Governor Recommends Funding for Mental Health, Opioid Response, and Medicaid Expansion

Last week, Gov. Gretchen Whitmer, Michigan State Budget Director Jen Flood, and Deputy Director Kyle Guerrant presented Gov. Whitmer’s Fiscal Year 2025 – 2026 Executive Budget Recommendations before a joint meeting of the Michigan Senate and House Appropriations Committees. This presentation marks the beginning of budget season in Lansing. During this time, the House and Senate use the Governor's recommendations as a framework to negotiate their individual budget proposals. Ultimately, they work together to present a unified budget to the Governor before the statutory deadline of July 1.

The highly anticipated budget recommendation – the largest in Michigan’s history – was unveiled following the January Consensus Revenue Estimating Conference, which reported a $1.2 billion surplus in the state’s general fund, exceeding expectations.

This year’s presentation offers a $83.5 billion budget recommendation that includes a general fund total of $15.3 billion and a School Aid Fund total of $21.2 billion. The Governor highlighted the following priorities for strategic investment:

• Lowering Costs for Michiganders
• Creating Jobs
• Getting Smart on Education
• Supporting Seniors
• Protecting and Defending Michiganders
• Making Government Work Better

 More specifically, the Governor proposed the following:

Lowering Costs

• Continue the Working Families Tax Credit, which delivered an average of more than $3,500 in tax relief to 650,000 families last year.
• $676.1 million to continue providing universal pre-K through the Great Start Readiness Program to an estimated 57,100 children.
• $200 million to continue providing free school meals to all 1.4 million public school students.
• $5 million to support the MiABLE program expansion.
• $7 million to create affordability programs to help families struggling with their water bills.
• $3 million to provide financial literacy education services to Michiganders.

Creating Jobs

• $4.9 billion in total road funding, including federal, state and restricted funds.
• $10 million for Small Business Entrepreneurial Support Hubs to enhance a statewide network of service providers that offer comprehensive resources and critical support to Michigan’s small businesses.
• $10 million to partner with employers to help meet their unique talent needs in industries like advanced mobility, semiconductor, aerospace defense and life science to attract, retain and connect talent with good-paying jobs.
• $7.5 million to grow our workforce and empower workers to get good-paying jobs by removing barriers to work such as child care, transportation, tools for work and clothing needs.
• $54.8 million to continue Going Pro job training grants to businesses to support training for current and new employees in high-demand, skilled trades industries.
• $50 million to offer affordable child care to families of infants, toddlers, children with disabilities and children living in areas where child care is scarce.

Getting Smart on Education

• $516 million to support school operations through a 4.1% increase in base per-pupil funding – equating to an additional $392 per student, for a total of $10,000 per pupil.
• $202.4 million to continue expanded support for special education students – a 10% increase in the state allocation from adjusted current law levels.
• $258 million to support the mental and emotional well-being of 1.4 million students through continuation of mental health and safety grants to districts.

Supporting Seniors

• Continues providing tax relief to Michigan seniors through the rollback on the retirement tax.
• $2 million to support services for Michiganders experiencing dementia.
• $96.4 million to expand Medicaid eligibility to more disabled and elderly enrollees.

Protecting and Defending Michiganders

• $26 million investment to upgrade critical infrastructure at Selfridge Air National Guard Base to build Michigan’s defense industry and attract new flying missions and aircraft.
• $46.8 million in opioid settlement funds directed to reduce overdose deaths through prevention, treatment, harm reduction and recovery supports for those affected by the opioid epidemic.
• $42.8 million from taxing vaping and non-tobacco nicotine products similarly to other tobacco products, with all revenues supporting smoking and cancer prevention, and youth mental and physical health, and access to healthcare.
• $2.5 million to fund enforcement and compliance processes for the new tax on vaping and nontobacco nicotine products.
• $5.5 million to protect Michigan’s food supply and help livestock farms prevent disease outbreaks like the bird flu by investing in biosecurity measures.
• $2.5 million to support behavioral health resources for first responders and public safety staff.
• $2.5 million increase to the First Responders Presumed Coverage Fund which has assisted more than 100 first responders by providing payment for wage loss and medical care expenses for those battling certain cancers.
• $400,000 to study expanding Medicaid eligibility to children up to six years old.

Making Government Work Better

• $15.2 million for staff and transition funding to operate and relocate to the state’s new psychiatric hospital, which will serve Michigan children and adults, increasing capacity by 54 beds for a total of 264 beds.
• $46.2 million increase in the Information Technology Investment Fund to upgrade government information technology applications and modernize legacy systems to better serve Michigan residents.

Additionally, the Governor is proposing $50 million be deposited into Michigan’s Budget Stabilization Fund and $50 million into Michigan’s Rainy-Day Fund, which brings the balance in both funds to nearly $3 billion.

You can access all budget recommendation materials here.

It is important to note that this budget recommendation serves as a jumping off point to get the negotiations with the House and Senate started. Many priorities the Governor announced will be replaced with those of legislative leaders. More likely than not, we expect negotiations to continue throughout the summer, past the July 1 statutory deadline into September, with a final FY26 budget being presented to the Governor days before the Oct. 1 fiscal year start date.