Governor Whitmer Proposes Fiscal Year 2025 Budget

Posted on February 9, 2024 by John LaMacchia

This week Governor Whitmer released her proposed budget for Fiscal Year 2025. As expected, the proposed budget is less than last year’s budget that was filled with significant one-time resources, and totals $80.7 billion. While the budget is down, core areas the League tracks, revenue sharing, transportation and water infrastructure funding, housing, and economic development saw proposed funding increases.

On the revenue sharing front, constitutional is up slightly as we see sales tax revenue level off as we move further into a post covid world, while statutory received a proposed 10% increase (5% on-going and 5% one-time). Here are some additional details.

$1.1 billion in estimated Constitutional Revenue Sharing (sales tax revenue) payments made only to cities, villages, and townships (CVTs), these payments constitute a significant portion of many municipalities’ local budgets. This represents a $5.4 million increase over the fiscal year 2024 enacted appropriation.
$55 million total increase in Statutory Revenue Sharing (sales tax revenue) payments, an overall 10% increase compared to enacted fiscal year 2024 ongoing statutory appropriations. This total increase represents the following:
- A 5% ongoing increase in general statutory revenue sharing compared to enacted fiscal year 2024 ongoing statutory appropriations.
- A 3% one-time payment for local units that have fully obligated their local fiscal recovery funds by Oct.1, 2024, compared to enacted fiscal year 2024 ongoing statutory appropriations.
- A 2% one-time payment specifically designated for local public safety initiatives, compared to enacted fiscal year 2024 ongoing statutory appropriations. These initiatives may include public safety employee recruitment, retention, and training, as well as public safety equipment and infrastructure improvements.
City, Village, and Township Revenue Sharing total increase is $29.4 million ($14.7 million related to 5% ongoing, $8.8 million related to the one-time local fiscal recovery fund incentive, and $5.9 million one-time related to public safety). Total fiscal year 2025 statutory payments for CVTs are recommended at $322.9 million.

Here are a few other highlights from the Governor’s proposed budget:

Department of Environment, Great Lakes, and Energy

$40 million for Water Infrastructure Replacement and Improvements (general fund) to provide loans and grants to local communities for water infrastructure. These projects will augment replacement and upgrade efforts funded through the Infrastructure Investment and Jobs Act to ensure that Michigan fully leverages every available federal dollar.
$25 million for Electric Vehicle Charging Station Expansion (general fund) to install charging stations at multi-family complexes and commercial parking lots. This investment will assist in Michigan’s efforts to fully build out a charging network for the future green economy.
$20 million for Transitioning Michigan’s Fleets to the Green Economy (general fund) to provide grants to municipalities, transit authorities, and key infrastructure hubs to replace medium and heavy-duty fleet vehicles with emission free alternatives such as battery EVs and hydrogen fuel based vehicles.
$15.3 million for Green Infrastructure Projects (general fund) to assist municipalities in mitigating the impacts from and adapting to climate change through the installation of stormwater diversion infrastructure that utilizes the restoration of natural site hydrology, implementation of ecological water absorption, and stormwater reuse.

Department of Labor and Economic Opportunity

$50 million for the Housing and Community Development Program (restricted funds) to continue alleviating affordable housing needs across the state and revitalize downtown areas in Michigan. This funding will also be used to support new staff that will focus on local capacity building and reducing barriers to affordable housing creation.
$50 million for the Revitalization and Placemaking Program (state restricted funds) for grants that will be used to rehabilitate vacant, underutilized, blighted, and historic structures and develop place-based infrastructure associated with traditional downtowns, social-zones, outdoor dining, and other public spaces.

Department of Transportation

$397.6 million increase for Michigan roads and bridges, including:
- $247.6 million to support revenue increases for state and local roads, highways, and bridges (federal and state restricted funds). This reflects an additional $102.7 million of federal funding, with the remaining $144.9 million attributable to net increases in baseline state restricted revenues. Cities, villages, and county road commissions will receive $127.2 million of additional road and bridge construction funds, with a $123.4 million increase for state-owned roads.
- $150 million for road and bridge projects (general fund). An estimated $95 million will be used to ensure that Michigan fully matches all federal highway aid made available under the Infrastructure Investment and Jobs Act of 2021. The remaining $55 million will support local bridge and culvert projects across the state.
$74.8 million of additional ongoing support for Transit and Rail Programs (federal and state restricted funds). This reflects $38.8 million of federal funding and includes $22.4 million for anticipated federal transit capital grants and $15.1 million for marine passenger services. The remaining $36 million is attributable to net increases in baseline state restricted revenues and supports $14.5 million to rail operations and infrastructure and $14.5 million for transit capital matching funds, as well as a $5 million increase in operating support to local transit agencies.
$30 million for Transit Innovation Grants (general fund) to support technical and other grant assistance for local transit agencies to spur innovation to connect Michiganders with new public transportation options that link communities.

Documents related to the Governor’s recommendations are linked below if you’re interest in further information about the budget proposal:

Overall, the budget has many positives. As the legislature begins to have hearings on this budget and develop their own, the League’s will continue its active engagement on funding issues critical to our members.

John LaMacchia is the League’s director of state & federal affairs. He can be reached at [email protected] or 517-908-0303.

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