on tobacco (vaping products) and online gaming to help bridge the deficit. A new 24 percent wholesale marijuana tax is projected to generate roughly $420 million annually, specifically designated for road repairs and infrastructure.
Infrastructure and Public Safety – The plan allocates nearly $1 billion specifically for road infrastructure, with over $450 million directed to county road commissions and $246 million to cities and villages. The budget includes investments to improve water affordability and protect families from shut-offs. Funding is earmarked for mental health and safety grants for both public and private schools, alongside expanded support for the First Responders Presumed Coverage Fund to assist with medical expenses for work-related illnesses. Significant incentives to increase affordable housing are included in the plan.
Prospects – As the Michigan House and Senate begin their review, lawmakers will negotiate the spending plan before sending a final version for the Governor’s approval or line item vetoes. Keep in mind that last year the Republican controlled House did not engage in negotiations until well past the statutory July 1 deadline. And the budget was not really done until a few hours after the fiscal year began on October 1.
Speaker’s Proposal – Speaker of the House Matt Hall (R-Richland) has already announced a plan to eliminate all property taxes ($5 billion in revenue) and replace them partially ($4.7 billion) with six percent sales taxes on services typically used by higher-income residents and tourists. Services are not currently taxed in Michigan. According to the most recent tax expenditure report, there was an estimated $16.9 billion in tax exempt services during the 2022-23 fiscal year.
Hall proposes eliminating the personal property tax, the 6-mill State education tax, the real estate transfer tax, and the pop-up tax, which is when residential property is reassessed upon its sale, removing the inflationary cap on tax increases for the prior owner.
Examples of taxable services Hall laid out include limousines, country club memberships, private jets, marinas, tourist services, travel agencies, skiing, golf, artificial intelligence services, newspaper publishing, performing arts, environmental consulting, and political ads. Nail salons, barbers, landscaping, health care services, car repairs, childcare, veterinary services, dry cleaning, legal services, and streaming services would be exempt under Speaker Hall’s plan.
Other Responses – The marijuana lobby has opposed any more taxes on its industry, saying it is struggling now. Local governments do not want reduced control of zoning and construction codes to encourage diverse and affordable housing. People want tax relief and like expanded State services at the same time, a contradiction. The coming months will reveal how much of the Governor’s original framework remains intact.
STATE OF THE STATE ADDRESS
Gov. Whitmer delivered her final State of the State address, outlining her top priorities for 2026, her final year in office due to term limits. In her 50-minute speech with 15 standing ovations, the Governor focused on three key areas for the year ahead: literacy, housing supply, and health care affordability. She also called for continued bipartisan cooperation and an on-time, balanced State budget.
Literacy – On literacy, she pointed out that Michigan students ranked 44th in the nation for fourth grade reading on the 2024 National Assessment of Educational Progress. Third grade reading scores reached a new low on the state tests last year too. Her Executive Budget proposed new $88 billion literacy-related spending with calls for $100 million for a new high-impact tutoring program, $100 million for literacy curriculum, and $50 million for teacher training.
Housing – To address housing shortages, the Governor called for a “new, state-level affordable housing tax credit” that would pair with a federal version to incentivize the construction of housing “for working-class families.” The cost is in the range of $42 million but could create as many as 2,600 additional residences per year in the State.
Medical Costs – On affordable medical costs, the Governor supported some ideas in recently introduced legislation: cap interest rates on medical debt, bar medical debt from showing up on a person’s credit report, ban liens or foreclosures on homes due to medical debt, and require hospitals to set up financial assistance programs. Whitmer urged stabilization of Medicaid funding to protect benefits by creating new taxes on vaping, gambling, and digital ads. Speaker Hall and other legislative Republicans have already made clear they will not support this $800 million tax proposal.
Other Issues – The Governor thanked President Trump for helping bring the fighter mission to Selfridge Air Force Base in Macomb County. But she criticized tariffs the president has implemented and appeared to rebuff his threat to block opening of the Gordie Howe International Bridge in Detroit saying, “For the first time in over a century, a new bridge connecting Michigan to Canada … will open!” Her final farewell statement was “Big Gretch, out!”
Sen. Jim Runestad, a White Lake Republican and chair of the Michigan Republican Party, blasted the speech in a statement shortly after Whitmer’s Address, saying he did not have “even a glimmer of hope that she will fulfill the promises she made tonight.”
DEATH CERTIFICATE BILLS TO GOVERNOR
As reported in last month’s “Capitol News,” SERA supported House Bills 4077 and 4078 to speed up the death record issuance process. The bills require that physicians and funeral directors use the Michigan Department of Health and Human Services’ electronic system for death certification rather than the analog “wet signature” process. This would assist in quickly processing all the paperwork connected to burial or cremation and settling an estate of the deceased person.
Though adopted in the House unanimously and reported by the Senate Committee, the bills were waiting in the queue for final action by the full Senate. On February 8, I sent an e-mail to the Senate leadership on SERA’s behalf urging them to put the bills on the Senate agenda for passage. On February 18, the Senate had the bills on the agenda and adopted them on March 4 unanimously. The House quickly concurred and enrolled the bills on March 5, which means they will be sent to the Governor for her signature very soon. Thank you, Senate and House members!
PHONE SOLICITATION BILLS PASS SENATE
The scourge of unwanted phone solicitation calls to Michigan may be prosecuted in Michigan if Senate Bills 351 – 355 become law. Michigan residents reportedly received over one billion robocalls in 2024, many being fake Internal Revenue Service scams and Social Security scams. These scams exploit trust in governmental organizations and target vulnerable people, like those with diminished capacity to understand the verbal rope-a-dope phone solicitors use. After notification to the prospective defendant phone solicitor and its refusal to cease and desist, the Act would allow the Attorney General to bring a civil action against the phone solicitor to cease the unlawful behavior. The Act also would allow a person to bring a civil action for damages caused by a loss due to a violation of the Act. The Act would prescribe civil fines associated with violations of the Act. The bills have been referred to the House Committee on Regulatory Reform. Note that the bills do not prohibit religious or political solicitation, which are protected by the First Amendment.
MESSAGE FROM SERA LEGISLATIVE REPRESENTATIVE
I have given notice to both the SERA Coordinating Council and the Lansing SERA Chapter that I intend to end my 15-year stint as your Legislative Representative on December 31, 2026, the end of the 103rd Legislature. I hope this early notice will provide an opportunity to train the new Legislative Representative on some ways to do legislative services. If you are interested in the opening, you may contact Cheryl Streberger, Chair of the SERA Coordinating Council at cstreberger@yahoo.com and Merritta Proctor, President of the Lansing SERA Chapter at mchp1@aol.com. I work for both organizations and receive a small stipend from both to cover some basic costs of the work.
(Editor’s Note: Mary Pollock is the Lansing SERA Chapter and SERA Coordinating Council’s Legislative Representative. She may be contacted at michigansera@comcast.net.)