4 proposals that were axed from Michigan’s budget and 1 controversial agency that survived cuts

Michigan Capitol | Susan J. Demas

After several fits and starts, the Democratic-controlled Michigan Legislature wrapped work last week on the Fiscal Year (FY) 2025 budget.

Most attention has been on education funding, with Republicans objecting to changes in the Michigan Public School Employees’ Retirement System (MPSERS) and some Democrats complaining that accompanying legislation wasn’t transmitted to the Senate before they adjourned until July 30. Lawmakers also took a different approach to Gov. Gretchen Whitmer’s centerpiece proposals for free pre-K and community college.

But there were some other significant developments in other areas of the $83 billion FY 2025 budget that’s set to go into effect on Oct. 1.

Here’s our look at four proposals that got left on the cutting room floor and one agency that ended up receiving full funding, even after sparking concerns about partisanship.

Recreation passport opt-out

In her executive budget proposal for Fiscal Year 2025, Whitmer proposed moving the state’s recreation passport program from its current opt-in system, to an opt out program, reviving a debate from when the program was first created.

The recreation passport program was enacted in 2010 as part of a bipartisan effort led by then-state Sen. Patty Birkholz (R-Saugatuck) as a way to support Michigan’s state parks, which had been neglected and underfunded during the state’s decade-long recession.

While the legislation that created the program uses the current opt-in approach, another version would have required Michiganders to opt out of paying the fee when they renew their license.

A recreation passport currently costs $14 for vehicles and $7 for motorcycles and mopeds.

Shifting to an opt-out system would have brought the state an estimated $21 million in additional revenue according to the State Budget Office. However, some Republicans raised concerns about the shift , with state Rep. Ken Borton (R-Gaylord), minority vice chair of the House Appropriations Agriculture and Rural Development and Natural Resources Subcommittee, calling the proposal “a tax on people who don’t pay attention.”

The Senate concurred with Whitmer’s proposal to allocate additional revenue generated by the switch to an opt-out system, but the final budget that was passed did not include this potential revenue stream.

While members in both the House and Senate introduced bills amending state law to make the recreation passport fee an opt-out option, neither has been reported out from their respective committees.

Waste tipping fee increase

The House and Senate initially split on whether to include another stream of revenue proposed by the governor before ultimately excluding a proposed $80 million for environmental cleanup and recycling initiatives which would be generated by an increase to the state’s waste tipping fee.

A briefing on the proposal from the State Budget Office explained that Michigan has been facing issues with a significant amount of out-of-state waste being deposited into in-state landfills, with out-of-state waste making up 25% of all waste in Michigan annually.

In order to address these concerns, Whitmer proposed raising the state’s waste tipping fee from $.36 per ton to $5 a ton, with neighboring states like Ohio charging $4.75 a ton and Wisconsin charging $13 a ton.

Republicans and business groups across the state spoke out against the proposed increase, with some blasting it as a “trash tax” hike .

While the proposal was not included in the budget bills initially passed by the House, with Rep. Rachel Hood (D-Grand Rapids), chair of the House Environment, Great Lakes and Energy (EGLE) Appropriations Subcommittee, telling reporters more work would be needed to ensure the proposal worked as intended.

Although the Senate acknowledged the proposed tipping fee increase in its version of the EGLE budget, Sen. Jeff Irwin (D-Ann Arbor) who chairs the Senate Appropriations EGLE Subcommittee, said another bill would have been needed in order to enact the fee increase.

“I don’t see how that could have been included, given the fact that we have not yet enacted the policy, and by the time we would, or could, we’re really going to be talking about next year’s budget,” Irwin said.

Irwin said he hoped that conversation continues, pointing to policy introduced by Rep. Reggie Miller (Van Buren Twp.) last fall that would increase the tipping fee to $0.72, with the state treasurer adjusting the charge every five years beginning in 2029 to reflect the cumulative percent change in the Consumer Price Index over the most recent period of five years where data is available.

Vehicle rebates

Whitmer announced the “MI Vehicle Rebate” plan in December, seeking a $25 million allocation in the next budget in an effort to boost vehicle sales in Michigan.

The money would have allowed the state to offer a tax rebate to lower the cost of a new electric, hybrid or traditional vehicle between $1,000 and $2,500 per vehicle. When combined with a $7,500 federal incentive , Whitmer’s office said Michiganders could have saved up to $10,000.

However, the funding never made it past a House budget subcommittee, and was not included in the House budget plan passed in May .

It was the third year in a row Whitmer had proposed incentives to boost vehicle sales, which would boost a critical industry in the state.

In her FY 2024 plan , she asked for $48.4 million for a temporary “Sales and Use Tax Exemption on the Purchase of Electric Vehicles,” while in the FY 2023 budget , Whitmer requested $50 million in order to provide a $2,000 point-of-sale rebate for the purchase of a new electric vehicle. Those plans were also ultimately rejected by the Legislature.

Revenue sharing fund

Another proposal that didn’t make it through the budget process was a plan to create a revenue sharing trust fund for Michigan municipalities that would have provided a dedicated revenue stream.

That plan, encompassed in House Bills 4274 and 4275 ,  would have established a revenue sharing trust fund that would receive its revenue by allocating “at least 8% of the money received and collected from the (state’s sales) tax imposed at a rate of 4%,” which the nonpartisan House Fiscal Agency expected would generate more than $601 million.

Municipalities had been urging that reform as they have seen statutory revenue sharing, which is subject to the annual budget process, decline since 2001 .

However, that plan was never taken up by the state Senate. Instead, the Legislature appropriated $75 million toward a revenue sharing trust fund and another $75 million to establish a public safety trust fund for cities, villages and townships. Altogether it increased revenue sharing for cities, villages and townships by $34.2 million, and $20.7 million for counties.

While the basic boost in funding was cheered by the Michigan Municipal League and the Urban Core Mayors of Michigan, Stephan Currie, executive director of the Michigan Association of Counties, was less enthusiastic.

While saying he appreciated the increase and was “grateful for the hard work the subcommittee chairs put into the budget,” Currie said the long-term funding issue remained.

“Counties still need the certainty of a Revenue Sharing Trust Fund. Our members face increasing costs and increasing challenges to hire and retain employees to serve the public properly,” said Currie. “For many months, MAC has been working in concert with cities, villages and townships on a plan to establish a dedicated state account filled by a percentage of the state sales tax. This would provide a growth factor and stability to local governments that count on revenue sharing. We look forward to the Legislature returning to this reform in the fall.”

Auditor General budget

The budget for the fiscal year that starts Oct. 1 will not include what Michigan Auditor General Doug Ringler had said back in March would be a nearly 30% reduction to his department’s budget, based on Gov. Gretchen Whitmer’s proposed spending plan .

That $80.7 billion proposal placed a $100 placeholder in the Office of Auditor General (OAG) budget line item where previously 23 interdepartmental grants (IDGs) and 13 appropriations from special revenue funds were listed.

Emails reveal Michigan auditor general helped write GOP draft requesting 2020 election audit

The potential loss of those funds, which Ringler said would “significantly impair” the oversight function of the agency, came at a time that criticism had been growing that the OAG had strayed from its nonpartisan status.

In particular, Democrats took issue with audits carried out during Whitmer’s first term as governor they said misled the public; one of the Unemployment Insurance Agency (UIA) , and the other, a report on deaths in long-term care facilities during the first year of the pandemic, which Democrats charged was doing the bidding of Republicans .

More recently, the Advance reported in March that emails revealed that while an OAG audit of the 2020 election came at the request of a Republican House member, it was only after Ringler helped draft the request through a series of previously undisclosed meetings with GOP staff.

Ringler strongly disputed the characterization that his agency was partisan in carrying out its statutory oversight role.

Regardless, in the omnibus bill that funded the Legislature, which includes the OAG, the grants and revenue funds were included. In fact, the gross appropriation for the OAG increased from $29.8 million in FY 2024 to $31.3 million for the FY 2025 budget.

Advance Editor Susan J. Demas contributed to this story.

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