Whitmer 2027 budget has tax cuts for some; tax hikes for others

LANSING — Gov. Gretchen Whitmer is proposing an $88.1 billion state finances for 2027 that might give tax breaks to seniors and households with school-age youngsters whereas paying a variety of taxes and costs, from on-line gaming to tobacco to licensing charges for searching, fishing and boating.

For the second yr in a row, Whitmer didn’t take part within the finances presentation. However she mentioned in a information launch that Michigan “is open for enterprise and on the transfer, and this finances will clear up the kitchen desk points that make an actual distinction in individuals’s lives.”

The spending plan, which State Finances Director Jen Flood offered to lawmakers on the Capitol on Feb. 11, acquired a backlash from Republicans within the Home of Representatives, primarily based on the leak of its contents earlier than Flood’s afternoon presentation even started.

“There shall be no tax will increase on this finances,” Home Speaker Matt Corridor, R-Richland Township, mentioned as soon as a remaining settlement is reached with the Legislature at a Feb. 11 morning information convention. “We now have to reside inside our means,” and “we’ve got to make extra cuts.”

Whereas there was uncommon disagreement over the general measurement of the 2026 finances, as a result of issues associated to how sure health-related taxes have been accounted for, the nonpartisan Residents Analysis Council of Michigan estimated it at $84 billion, barely lower than the 2025 finances of $84.1 billion, as soon as all 2025 supplemental spending payments are included. Based mostly on these numbers, Whitmer’s eighth and remaining finances proposal represents a 4.9% enhance over the present yr.

Flood famous that below Whitmer’s proposal, the finances for the final fund, the state’s principal checking account, would drop 3.5%, to $13.6 billion for 2027, down from $14.1 billion this yr. That is regardless of important finances challenges associated to lowered federal assist for sure packages and better well being care and Medicaid prices, she mentioned.

Listed below are highlights:

Tax cuts

As first reported by the Detroit Free Press, the finances features a proposed property tax credit score for eligible seniors 65 and older. The $90 million plan would make greater than 355,000 seniors eligible for property tax rebates of as much as 10%, with a median financial savings of $345 per yr, Flood mentioned.

There could be an earnings ceiling to qualify for the property tax credit score, Flood mentioned Feb. 11. Particulars on earnings eligibility weren’t instantly obtainable.

The finances additionally features a gross sales tax exemption on faculty provides, which would supply a complete tax discount of $15 million, in response to the finances.

On-line and brick-and-mortar retailer purchases would qualify for a short lived 6% gross sales tax exemption for college clothes as much as $100 every, faculty provides as much as $20 every, and computer systems for private use as much as $1,000, in response to a finances doc.

Particulars, resembling when the proposed VAT exemption would start and when it will finish, weren’t instantly disclosed.

Tax and tariff will increase

New tax will increase proposed within the finances embrace $232 million from elevated tobacco taxes, $95 million from a vape tax, $195.4 million from increased taxes on on-line gaming and sports activities betting, and $282 million from a digital promoting tax.

The state tax on cigarettes would enhance from $2 per pack at the moment to $3 for a pack of 20 cigarettes. Whitmer additionally proposed growing the tax on different tobacco merchandise, resembling pipe tobacco, moist smokeless tobacco and snuff, from 32% of the wholesale worth to 57%. A brand new excise tax on vaping merchandise and various nicotine merchandise could be 57% of the wholesale worth.

The proposed increased playing taxes embrace: the next tax price – 36% versus 28% – on on-line playing that exceeds a sure threshold on the largest casinos, producing $135.5 million for the state; $38.8 million for a per-bet sports activities betting tax; and $21.1 million from the elimination of a free play deduction that on-line casinos obtain.

The digital promoting tax is described in finances paperwork as a 4.7% excise tax on Michigan’s share of digital promoting income, with exceptions for broadcast and information media. Platforms resembling Fb, Instagram and Google could be topic to the tax, in response to the State Finances Workplace.

The finances additionally proposes a sequence of smaller tax and/or charge will increase, lots of which have been proposed by Whitmer in earlier budgets and rejected by the Legislature. These embrace $29.4 million from elevated searching and fishing license charges; $11 million from elevated landfill charges to assist cleanup of contaminated websites; $7.3 million from elevated land and water allow charges, $5 million from elevated hazardous waste charges; and $465,500 from elevated underground gasoline and storage prices. The finances additionally proposes increased charges for boat permits and plane registrations.

Wet Day Fund

To cowl bills, the finances proposes to attract about $400 million from the state’s Finances Stabilization Fund, often called the Wet Day Fund, the place the stability just lately reached $2 billion.

Flood famous that the Legislature’s finances companies have calculated that a fair bigger pullback — $540 million — could also be justified.

Corridor mentioned Michigan’s financial system is steady and there’s no justification for drawing cash from a reserve fund meant to cope with an financial downturn.

The finances proposes a 2.5% per-pupil grant enhance, to a minimal of $10,300 per scholar.

It recommends that cyber colleges, which face decrease prices for issues like buildings and transportation, be funded 20% decrease: $8,240 per scholar.

Whitmer is proposing $2.9 billion for college students with particular wants, a rise of $154 million.

Extra: Governor Whitmer’s 2027 finances to name for increased tobacco and playing taxes

Extra: Whitmer finances to suggest $90 million property tax break for Michigan seniors

The finances additionally proposes main funding will increase for literacy packages, which Whitmer introduced as a prime precedence in her remaining yr. These embrace: $100 million for “excessive impression” tutoring; $100 million over two years to buy and implement high-quality literacy curricula; $50 million to proceed implementation of “science of studying” instruction, and $10.5 million for extra literacy coaches in center faculty districts.

Whitmer’s finances additionally continues to fund two packages she launched or expanded earlier in her governorship: $200 million without cost breakfast and lunch for all Ok-12 college students, and $765 million for preschool for all four-year-olds.

Faculties and universities

The finances largely freezes working funding for group schools and universities, whereas offering one-time grants to assist mitigate what would in any other case be a lack of funding as a result of inflation.

Based on finances paperwork, this method “prioritizes fiscal accountability” in “a revenue-constrained surroundings.”

For group schools, Whitmer is proposing one-time grants of $11 million to take care of operational funding ranges, and $33 million for infrastructure, know-how, tools, upkeep and security. For universities, she proposes grants for a similar two functions, of $52.3 million and $26.7 million respectively.

Transport

Based on the finances, Michigan will obtain $1.6 billion in new transportation funding this yr from the package deal handed final yr, with annual funding ultimately rising to greater than $2 billion.

Of the brand new 2027 funding, 69% will assist native street initiatives and 10% will assist transit and rail packages, in response to finances paperwork.

Different highlights

The finances proposes closing the Michigan State Police forensic labs in Northville and Grayling and consolidating these operations at different labs. At present, the MSP has seven forensic laboratories throughout the state.

On financial improvement, Whitmer can also be proposing a 2026 supplemental finances that would come with $150 million for “strategic website readiness” to “place Michigan for key initiatives that can create jobs for Michigan residents,” in response to finances paperwork.

The finances proposes $59.4 million in ongoing funding to draw companies and revitalize the group, and $16 million for the Pure Michigan promoting program, which promotes tourism.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com.