Early July 2025 Newsletter

Budget Talks on Eve of Summer Recess Get Serious
A months-long stare down between the Republican-led House and Democratic-led Senate on some of the budget finally showed signs of easing Thursday.

Governor Gretchen Whitmer, House Speaker Matt Hall (R-Richland Township) and Senate Majority Leader Winnie Brinks (D-Grand Rapids), after a day of inaction, met at 7 p.m. in Whitmer's ceremonial Capitol office.

By the time they concluded, there was new life to completing at least the K-12 budget by the July 1 statutory deadline. Hall was ebullient about the prospects of completing the K-12 school aid budget and perhaps a road funding deal. Budget Director Jen Flood voiced optimism. Brinks said there was a long way to go, but conversations would continue Friday and through the weekend. The Senate added session days to its calendar for July 1 and July 2. The House already had July 1 on its calendar.

The rest of the budget – departments, community colleges, higher education, revenue sharing – will have to wait beyond the July 1 deadline.

The only real concrete action of the day came when the House discharged the Senate version of the K-12 budget (SB 166 ) from the House Appropriations Committee and moved it to the House floor. The House and Senate both adjourned just after 8 p.m.

Flood told reporters she's optimistic about getting action on Tuesday, saying there were great conversations Thursday night.

What remained unclear was the willingness of Brinks and her Senate Democratic Caucus to complete a road funding package without some understanding of what the full budget looks like. Whitmer and Hall prefer to get a road funding package done now and build the rest of the budget around it.

Brinks told Gongwer News Service in an interview at her Capitol office after she, Hall and Whitmer met there is "certainly a long ways to go" since they are only working with a partial House budget.

"We did have what I would call a positive meeting in terms of trying to make progress, and we'll continue having our appropriations folks meet throughout the weekend and see if we can make significant progress," Brinks said. "I think we'll have the beginning of some good conversations this weekend, and there will be more pieces that need to be in place for us to fully complete the whole budget, but we're going to get started. Some of those pieces will come into play and into place as we get through some of those initial conversations."

Brinks said she has always wanted a conversation on road funding to move in conjunction with the budget conversations.

"Naturally, some pieces will get done sooner than others, but any deal that we come to will have to be contemplated in the context of the whole. That's the Senate's view," Brinks said.

The majority leader repeated oft-used comments she has recently made that she wants to make sure the budget is done right.

"It's more important to get it right than it is to do it fast, because there's a deadline that some folks didn't do their homework for early enough," Brinks said. "We will work diligently, but we will keep our priorities straight, and we're not going to make a bad deal for kids in order to complete something fast."

Brinks said she has worked well with the governor and her staff during the process and has kept open regular lines of communication. She added that it is an adjustment and challenge to work under divided government.

She also was not concerned about any attendance issues by members next week ahead of any possible votes.

"We'll see what's ready for a vote, but at this point, our members have been very good about attendance when we need them to be here to do the business of the state, so I don't anticipate that," Brinks said.

Hall told reporters after the meeting with Brinks and Whitmer that House Republicans were committed to working through the weekend to get something done on the K-12 budget and a roads plan by July 1.

"I'm still hopeful after our meeting with Governor Whitmer and Leader Brinks that is still on the table," he said. "It's going to be a challenge, but I'm hopeful that's still on the table."

Hall said that if the Legislature can come to an agreement on roads and K-12, the rest of the budget will be easier.

"It's really going to unlock the rest," he said.

Deadlines are a powerful motivator for this Legislature, Hall said.

"There were a few days out of the paid sick leave and tip credit bills where it seemed like a long shot, we were going to get it done, and then in those last 48 hours we really came together and were able to make it happen," he said. "I think after our meeting today, we're on a roadmap that will put us in a position to get it done."

Hall said that that he expected both the Senate and the House to be in to vote on Tuesday.

"I'm optimistic we'll at least be able to announce something by July 1," he said. "We may not be able to vote on it by then, because there's a lot of mechanics and bills and things, but I'm really optimistic we'll be able to do that, especially with Governor Whitmer coming in and helping us."

Hall said it was a victory for the House that the Senate scheduled session for next week.

"If we keep that deadline I think we're going to get this done and make progress," he said. "K-12 and roads would be a really good outcome, and is an aggressive outcome, but I'm optimistic it's possible."

Hall said that House Republicans have maintained that it's possible to fund a roads plan without increasing revenue, but that others have said they want to see a revenue increase to support roads funding.

"As you're working through that, you have to take all perspectives into account," he said, hinting that a compromise on increasing revenue for roads might be possible.

Hall said he wasn't sure whether there would be a conference committee.

"We haven't gotten to that place in the conversation yet," he said. "I'd say all options are on the table."

Following session on Thursday, Rep. Alabas Farhat (D-Dearborn), minority vice chair on the House Appropriations Committee, was seen going into Hall's office for a meeting.

"We're hoping we can come to some kind of common-sense agreement on what a budget should look like," Farhat told reporters before the House session adjourned on Thursday. "This is a process that usually takes one or two months to negotiate that we're trying to see condensed into four or five days. So, we've got to make sure we get it right. And it's OK if that brings us close to the deadline, but we have to get it done before July 1."

Farhat said that the School Aid Fund budget that the House voted on, which uses about $1 billion in one-time funding to pay for the higher education budget, is "structurally unsound."

"We have to unwind that in order to properly fund both," he said.

Farhat said there was an appetite to get the K-12 budget and roads done by Tuesday.

"We just have to break the logjam at this point," he said. "We shouldn't be in this spot right now where we're five days from the statutory deadline contemplating whether or not we'll have a budget."

Farhat said he believed it was possible to pass a roads plan without passing the rest of the General Fund budget because he believes that a sustainable roads plan will require an increase in revenue.

"We have to look at ways where we can insulate our budget and our General Fund so we can protect patient and Medicaid, we can protect families and we can also fully fund roads," he said. "Roads is a huge issue … If we're talking about having all the tools on the table, whether that's revenue, whether that's modest cuts, and whether that's agreeing on realistic targets."

Farhat said the Senate and the House may not need to have a conference committee to pass the education budget.

"The whole point of conference is to get the leaders all into one room to negotiate a budget. You could argue what they're doing now is a form of that," he said. "We should not let process and procedure get in the way of making sure that we get this done by July 1."

School groups watched with a mixture of frustration, hope and confusion Thursday.

Robert McCann, executive director of the K-12 Alliance of Michigan, said of the situation, "Educators, students, and parents are watching this continued inaction closely and will hold Lansing politicians accountable if they continue to put party politics and other priorities over our classrooms and kids."

MI Canvassers Approve Summaries for Ranked Choice Voting, Invest in MI Kids Ballot Initiatives & One Fair Wage Referendum
In a marathon Friday meeting, the Board of State Canvassers approved 100-word summaries for two constitutional amendments and one referendum aiming for inclusion on the 2026 ballot.

Petition language from Rank MI Vote, the committee seeking to put a ranked choice voting constitutional amendment on the ballot, occupied over five hours of the meeting as attorneys for and against the proposed amendment sparred with board members and Bureau of Elections staff on the intricacies of ranked choice voting.

Opponents of the measure argued ranked choice voting would represent such a drastic change to Michigan elections that further emphasis in the summary should have been placed on its differences from the current system. Proponents of the petition attempted to explain several aspects of how a move to RCV would affect constitutional protections for straight ticket voting or ensuring every vote is counted, but board members remained skeptical.

"You did a good job explaining that, but I'm still confused," Board Vice Chair Mary Ellen Gurewitz said to Rank MI Vote attorney Steve Liedel at one point in a lengthy discussion about how straight ticket voting would work if the amendment were adopted.

Although much discussion was had over the potential for voters to be confused or dissuaded from voting under a new system, attorneys and public commenters were reminded that before the board was only the summary language and the form itself, not the merits or demerits of any proposal.

Eventually, the board settled on a summary reading "require ranked choice voting (RCV) for federal offices, governor/lieutenant governor, attorney general and secretary of state, allowing voters to numerically rank candidates by voter preference starting in 2029; count votes in rounds eliminating lowest ranked candidate and reallocating their votes to remaining ranked candidates until candidate with most final round votes is declared the winner; allow voters to rank at least four more candidates than positions to be nominated/elected unless insufficient number of candidates; authorize local jurisdictions to adopt use of RCV in local elections; move August primary to June or earlier in even year elections; require legislative funding and implementing legislation."

Board members made the decision to strike other provisions of the ballot initiative language establishing constitutional rights to paper ballots and that those in line when polls close are still allowed to vote, reasoning that statute requires 100-word summaries to inform potential signers of any new rights the amendment would create. Since those rights are already statutorily protected under Michigan election law, they aren't classed as new.

The form for the Rank MI Vote committee's petition was approved, allowing their signature gathering process to begin.

One Fair Wage left frustrated by referendum summary

Canvassers next considered a referendum on PA 1 of 2025, the Legislature's final answer to the minimum and tipped wage debate that occupied much of late 2024 after the Michigan Supreme Court's ruling allowing a 2018 ballot proposal raising the minimum wage and eliminating the tipped wage to take effect.

The referendum is being brought forth by Voters to Stop Pay Cuts, a committee operated by One Fair Wage, the group which fought against the Legislature's modifications to the policy in hopes of seeing the ballot measure's language left intact.

The petition language was almost pulled from the agenda over confusion about what iteration of the policy would take effect if voters were to overturn PA 1, until One Fair Wage representatives said the minimum wage policy would default to the MSC order.

Attorneys and canvassers went back and forth over whether to classify the repeal of PA 1 as a decrease in the minimum wage. Ultimately, a summary was approved for a referendum petition to "repeal Public Act 1 of 2025, which amended the Improved Workforce Opportunity Wage Act. A repeal of PA 1 would decrease the minimum wage from $13.73 to $13.29 (2026) and from $15 to $14.16 (2027), with annual inflation-based increases thereafter; increase tipped worker wage to 48 percent of the full minimum wage in 2025, 60 percent in 2026, 70 percent in 2027, 80 percent in 2028, 90 percent in 2029 and 100 percent in 2030; and eliminate civil fines for employers failing to pay minimum hourly wage. This referendum petition would suspend PA 1 of 2025 and place it on the ballot for voter approval or rejection."

Despite several One Fair Wage members signing up to give public comment on the referendum summary, no one was allowed by the board. Supporters of the petition called the summary inaccurate for leaving out the main reason the group wants to see PA 1 repealed – the law caps tipped wage at 50 percent of minimum wage by 2031, which One Fair Wage wants to see brought to parity with the non-tipped minimum wage.

Business groups celebrated the summary as a realistic presentation of what repealing PA 1 would mean for Michiganders.

"The Board of State Canvassers unanimously validated the irrefutable reality of this misguided One Fair Wage referendum – that it will actually reduce the minimum wage for all Michiganders. Public Act 1 of 2025 established a clear, responsible increase to the minimum wage and supported our tipped employees through genuine bipartisan compromise," Michigan Restaurant and Lodging Association President Justin Winslow said in a statement. "Allowing this out-of-state and clearly out of touch group to repeal this law won't help workers or businesses, but it will cut wages by over five percent. We call on Michigan voters to see through this deceptive campaign and decline to sign any petition that would actually cut worker pay."

The Michigan chapter of the National Federation of Independent Businesses urged voters not to sign petitions being circulated by One Fair Wage. NFIB Michigan Director Amanda Fisher said having the referendum on the 2026 ballot would throw the restaurant industry back into the uncertainty it experienced in late 2024 and early 2025, when the Legislature was hammering out a compromise to alter the tipped wage policy set to take effect after the MSC ruling.

"We are disheartened that out of state dark money groups continue to undermine the will of Michigan restaurant servers and owners in their effort to eliminate the tipped wage," Fisher said in a statement. "After the hard-fought bipartisan compromise represented in Public Act 1 of 2025, small business owners, especially those in the much-beleaguered restaurant industry, now face more uncertainty knowing that changes to minimum wage could occur at any time. We would urge voters to decline to sign this proposal."

Despite objections from members of the group to the summary language in the meeting, One Fair Wage released a statement celebrating the approval of its petitions and announcing a public campaign launch for its signature gathering to take place in Detroit on July 14.

"This isn't just about wages – it's about democracy," OFW Michigan Field Director Sarah Rose said in the statement. "The Michigan Supreme Court ruled in favor of workers. Over one million Michigan voters have supported this raise time and time (again). And yet politicians caved to lobbyists and stole that raise the day it was supposed to go into effect. Now we're taking this back to the people to make sure every Michigan worker is guaranteed a full minimum wage with tips on top."

The canvassers also approved the forms for the referendum.

A near deadlock and fierce argument on tax surcharge proposal for school funding

The final item considered by the board was summary language and forms for the Invest in MI Kids ballot initiative, which seeks to place a five percent income tax surcharge on the highest earners in Michigan and use the proceeds to fund public schools.

The initial question posed by attorneys was whether to refer to that five percent as a surcharge or an additional tax in the summary language. Deputy Director of Elections Adam Fracassi initially classed it as a surcharge in his proposed summary, since the proposed amendment refers to it as such.

Liedel and fellow Dykema attorney Rowan Conybeare, representing Invest in MI Kids, agreed with Fracassi that the label of surcharge was accurate as describing "a tax in addition to another tax." Opponents of the proposal, however, said the summary should instead reflect the amendment tacitly creating a new graduated income tax bracket with a tax rate of 9.25 percent.

After more discussion about whether to refer to the surcharge as a graduated income tax, attorneys and canvassers went back and forth about the specific purposes the revenue from the surcharge could be used to fund.

The canvassers approved, after Chair Richard Houskamp decided not to vote against the language and deadlock the matter, a summary to add, beginning in 2027, "an additional 5 percent tax on annual taxable income, over $1 million for joint filers and over 500,000 for single filers."

"This tax is in addition to existing state income taxes and is to be deposited into the state school aid fund and required to be used exclusively on local school district classrooms, career and technical education, reducing class sizes and recruiting and retaining teachers and subject funds to annual audits," the summary continued.

Due to time constraints, the canvassers did not vote on the petition forms from Invest in MI Kids and said they would take up the matter at their July meeting.

The Michigan Chamber of Commerce released a statement opposing the proposal, saying it would deal a body blow to small businessowners who pay business taxes through individual income tax and the summary did not do enough to underscore the reality of an additional tax.

"The Michigan Chamber is deeply concerned that the revised ballot summary language approved today to amend the state Constitution and impose a graduated income tax fails to meet the standard of being true and impartial. Instead of clearly outlining the intent and real-world consequences of this proposed constitutional amendment, the language glosses over the significant graduated income tax hike and its impact on tens of thousands of Michigan small businesses," Michigan Chamber CEO Jim Holcomb said. "The Board had a responsibility to present the public with clear, unbiased language that reflects the scope and impact of the proposal. Unfortunately, this summary falls short and risks misleading voters about what's really at stake: rewriting Michigan's tax code to more than double the income tax rate for many job creators."

Speaking before the board during discussion on how best to emphasize the permanent nature of an additional tax, Dan Ziegler of Dickinson Wright cited a statistic claiming his 2-year-old, as part of a predicted over 50 percent of toddlers in Michigan who will come to earn at or over $500,000 annually in 50 years.

"This tax, which currently would only apply to a very small top percent, will within my child's lifetime apply to more than 50 percent of Michigan's residents," Ziegler said.

Canvasser Heather Cummings shot back, to applause from Invest in MI Kids members in the audience.

"If they're educated," she said.

Tobacco Cessation, Retail Licensing Package Reintroduced in the Senate
A bipartisan bill package similar to legislation considered last session was introduced in the Senate on Thursday that supporters said would prevent young people from using nicotine products.

Collectively, the five-bill package introduced Thursday would enact licensing requirements for retailers to sell tobacco and vaping products as well as sunset penalties for minors under age 21 for possessing, purchasing or attempting to purchase tobacco and vaping products.

The first bill, SB 462, consists of the licensing requirements as well as providing penalties for violations of selling to minors within a three-year period. Further licensing requirements are outlined under SB 464 and SB 465.

A sunset of the penalties for minors is outlined under SB 463 and SB 466.

Similar legislation passed the Senate late last year but died in the House (See Gongwer Michigan Report, December 5, 2024).

The bills were referred to the Senate Regulatory Affairs Committee.

Campaign for Tobacco-Free Kids Regional Director Jodi Radke in a Thursday statement urged the Legislature to pass the bills and strengthen regulations of tobacco products in Michigan.

"Michigan has lacked the tools to enforce tobacco laws properly, and our kids have paid the price of easy, unchecked access," Radki said. "Licensing retailers, while eliminating outdated penalties on youth, sends a clear message: prevention matters more than punishment, We're encouraged to see bipartisan interest in this issue and urge lawmakers on both sides of the aisle to put Michigan's kids first."

The Keep MI Kids Tobacco Free Alliance said Michigan is one of nine states without licensing requirements for selling tobacco products. It stated that if tobacco retail licenses were put in place, the state would have a stronger enforcement measure to reduce youth access to the products.

Drew Beardslee, vice president of government affairs with the Michigan Retailers Association, said Friday the group is in the process of reviewing the bills and comparing them to what was considered last session.

"While we may not believe a license will solve some of the problems happening today around youth access to tobacco products (roughly 2/3 is driven by social sources like friends, family, and other adults of legal age according to a recent MDHHS survey of under 21-year-olds), we're not inherently opposed to a license if it's fair and mirrors the licensing process retailers follow for other licenses they hold today," Beardslee said in a Friday email when asked for comment. "We look forward to having a robust discussion on this."

The Michigan Retailers Association was one of multiple groups that voiced opposition to the package that was taken up last session over the licensing provisions.

Keep MI Kids Tobacco Free Alliance co-chair Brittany Tayler in a statement thanked the bill sponsors for reintroducing the bills.

"It is far too easy for young people to get their hands on tobacco and nicotine products that are highly addictive," Tayler said. "The introduction of this evidence-based legislation shows that Michigan senators want to finish the job they started last session to protect Michigan youth."

DCD OUT & ABOUT

Senator Mat and Jake German recently attended Oakland County Executive Dave Coulter's fundraiser at Beau's Grillery in Bloomfield Hills with clients Dr. Nikil Hamady of Honor Community Health, Ahmad Taylor and Yvette Transou of the Pontiac Housing Commission, and Avinash Rachmale from Lakeshore Global Corporation.

Senator Mat and Jamie Ayers, along with service dog, 'Wyleigh," recently met with several legislators and staff in Lansing to discuss Common Ground's Victim Assistance Program. Wyleigh stole the show!

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