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Budget Tensions Take Center Stage at Mackinac As Michigan's fiscal year deadline approaches, the state's top legislative leaders offered a revealing glimpse into what could become one of the most contentious budget negotiations in recent years during a panel discussion at the Mackinac Policy Conference. The exchange between House Speaker Matt Hall and Senate Majority Leader Winnie Brinks highlighted not only significant policy disagreements, but fundamentally different approaches to governing and negotiating. With divided control of state government, the path to a finalized Fiscal Year 2027 budget will require compromise among the Republican-controlled House, Democratic-controlled Senate, and Governor Gretchen Whitmer. Budget Negotiations Begin While legislative leaders expressed optimism that a budget could be completed before the July 1 start of the new fiscal year, substantial differences remain. Speaker Hall has called for identifying more than $2 billion in savings through the elimination of vacant state positions, reductions in what he characterizes as wasteful spending, and additional tax relief measures. Hall has also firmly opposed any use of Michigan's Budget Stabilization Fund, commonly known as the Rainy Day Fund, arguing instead that the state should continue building reserves. Senate Republicans echoed those concerns, while Senate Democrats emphasized protecting funding for existing programs and services. The debate reflects a broader disagreement over whether Michigan's current fiscal challenges should be addressed through spending reductions, use of reserves, or other budgetary adjustments. Political Friction on Full Display The discussion frequently moved beyond policy and into questions of leadership style and legislative strategy. Brinks criticized what she described as a tendency to hold broadly supported legislation in order to secure larger negotiations, noting that numerous bipartisan bills remain stalled despite support in one chamber or the other. Hall countered that meaningful policymaking requires negotiation and compromise, arguing that major reforms are best achieved through comprehensive agreements rather than piecemeal action. The exchanges illustrate the challenges facing lawmakers as they attempt to navigate divided government and competing priorities over the coming months. Potential Areas of Agreement Despite the sharp rhetoric, several policy areas emerged as possible opportunities for bipartisan collaboration. Among them:
Whether these issues ultimately move forward may depend on broader budget negotiations and leaders' willingness to package multiple priorities into larger legislative agreements. What This Means for Stakeholders For local governments, businesses, nonprofits, and trade associations, the message from Mackinac was clear: budget negotiations are likely to dominate Lansing throughout June. Organizations with state funding priorities, grant requests, appropriations, regulatory concerns, or legislative initiatives should expect progress to be closely tied to budget discussions. As negotiations intensify, leadership offices will play an increasingly central role in determining which policy proposals advance and which remain on hold. While public disagreements among legislative leaders often generate headlines, they also signal where leverage points exist. Stakeholders should closely monitor discussions surrounding spending reductions, reserve fund usage, healthcare policy, education governance, and election administration reforms, as these issues appear likely to become key bargaining chips in the final budget package. With the July 1 deadline approaching, the coming weeks will provide a clearer indication of whether Michigan's leaders can bridge their differences—or whether another extended budget negotiation lies ahead.
Michigan is poised to face significant difficulties transitioning to new work requirements and enrollment frequencies for Medicaid if the state does not begin implementation of federal policies set to take effect in January 2027 as soon as possible, a new report from the Citizens Research Council argues. Beginning in 2027, able-bodied adults ages 19 to 64 will have to prove they spend at least 80 hours per month working, in job training, in school at least half the time or doing community service to maintain their eligibility for Medicaid, one of the controversial changes to healthcare policy within the One Big Beautiful Bill Act passed in 2025. The other major change to Medicaid within the OBBBA is that states will need to redetermine eligibility for enrollees every six months, an increase from the current frequency of every 12 months. Taken together, these two policy shifts stand to see hundreds of thousands of Michiganders lose healthcare coverage – but researchers said if lawmakers and state agencies begin working now to implement the necessary components of the changes, they can mitigate some of the loss of coverage. "People who will lose access to Medicaid due to changes in federal law fall into two different categories: those who will no longer meet the enrollment criteria; and those who will still meet the criteria, but who will fail to properly demonstrate that they are eligible under the new rules," the CRC report said. "States will be limited in their ability to do much about the first category of individuals impacted. However, the number of people impacted in the second category will depend, in large measure, on how states implement the changes." The more than 2 million people in Michigan covered by Medicaid are supported by roughly $25 billion each year in combined state and federal funding. Various estimates have been made as to how many may lose coverage when the new policies take effect next year, but it's hard to quantify those populations, researchers said, in part because there are several levers still to be pulled by lawmakers and the administration to keep as few people from losing coverage as possible. Gov. Gretchen Whitmer recommended $104 million as part of the Department of Health and Human Services budget to implement the work requirements for Medicaid and food benefits. The House approved a budget with $22.5 million, and the Senate approved a budget with $59 million. The work requirements will be a particularly challenging shift for many enrollees, the report said, due to the nature of the new regulations and how many Medicaid-eligible workers are employed in hourly jobs which don't always guarantee 80 hours per month. The latter is particularly prevalent in Michigan's Medicaid Expansion population. "A survey from 2023 found that about two-thirds of those covered by Medicaid expansion work 80 hours per month or attend school, but others are likely very close to the threshold and could fall below in a given period. This is especially complicated for the slice of the population that is traditionally enrolled in Medicaid expansion, as they are, by definition, low wage earners," the report said. "Hourly positions in retail, the service industry, or similar types of jobs are not guaranteed to produce a consistent flow of hours each week, creating windows of time where a person with a steady job may not have met the 80-hour requirement simply because of the varying labor demands of their employer." There are exemptions to the work requirements, including for individuals in foster care; Indian health service members; certain caregivers; disabled veterans; those who are deemed medically frail; people who meet work requirements found in other programs; people undergoing substance use disorder treatment; recently incarcerated people and those who are pregnant or postpartum. The policy also includes a "look-back" period, which means states must review whether a Medicaid applicant met the work requirements criteria for at least one month prior to their application. Existing enrollees will have to demonstrate they met the criteria for at least one month during each six-month eligibility window. Researchers said these technicalities and exemptions, along with the new frequency requirement for redetermining eligibility effectively doubling each state's workload from where it currently stands, mean Michigan is currently at an inflection point, the results of which will decide how the Medicaid recipient population experiences the effects of the new policies come 2027. "OBBBA does allow states to ask for a one-year delay in the implementation deadline via waiver, but they should not assume such a waiver will be granted by the federal government and should proceed as if the requirements will go into effect in January," the report said. With just over six months until the new year begins, and with it, some of the largest changes to Medicaid in decades, researchers said the biggest task for policymakers will be prepping to carry out the requirements of federal law while doing the utmost to make the public aware of what's coming. "People will need to understand the requirements, know how to demonstrate compliance, consistently keep proper records, and respond to requests for more information. Furthermore, people who work multiple, less consistent jobs with irregular hours (e.g., landscaping, house-cleaning) may have a more challenging time documenting their work than ordinary W-2 jobs," the report said of Medicaid recipients who will need to start filing proof of work requirement fulfillment. "These administrative burdens are not insurmountable, but the evidence from previous experience suggests some people who have sufficient hours or should be exempted will lose coverage because of the registration and record-keeping process." There are provisions within the OBBBA which states are legally asked to decide themselves, like the length of time for initial and renewal look-back periods, as federal law allows for at least one month but up to three months. States are also given the ability to decide if and how to define their hardship exemptions and the definition of medical frailty. "Michigan has not formally made all of these decisions, but it appears that every state that favors minimizing disenrollments is trending in the direction of shorter look-back periods and the broadest allowable definitions for exemptions under federal rules," the report said." Under the law, some public awareness work must begin this summer: between June 30 and August 31, states are required to undertake public awareness efforts regarding the Medicaid changes. They must include information about "compliance with work requirements, an explanation of exemptions, consequences of noncompliance and reporting instructions," and will be conducted via regular mail and other forms, including telephone, text message, website and other electronic sources. After that, the outreach must continue to occur at once every six months after the initial window. Researchers said Michigan's policymakers should "capitalize on every possible avenue of outreach and ensure that sufficient funding is available for personnel, direct communication, and advertising that informs the public of the upcoming changes." "Not everyone who is at-risk of losing coverage because of work requirements will be able to come into compliance immediately, but state leaders should do everything feasible to minimize the number of people who lose coverage (even temporarily) because they did not know about the new requirements soon enough to act," the report said. Beyond public awareness, the best ways Michigan can prepare for the sweeping changes coming for Medicaid are to improve and invest in the systems it already has, the report said. The state needs to make use of its "wide variety of existing data sources," but it also has to put money into "improving the accuracy of those sources and the ability of residents to access them." "Much of the state's data infrastructure is antiquated and plagued with issues," the report said. "Making sure that as much verification can happen without having to request records from applicants will go a long way toward minimizing the number of individuals that might lose coverage." Researchers said the decisions lawmakers make in the coming weeks of budget negotiations could help support the implementation of the new laws – or, should no consideration be given to the changes in appropriations committees or policy bills this summer, those decisions could not only hinder the implementation but lose coverage for untold numbers of citizens. "Even those who favor a less expansive social safety net should want the state to implement work requirements as accurately as possible so that the people are Medicaid-eligible under federal law have access to coverage," the report said. "From the state's perspective, too, making sure everyone who is eligible gets covered is a prudent financial decision." Ultimately, researchers said the success or failure of the OBBBA implementation will likely come down to "the state's capacity to inform and assist new applicants and current recipients subject to redetermination through the compliance process." Processing more information and more frequent applications will become a basic matter and place additional burden on agencies already dealing with under-resourcing or staff issues, but the additional requirements will also create more opportunities for people to fail verification and lose their coverage. Lawmakers and advocates alike have heightened focus on Medicaid and the likely effects of the policy changes on Michigan's health and hospital systems since the OBBBA was passed last year, particularly in opposition to the work requirements, but less has been said about what can or will be done to mitigate those effects. "Michigan is already a state with lagging health indicators despite doing reasonably well in terms of health insurance coverage. A major jump in the size of the uninsured population could be particularly damaging to the state," the report said. "Some federal money is available for implementation, but the state will have to put up its own resources as well given that even a baseline level of compliance that is not designed to maximize coverage is likely to be costly."
The Senate and the House budget proposals for the 2026-27 fiscal year take radically different perspectives on economic development in the new Wild West since the end of the Strategic Outreach and Attraction Reserve Fund last budget season. Last year's budget saw major changes in the state's approach with the sunset of the SOAR Fund, which spearheaded most large business projects, and left next steps in the air. During budget negotiations, both chambers agreed they would develop a new tool by the end of the calendar year, but that never came to fruition. The Legislature has also toyed with the idea of abolishing the Michigan Economic Development Corporation, while every Republican gubernatorial candidate has said they would either abolish or reform the agency. The new proposals leave many questions for upcoming budget conversations: what does the state do with the leftover $600 million in SOAR funds? What is the role of popular programs recently slashed like Going Pro? What businesses will be supported by state grants, and which ones won't make the cut? How to use SOAR and site readiness There is currently around $600 million left in the SOAR fund that remains untapped. Although there have been a lot of philosophical conversations on where those funds should go since the sunset, the budget proposals were the first step to something more concrete. The House proposed to use all the remaining SOAR funds, with $300 million deposited into the Budget Stabilization Fund, $150 million for legislative-directed spending projects and the rest, around $207 million, lapsing back into the General Fund. The Senate, on the other hand, didn't touch the funds at all. Sen. Mary Cavanagh, D-Redford Township, said she has looked at SOAR funds as a backfill for their "hardest hit" areas in the future, as the state faces a big budget deficit. She said watching the implementation of the federal budget bill on Medicaid will be key to what they decide to do with those funds. Gov. Gretchen Whitmer's executive recommendation called for something much more specific: a $150 million supplemental of the SOAR funds to go toward site readiness efforts. Last year's budget cut Critical Industry Program and readiness appropriations in the boilerplate alongside the sunsetting of the Strategic Outreach and Attraction Reserve Fund. The supplemental would support $100 million for items with an unknown end user and $50 million for sites with a known end user. At least part of these funds would be used to support infrastructure work for the Michigan Strategic Fund-approved projects in Muskegon County and the city of Coopersville as part of the Chobani and fairlife expansions. However, Danielle Emerson, spokesperson for the MEDC, said in a statement there has been around $400 million of need identified in infrastructure investment overall across the state. "These kinds of 'site readiness' funds are beneficial for residents as much as businesses," Emerson said. "Quite simply, communities are expected to provide basic infrastructure – like properly working water and sewer – as a function of local government, and to help drive population and business growth." She said although there are many high-quality sites available, not all have high-quality public infrastructure, and that's why Whitmer proposed the money: "to meet these residential needs, appeal to businesses outside of the state, safeguard businesses in-state, and support the long-term viability of communities to compete for good-paying jobs and private investment." The groundbreaking for the La Colombe $567 million expansion in Muskegon County is set for Tuesday. Johnston said there are many other states, like Tennessee, that have spent decades investing in site readiness, and while it's a political risk to invest in property and hope for a site, then the state is ready to take on the large investments. Going Pro Going Pro, a popular program among business leaders meant to assist employers in training and credentialing, has faced turmoil in the last few budget seasons. Funding for Going Pro was cut to $22.3 million in one-time funding for the current fiscal year, while another $22.9 million in General Fund was eliminated. Now, both Whitmer's and the Senate's proposals do not include the program, while the House looks to refund the missing dollars with $40 million in restricted funds. Cavanagh previously told reporters it was a good program but was wary about who it was really helping, and that there is more work needed to evaluate how the state directs the program. But, Mike Johnston, the Michigan Manufacturers Association executive vice president of government affairs and workforce development, said most dollars go to small businesses because the program is designed that way intentionally. Johnston has been vocal about the group's disappointment in seeing two out of the three budget proposals reject funding the program, saying it's "far and away the best direct talent program the state has ever had" because the manufacturers get to decide how to spend money to train their workers. Employers, on the other hand, then get to see increases in both wages, around $4 per hour on average, and skill sets, he said. He said, now, the issue has "become a political football" when it has historically touted bipartisan support. If it were to remain removed from the budget, he said, it would be bad for Michigan's competitive future. "It's sort of well understood that anybody, any state that wins the talent battle, wins the economic battle, and as one of the largest manufacturing states in the union, we have to be competitive on talent, because, as our board has identified for last several years, talent is the primary barrier to competitiveness," Johnston said. He also said the Going Pro program has growing demand overall, and even if the House restores the budget to $40 million, the demand for the program sits at around $100 million. Randy Gross, senior director of the legislative affairs and associate general counsel for the Michigan Chamber of Commerce, said he was also disappointed even after the hefty cuts because data shows it's a successful program. Postsecondary education institutions also awarded 15,308 industry-recognized credentials in over a thousand CTE programs. In the 2024-2025 school year, 122,751 students were enrolled in these programs. Gross said in current conversations with the Senate, they are feeling hopeful in members seeing some value in the program. In worries from Cavanagh, he said it's not just big business investing, but members of all sizes capitalizing on the funds, but small businesses tend to win out, with higher preference for program resources going to businesses not receiving other grants. He said he doesn't want to discount problems with money being tight, but the demand overall is high. "It's a win-win for both the employer and the employee," Gross said. Business grants or small business supports? The budget proposals across the two chambers of the Legislature also have competing interests in business grants. Although the Senate proposed the continuation of $60 million for business attraction grants, the House proposal swapped out the funds for small business support. However, the Senate's proposal would be a one-time allocation from the General Fund instead of from the 21st Century Jobs Trust Fund. That fund, under the Senate proposal, would be transferred to the Department of Health and Human Services. The new fund in the House, entitled "Small Business Supports," would provide grants for small business and community incubators, small business development centers, community development financial institutions, small business service providers, small business technical assistance, manufacturing and automation support services, and early-stage funding and venture capital, according to language from the House Fiscal Agency. Rep. Nancy Jenkins-Arno, R-Clayton, chair of the House Appropriations Labor and Economic Opportunity Subcommittee , said although both the funding mechanisms look to support the small business community in one way or another, the House's proposal looks to keep it more local. "Rather than looking outside our state and saying who can go out and get and bring back and hope they stay, why don't we look and see who's already here and find out what their needs are? Because if they're already here, it's more likely they're not going to leave," Jenkins-Arno said. She said when she tours small businesses, they ask for support in how to navigate the environment overall in regulation and grants at every level. The intent is for the MEDC or another state partner to put more effort into these small businesses. The intent would also include flexibility, so the MEDC or another state partner could direct small business supports as needed without many requirements, other than hoping to direct it towards businesses with less than 500 employees. Johnston said there needs to be as many tools as possible for the state to use to compete and fund them to the maximum amount possible. He said although most of the manufacturing sector is made up of small businesses with 100 employees or less, and there does need to be a focus on small business success, the state cannot forget about the large businesses that create and add demand to the supply chain. Gross said he is interested in seeing more details established in the new fund rather than just a line-item grant, including how scoring would work, accountability and oversight. There is a lot of demand for business support overall on both sides, Gross said. Fundamentally, he said, "it should be accessible to businesses of all sizes" and "it should be accessible to businesses in all sectors." "We don't believe in differentiating and focusing on one size or type of business over others at those expenses," Gross said. On the island The Mackinac Policy Conference hosted by the Detroit Regional Chamber last week had a laser focus on how to improve the state's economic standing, specifically how to signal to businesses that they were "open for business" and how to compete with other states. While MEDC CEO Quentin Messer Jr. was uninterested in negotiating budgets in the media, gubernatorial candidates shared their economic platforms enthusiastically. Although many of the candidates say they would abolish the MEDC, U.S. Rep. John James, R-Shelby Township, said there must be a change in philosophy instead. He said he would focus on retention and a culture based on compliance while lowering regulatory burdens. Senate Minority Leader Aric Nesbitt, R-Porter Township, said the current MEDC is corrupt and needs a restart, "taking a flame thrower to the bureaucracy in Lansing" to ensure the state is actually open for business. Secretary of State Jocelyn Benson said there needs to be a top-to-bottom review of how the state generates revenue and diversification and of how the state competes for business development. She also said there is not enough small business support now. Genesee County Sheriff Chris Swanson said the MEDC is not failing, but there are gaps in transparency on where money is going and people signing non-disclosure agreements. In a cheekily abbreviated "What's the Fix" session looking for a solution to economic development, Jeff Donofrio, president and CEO of Business Leaders for Michigan, said it's been a long slide down the national totem pole for the last 20 years, and instead pointed in the direction of instead fixing the educational and talent pipeline system instead of specific tools. He said it's also a "purple state curse," which could be an asset, but has not been the story in Michigan, with a lot of back and forth on how to approach the economy instead of a stable solution. Sandy Pierce, CEO advisor and Michigan State University Trustee, championed Ohio's growth in the last 15 years, specifically in taking economic development out of the hands of the government, abolishing their version of the MEDC, and privatizing the industry. She said it worked because it led to "faster decision making, business-oriented execution, regional coordination across the state, long-term strategy, aggressive site readiness, consistent focus across administrations." Specific policy proposals on tools were not on the forefront at the policy conference, but instead more philosophical conversations on how to change economic mindset and answer to other parts of the state that could trickle down into business development. DCD MUNICIPAL MINUTE  Mackinac's Central Message: Michigan Needs Stability More Every year, the Mackinac Policy Conference serves as a snapshot of Michigan's economic and political climate. While headlines often focus on partisan clashes, this year's most important takeaway may have come from a recurring theme heard from business leaders, employers, local officials, and economic development professionals throughout the island: uncertainty is becoming one of Michigan's biggest competitive challenges. Whether discussing energy policy, economic development incentives, workforce programs, infrastructure investments, taxation, or regulatory requirements, many employers expressed the same concern—frequent policy shifts make long-term planning increasingly difficult. Businesses make investments based on predictability. Hiring decisions, capital expenditures, facility expansions, site selection, housing development, and infrastructure projects often require planning horizons measured in years or even decades. When policies change dramatically from one administration or legislative majority to the next, organizations are forced to spend more time managing uncertainty and less time pursuing growth. The concern extends beyond any single political party or policy issue. Rather, it reflects a broader frustration with the growing cycle of legislative reversals and partisan policymaking. Programs are created, altered, repealed, and recreated before stakeholders have an opportunity to fully adapt. Regulatory frameworks shift. Incentive structures change. Funding priorities move. While debate is a healthy part of democracy, constant change carries real costs. Those costs are felt by businesses deciding where to invest, developers evaluating projects, local governments planning infrastructure improvements, and nonprofit organizations attempting to deliver services efficiently. In each case, uncertainty becomes a hidden tax on growth. The public exchanges among legislative leaders at this year's conference provided a visible reminder of the political divisions that continue to shape policymaking in Lansing. While spirited debate is expected, many attendees were less interested in who won the latest political argument and more interested in whether state leaders can provide the consistency necessary for Michigan to compete. For Michigan to realize its economic potential, stakeholders increasingly emphasized the need for policies that endure beyond election cycles. That does not require agreement on every issue. It does require a commitment to building durable solutions, creating accountability for results, and avoiding dramatic swings in policy direction whenever political control changes hands. The message from Mackinac was not necessarily a call for less politics. It was a call for more governance. As budget negotiations and major policy debates continue throughout the remainder of the year, business leaders, local governments, and community organizations will be watching closely. Their expectation is straightforward: provide a vision for Michigan's future that is stable enough to plan around, predictable enough to invest in, and accountable enough to earn public trust. In an increasingly competitive economic environment, consistency itself may be one of Michigan's most valuable assets. By: Jake German DCD OUT & ABOUT
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State Must Prepare for Medicaid Work Requirements Now to Reduce Number of People Who Lose Coverage 
After Last Year's Budget Shakeups, Michigan's Economic Development Future is in Uncharted Territory
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