Senate Appropriations leaders grapple with state, federal challenges as FY ‘26 budget season starts

Yahoo

05-02-2025

Senate Appropriations Committee Chair Sarah Anthony (D-Lansing) during a Feb. 4, 2025 committee meeting. | Kyle Davidson
While working to close the books on the Fiscal Year (FY) 2024 state budget, members of the Michigan Senate Appropriations committee are preparing for FY 2026 as moving pieces at the state and federal level create big questions for this year's budget.
'So much of this is so dynamic, you know, it's really chewing gum and walking — which I talk about being really good at — but this is going to be a challenging year,' Senate Appropriations Chair Sarah Anthony (D-Lansing) told reporters after a Tuesday committee meeting.
On Wednesday, the State Budget Office will present Gov. Gretchen Whitmer's executive budget recommendations for Fiscal Year 2026 to members of the House and Senate Appropriations committees, kicking off budget season for the Legislature as members work to finalize legislation before their July 1 deadline.
Second federal judge issues temporary order blocking Trump spending freeze
However, there is no penalty if the Legislature fails to meet the deadline and Speaker Matt Hall (R-Richland Twp.) last week said his goal is to finish by Sept. 30 — right before the new fiscal year begins on Oct. 1.
After reviewing Whitmer's proposal, the House and Senate will each produce their own version of the budget. Once each chamber passes their own Appropriations bills, they will negotiate any differences between them in conference committees. Afterward, both chambers will take a final vote on the budget before sending it to the governor for her signature.
While Democrats held control of the Legislature the past two budget cycles, Republicans have taken the majority in the House, meaning Whitmer, a Democrat, will now have to negotiate with a Democratic-led Senate and a Republican-led House.
State fiscal experts in January projected modest economic growth in 2025, with expectations that the state will close out the 2025 Fiscal Year with an additional $457.7 million in the General Fund and $312.7 million in the School Aid Fund compared to previous projections from May 2024, with state revenue continuing to grow over the coming years.
However, lawmakers will also face a number of unknowns from the federal government with the Trump administration currently embroiled in multiple legal battles resulting from an attempt to pause spending on federal grant and loan programs.
Additionally, Trump's introduction and subsequent pause on tariffs against Mexico and Canada, U.S. House Republicans discussions of cuts to several government programs and the potential elimination of the Department of Education — which provides funding to elementary and secondary schools — the amount of federal dollars the state will receive this budget cycle remains uncertain.
'You have chaos from the federal government. Every other day there's a new headline, a new executive order that could impact the state's resources,' Anthony said.
Anthony said she is looking forward to hearing what Whitmer's budget priorities are. The governor also will propose a road-funding plan next week, Crain's Detroit reports.
Hall said last week that House Republicans will be working scrutinizing new programs created under the Democratic trifecta alongside older programs that have been around for decades, seeking cuts to help fund road repairs, a public safety trust fund and income tax cuts.
There are questions about which investments from the past two years should be protected, and where leaders can find common ground to trim the budget back, Anthony said. While there are a lot of unknowns, lawmakers can only control what's in their power, Anthony said — building a budget that actually centers people.
'But also, we have to make sure that none of that actually touches real lives, real people. So, you know, drastic cuts are not on my radar if it means that it's going to hurt Michiganders,' Anthony said.
Looking forward to future budget negotiations, Anthony said she'd already had several meetings with newly named House Appropriations Committee Chair Ann Bollin (R-Brighton Twp.)
'She's like me. She gets down to work, she is looking at all of the documents, meeting with department heads, and that's what a new chair needs to do, is actually understand the budget before putting your fingerprints on it,' Anthony said.
'Obviously, there's going to be much to disagree about, but as you know, the name of the game for me has always been working across the aisle to get something done for people. Even when we did have a trifecta, there was always negotiations with the Republican caucus to try to find that common ground. So it'll just be more important with divided government,' Anthony said.
Sen. Jon Bumstead (R-North Muskegon), the committee's minority vice chair, said the budget process will likely be longer than in recent years, with new House leadership facing a learning curve and Senate Democrats now needing to work across the aisle to pass the budget.
'We're not hearing a whole lot yet, so hopefully we get included in the conversations,' Bumstead said.
Wednesday's presentation on the governor's budget will be an eye opener, he said, pointing to road funding and support for infrastructure as components that would appeal to Senate Republicans.
'I think all Michiganders would agree that's needed,' Bumstead said.
The question then becomes, do we tax or find the funds within the existing budget, Bumstead said, telling the Advance he would support taking a look within the budget for current funding, as Hall has suggested.
When it comes to federal funding, lawmakers will just have to see how that plays out and which dollars come back to the state, Bumstead said.
Anthony expressed concern about Hall saying the budget may stretch out to Sept. 30.
'Whether you're a local township or a county or even just local school districts, they have relied upon the Legislature to have their act together and to ensure that the budget is done before July 1,' Anthony said.
'This has been done under Republicans and Democratic control. And so I know that the new speaker is trying to make a name for himself and put his stamp on just about everything. But good governance is something that we take really seriously, and drawing this out to Sept. 30, feels really irresponsible,' Anthony said.
Bumstead agreed, saying the Legislature should always work to have a budget done before summer break and noting that finalizing the budget by June was a priority during his time serving in the House under GOP Gov. Rick Snyder.
'Putting it off into fall, I think it makes it really difficult for schools. … I don't know, that's just, to me it's not fair to the public,' Bumstead said.
'Let's try to get that thing done before summer break because, to me, that's more responsible,' he said.
Last week, the House also approved new rules for legislative spending initiatives, also known as earmarks, barring for-profit businesses from receiving funding, requiring greater accountability from lawmakers sponsoring a funding request, tightening rules around nonprofit eligibility, protecting against conflict of interest and requiring greater transparency.
While the Senate has not altered its rules to match those approved by the House, Hall argued the Senate must still comply with the provisions, including a provision that requiring members to submit funding requests to the House Business Office at least 14 days before they are considered and make them publicly available online by May 1 for 2025 and April 1 in future years. 'Our rules say, if it's an earmark that isn't submitted by May 1, we're not doing it, period. We're not doing it. So they can submit us projects that don't comply with our rule and under our House rules, we'll strip them out and we'll send it back without them. But we don't need a deal. They'll just adhere to it because they have to, because it's a House rule,' Hall said.
If they don't comply, they will eventually, Hall said, noting that a budget will need to be passed.
When asked about these new rules, Anthony pointed to efforts in recent years to make the enhancement grant process more transparent, with Democratic leadership in 2023 asking individual members to step forward to sponsor grant requests.
'While I am encouraged that the speaker is, again, trying to put his name and his face connected to this new budget process, I encourage him just to see what we've already done. And if there's ways that we can strengthen transparency and strengthen ownership in some of these investments, I'm open to that, but I just would encourage him to see what's already been done,' Anthony said.
SUPPORT: YOU MAKE OUR WORK POSSIBLE