Report: ‘Big, beautiful bill’ will blow $1.1 billion hole in Michigan budget
- A report says Michigan must cut $1.1 billion from its $84 billion budget because of the new ‘big, beautiful bill’
- The bill shifts some cost sharing to the state for SNAP food benefits and Medicaid
- Additionally, tax breaks are expected to cost the state revenues
LANSING — Lawmakers may need to cut around $1.1 billion from Michigan’s upcoming fiscal year budget because of the recently passed “big, beautiful bill,” according to a report released Tuesday.
President Donald Trump signed the bill this month following a party line vote in the US House. The law extends tax cuts that were due to expire, and multiple nonpartisan groups — including the Congressional Budget Office and Michigan House Fiscal Agency — predict it will hurt lower-income earners and families.
Now, the nonprofit Citizens Research Council of Michigan warns in a report that Michigan will have to pay $1.1 billion in increased Medicaid and SNAP food benefits by 2032 and lose $677 million in tax revenue next year because of federal income tax changes.
The report comes as Michigan remains without a budget for the next fiscal year, missing a deadline in July. The budget is expected to be about $84 billion and was already likely to shrink because of a decrease in federal COVID spending.
The new law will create “an added budget challenge that will be particularly severe over the next few budget cycles,” said Bob Schneider, the Research Council’s senior research associate for state affairs and lead author of the report.
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He predicted the state’s budget challenges “will be particularly severe” and urged lawmakers to “get to work on developing a budget plan that considers these new realities.”
Along with the tax cuts, the Big Beautiful Bill increased military and immigration enforcement that necessitated cuts and shifts in cost sharing with states.
The federal government currently covers all SNAP program benefits in Michigan, which in the 2024 fiscal year totaled over $3.2 billion. In the 2023 fiscal year, benefits amounted to about $188 worth of food per person, per month on average for households with elderly individuals.
The new spending bill, however, requires states to pay up to 15% of SNAP benefit costs starting in the 2028 fiscal year.
Half of all SNAP households included an individual who was elderly or had a disability, per an April 2025 report from the US Department of Agriculture.
Regarding Medicaid, the federal government covers 50% to 90% of spending for Michiganders depending on the plan they’re enrolled in. Michigan's Medicaid budget in fiscal year 2025 totaled nearly $28 billion according to the Michigan Department of Health and Human Services.
Recent data from the nonprofit health policy outlet KFF, however, indicated Michigan will face a $32 billion federal spending decrease across the next decade under the bill, making it one of the harder-hit states.
While the Democratic-led Michigan Senate has passed its version of a budget, the Republican-led state House has only moved K-12 schools and higher education budgets before breaking for the bulk of the summer.
Failure to reach an agreement by the start of the new fiscal year, Oct. 1, will result in a government shutdown — the last of which Michigan also experienced during a time of divided government in both 2007 and 2009.
Lawmakers are next scheduled to be in session Aug. 12.
Neither House Speaker Matt Hall, R-Richland Township, nor Senate Majority Leader Winnie Brinks, D-Grand Rapids, responded to a request for comment.
Earlier this month, Hall praised the Medicaid and SNAP rollbacks and said he’s not convinced Gov. Gretchen Whitmer “is doing all of the proper checks” to “ensure that only eligible people are receiving welfare programs.”
Due to the expected funding shortage, Schneider said it wouldn’t shock him if the state ended up needing to call another Consensus Revenue Estimating Conference to better the situation.
“We, instantly, are going to need to make some adjustments and recalibrate on whatever budget ends up getting enacted,” he told Bridge on Wednesday.
That amount would ultimately need to be smaller than the nearly $84 billion budget Whitmer proposed in February, he added, “and that’s before we even talk about the road funding.”
Nonetheless Rep. Ann Bollin, a Brighton Republican and chair of the House Appropriations Committee, remains optimistic that both a roads plan and final budget deal can come this year — possibly without even needing a revenue estimating conference.
“We are going to have to move forward with more aggressive cuts,” she said, “but, at the same time, we have to be very mindful that we can’t leave our most vulnerable out of the equation. We need to take care of them and we need to get rid of waste, fraud and abuse.”
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