Governor Gretchen Whitmer has proposed an $88.1 billion Fiscal Year 2027 executive budget, which is markedly different than her prior budget proposals, since historic post-pandemic surpluses have faded. Unlike recent years, when Michigan had billions in one-time federal relief funds and stronger-than-expected revenue growth, the FY27 proposal has more modest revenue projections following the January Consensus Revenue Estimating Conference. The unifying theme is “saving Michiganders money” through targeted property tax relief for seniors, a back-to-school sales tax holiday, and the continuation of universal free school meals.

K-12 funding remains a cornerstone of the proposal, with additional dollars for increasing the per-pupil foundation allowance and sustaining funding models for higher-need students. The administration continues to emphasize literacy, early education, and career readiness. With federal policy changes and work requirement discussions at the national level, a sizable part of the budget proposal is for Medicaid stabilization and human services funding. Road funding also continues at substantial levels.

Republican leaders say the proposal is too large and too reliant on targeted tax strategies. They are expected to pursue spending restraint and broader tax reforms. Democrats are focused on preserving social safety net investments, and may seek more programmatic expansions. A link to the full budget proposal is available in the February 2026 Karoub Report.

According to the January Consensus Revenue Estimating Conference (CREC), Michigan’s economy remains stable now that extraordinary post-pandemic revenue growth has ended. General Fund and School Aid Fund revenues are projected to grow at a slower pace than in recent years. Inflation has cooled from its peak, consumer spending is moderate, and employment growth is stable. 

Michigan faces risks and opportunities as global markets evolve — especially in automotive manufacturing and energy. Whitmer has championed a forward-looking economic transition strategy that goes beyond traditional workforce development or business attraction models. Instead of responding after layoffs or industry downturns, the Michigan Economic Transition Strategy focuses on anticipating and shaping economic change to keep workers employed, strengthen communities, and diversify the industrial base. Key components include: Supporting small and mid-sized manufacturers in adopting new technologies and next-generation supply chains; attracting and retaining new investment in advanced sectors, like electric vehicle components, batteries, and clean energy technologies; and helping legacy firms compete as global markets shift. Without a coordinated strategy, structural changes could lead to job losses, community decline, and missed opportunities for new investment.

Click on the link below for complete details in the February 2026 Karoub Report.