News & Media
Legislative Update: Governor Whitmer’s 2026-2027 Budget Recommendations Released
An annual rite that marks the start of Michigan’s budget cycle unfolded this week in Lansing, as Governor Whitmer delivered her executive recommendations for the upcoming fiscal year. Presenting the plan, State Budget Director Jen Flood underscored the state’s structural fiscal challenges, attributing much of the shortfall to downstream impacts of H.R. 1 at the federal level.
Governor Gretchen Whitmer’s proposed FY 2027 budget includes more than $800 million in new or expanded taxes to stabilize Medicaid and offset declining federal support, with significant implications for Michigan physicians and the patients they serve.
The $41 billion Department of Health and Human Services (DHHS) budget reflects mounting cost pressures tied to federal policy changes. Implementation of new eligibility and compliance requirements under last year’s federal reforms is projected to cost the state nearly $100 million. In addition, Michigan is expected to assume a substantially larger share of SNAP benefit costs beginning in FY 2027, adding another $97 million in state spending. The administration also anticipates hiring hundreds of additional staff to manage Medicaid eligibility and compliance oversight.
Within this constrained fiscal environment, the Governor is proposing targeted tax increases on tobacco products, vaping products, gaming and digital advertising to generate approximately $804 million in new revenue. Of particular relevance to the health care community, a new vape tax and increased tobacco taxes are projected to raise more than $300 million combined, with a portion dedicated to the Medicaid Benefits Trust Fund as well as cancer prevention, smoking cessation and children’s health programs. Additional revenue from internet gaming and sports betting would also be directed largely toward Medicaid financing.
The proposed budget includes continued investment in behavioral health infrastructure, including funding to operationalize a new state psychiatric hospital, as well as wage increases for direct care workers. The administration has also prioritized ongoing support for early childhood education and literacy initiatives, recognizing their long-term impact on health and social outcomes.
Legislative reaction has been mixed. House leadership has expressed strong opposition to tax increases as a mechanism to fund Medicaid, instead advocating for cost containment strategies. As budget negotiations move forward, Medicaid financing and the sustainability of safety-net services are expected to remain central issues.
For physicians, the outcome of these negotiations will be critical. Medicaid reimbursement stability, behavioral health capacity and public health programming all hinge on how lawmakers resolve the projected funding gap in the months ahead.
Connect With Your Legislators
Developing relationships with your elected officials and meeting with key legislative leaders is critical to advancing your concerns and issues. Please register now to join your colleagues and MSMS staff at the annual MSMS Advocacy Day on March 11, 2026, and encourage other physicians to do so as well.
Local events also offer a great way to meet with your legislators. Upcoming events are listed below:
MONDAY, FEBRUARY 16
- Representative Ann Bollin (R) Local Office Hour 9:00 to 10:00 a.m., Walled Lake City Hall, 1499 E. West Maple Road in Walled Lake
- Representative Ann Bollin (R) Local Office Hour 11:00 a.m. to 12:00 p.m., Coffee Beanery, 4433 Old U.S. 23 in Brighton