Whitmer signs $81B Michigan budget: Here’s what’s in it

Gov. Gretchen Whitmer on Tuesday signed Michigan’s $81 billion budget for the 2026 fiscal year, a plan that includes new long-term road funding, continued tax cuts for seniors and working families, and investments in health care, public safety and environmental protection.

The budget, which began Oct. 1, includes a $14.1 billion general fund. It was approved with bipartisan support in the Legislature.

“This balanced budget delivers on the kitchen table issues that make a real difference in people’s lives,” said Whitmer. “Our budget fixes the damn roads, cuts taxes for seniors and working families, funds first responders, secures core health care services that millions of Michiganders rely on, protects our air, lakes, and land, and increases government efficiency to saves taxpayers time and money. I’m so grateful to legislators on both sides of the aisle for coming together to get this done. Amidst so much uncertainty caused by a chaotic tariff strategy and a national government shutdown, Michigan is showing everyone how to get things done. In the weeks and months ahead, we will build on this momentum and come together on commonsense tools to create and retain good-paying jobs.”

The deal was struck last-minute, a saga that included a brief government shutdown and then a 7-day extension to finalize details.

Here’s a breakdown of what was included in the final bipartisan budget:

Roads and infrastructure

A key feature of the budget is nearly $2 billion in ongoing funding for state and local road repairs to be phased in over the next four years. The plan also includes:

• $417 million for water infrastructure, including lead service line replacement.

• $322 million for airport safety and improvements.

• $50 million for affordable housing and neighborhood revitalization projects.

• $40 million for rail grade separation projects to reduce traffic congestion.

Part of the road funding comes with an approved 24% tax hike on cannabis sales in the state, a move many business owners spoke out against during negotiations. Lawmakers estimated $420 million annually from the new tax.

Tax changes and cost relief

The budget continues previously enacted tax cuts, including the rollback of the retirement tax for about 500,000 households and an expansion of the state’s Earned Income Tax Credit for working families. It also eliminates state taxes on tips, overtime pay and Social Security income.

Public safety

About $1.6 billion will go to local governments through revenue sharing to help fund public safety and local services. The plan also includes:

• $95 million for local police, fire and public safety initiatives.

• Funding to sustain about 2,000 uniformed state police personnel.

• $51.7 million for state forensic science operations.

• $32.1 million in wage increases for corrections officers and supervisors.

• $20.1 million for drug treatment, mental health and veterans’ courts.

Health care

Health and human services make up a significant portion of the budget, with $29.8 billion allocated for Medicaid and related programs. That includes:

• $14.5 billion for physical health managed care.

• $5.5 billion for mental and behavioral health services.

• $4.5 billion for senior and disability care programs.

• $430 million for children’s special health care services.

• $428 million for family health programs such as dental care and immunizations.

Environment and natural resources

Environmental and natural resource spending includes:

• $83 million for water quality programs.

• $77 million for contaminated site cleanup and recycling.

• $66 million for forest management.

• $25 million for wildfire prevention and response.

• $5 million for water affordability initiatives.

Economic and workforce development

The budget sets aside:

• $439 million for workforce development and job training programs.

• $59 million for business attraction and community revitalization.

• $56 million for entrepreneurship and defense industry growth.

• $17 million to continue the state’s Pure Michigan tourism campaign.

Government operations and elections

To improve government efficiency and technology, the budget provides:

• $157 million for customer service improvements at state offices.

• $50 million for major information technology upgrades.

• $28.6 million for election administration and security.

• $9.6 million for voting equipment and cybersecurity enhancements.

• $2.1 million for state archives, preserving government records and Michigan history

Whitmer signed the spending plan alongside legislative leaders from both parties, who each called it a compromise that funds key state priorities while maintaining a balanced budget.

“People are frustrated when they struggle to pay their bills while the government burns through billions of dollars of their money like it’s nothing,” said Republican Speaker of the House Matt Hall. “Our state government spending has grown way beyond its means, and it’s time to rein it in. This budget makes a significant difference in eliminating waste, fraud and abuse to lower state spending and give the taxpayers better value for their dollars. That’s how we were finally able to get our local roads fixed and pass the public safety trust fund, all while eliminating taxes on tips, overtime and social security. You can do a lot when you take the time to evaluate state spending and set better priorities.”