House budget includes $35M reduction in county revenue sharing among its sweeping cuts
In an unusual vote this week, the Michigan House adopted a fiscal 2026 General Fund budget that includes a nearly $35 million cut in county revenue sharing.
With just five weeks from the start of the state fiscal year on Oct. 1, the House vote increased speculation of a government shutdown and set the stage for high-stakes negotiations among the House, Senate (which adopted its own budget plan in the spring) and Gov. Gretchen Whitmer.
The House budget, which came to the chamber floor directly from House Appropriations subcommittees in an unusual tactic on Tuesday afternoon, passed with 58 Republicans and one Democrat approving. It is approximately $3 billion less than FY25 funding, $5 billion less than Whitmer’s proposed budget and $6 billion less than the Senate budget. Notably, $3 billion is the number determined to sufficiently support a road funding plan.
House Republicans have advertised cuts and changes in nearly every aspect of the budget, totaling $5 billion, many of which affect Michigan counties.
Most prominent is the 12 percent decrease to statutory revenue sharing for counties (see chart at right). MAC is asking county commissioners to demand reversal of the revenue sharing cut via an action alert released Thursday.
Other areas of concern include:
- Sheriff funding rules: A $40 million fund for county sheriffs is created, but it has strings. Any county that raised sheriff budgets in FY25 using revenue sharing must keep that higher funding level, even as overall revenue sharing is cut. This locks counties into higher law enforcement costs while reducing flexible general fund dollars.
- Emergency management: Funding is reduced by $1.3 million (a 50% cut) and 2 FTE positions are eliminated. This will lower the state’s capacity to respond to agricultural emergencies, which could make county coordination more difficult and force local governments to cover higher costs for outside expertise.
- Livestock disease programs: House did not advance the governor’s request for $5.5 million (3.5M GF/GP) to boost biosecurity and livestock disease prevention across the state. (The Senate plan includes $4 million on this line.)
- Recreation grants: A proposed $17.2 million fee increase backed by the Senate was not adopted, meaning no additional funding for county outdoor projects. Without this boost, counties may face more pressure to cover maintenance and improvements themselves.
- Local water trail grants: A one-time $2.1 million appropriation sought by the governor for coastal and riverfront enhancements was not included. (The Senate plan includes the $2.1 million.)
Other changes are beneficial to counties and in alignment with MAC’s advocacy agenda:
- Justice system funding: The County Jail Reimbursement Program retains its $5 per diem rate increase from the FY25 budget. And funding for Michigan Indigent Defense Commission (MIDC) grants continues to be over $200 million.
- Local prosecutor support grants: County prosecutors are eligible for $25 million in grant funding to assist with backlogged caseloads and increased caseloads created by the April 2025 Michigan Supreme Court ruling requiring that all 19- and 20-year-olds who had been sentenced to life without parole be eligible for resentencing.
- Transportation: The House Transportation budget totals over $10 billion. Michigan Transportation Fund (MTF) distributions to county road commissions include a $17.5 million increase from FY25 and a $366.8 million increase in motor fuel tax revenue based on House Bill 4183, $562.5 million from the redirection of income tax revenue under House Bill 4187 and $318.5 million in General Fund revenue.
- Michigan Natural Resources Trust Fund (PILT): Though changes are made in how funds are distributed, funding remains largely at FY25 levels.
- Horse racing: Horse racing programs get a $2 million boost in restricted funds (up 44%, from $4.5 million to $6.5 million).
For more information on MAC’s budget advocacy, contact Deena Bosworth at bosworth@micounties.org.
State leaders ask FEMA to reverse decision on ice storm aid
Example of the effects of an ice storm that struck Northern Michigan in March.
Michigan leaders are urging the Federal Emergency Management Agency (FEMA) to reconsider its denial of aid that could ease the financial burden on rural communities damaged by a massive ice storm in Northern Michigan this year.
The storm hit rural areas especially hard, where electric cooperatives such as Presque Isle Electric & Gas Co-op (PIE&G) and Great Lakes Energy serve tens of thousands of customers spread across vast and often hard-to-reach territory. Recovery has been both physically demanding and financially staggering — each co-op estimates restoration costs of more than $150 million. Without federal disaster relief, these expenses would be passed on to the customers, many of whom could see substantial rate hikes or emergency fees, in some cases totaling thousands of dollars per household.
While President Trump declared a major disaster on July 22, unlocking limited assistance for local governments, FEMA denied several critical forms of aid. Those included Individual Assistance to help residents directly, Public Assistance Category F to rebuild utility infrastructure and Hazard Mitigation Grant Program funding to protect systems from future disasters.
A bipartisan group, led by Gov. Gretchen Whitmer, has formally appealed FEMA’s decision. In her letter, Whitmer underscored the unprecedented scale of the damage and the urgency of easing the financial burden on already-struggling residents.
FEMA will review Michigan’s appeal; a decision is expected later this year.
For more information on this issue, contact Jimmy Johnson at Johnson@micounties.org.
Questions mount as shortfall lingers on veteran service grants
With the House of Representatives passing its proposed budget earlier this week ahead of the Oct. 1 deadline, one major issue for counties remains unresolved: the Veterans Service Grant Fund. The ongoing funding gap has left counties with more than $3 million in unfunded commitments, forcing many to draw from their own General Funds to keep critical veterans’ services running.
Restoring this funding remains a top priority for MAC, as we continue to push for a supplemental appropriation. Legislative leaders have signaled, however, that additional support is unlikely until the Office of the Auditor General completes its annual audit of the Michigan Department of Veterans Affairs (MDVA), which will show how funds were allocated, what was earmarked for programs and what remains unspent.
Rep. Julie Rogers (D–Kalamazoo) introduced House Bill 4423 earlier this year to restore the grant funding and cover county shortfalls. Other funding avenues are also being discussed, but like Rogers’ bill, they remain on hold until the audit is complete.
Rep. Ron Robinson, R–Macomb and chair of the House Appropriations Subcommittee on Military and Veterans Affairs, is asking any organization or Veterans Service Officer facing challenges — or wishing to share how the lack of funding has impacted services — to email his office. These stories will help guide discussions and negotiations with legislators and the department. Comments can be sent to RonRobinson@house.mi.gov.
For more information on this issue, or to discuss your county’s experience, contact Jimmy Johnson at johnson@micounties.org.
Podcast 83: Prosecutor urges united county front on funding
County commissioners need to send a clear and consistent message to state lawmakers that continued inaction on prosecutor funding will not end well for Michigan.
That was the message from Eaton County Prosecutor Doug Lloyd in a new special episode of Podcast 83.
Lloyd, a former president of the Prosecuting Attorneys Association of Michigan and an announced candidate for the Republican nomination for state attorney general in 2026, discussed the critical need for increased prosecutor funding and the impact of the Michigan Indigent Defense Commission on county prosecutor offices with MAC’s Samantha Gibson during the episode.
“In my county, there’s 34 departments. I’m one of those departments, and at the prosecutor level, if we aren’t able to secure some separate grants, so some separate funding to actually increase the funding or help with the funding in our office, then we are stuck with whatever budget the county commissioners develop in their budget each year,” Lloyd explained.
Lloyd emphasized the unfunded mandates and the challenges in retaining and recruiting prosecutors and noted that the governor’s $250 million budget allocation for indigent defense excluded prosecutors.
“If you want your community safe, then your local prosecutors have to be able to do their job,” Lloyd concluded. “Because if they can’t, you’re just going to see your local county go downhill. And I don’t believe that any citizen wants that, and I’m sure there’s no county commissioner who would want that.”
To watch the full episode, recorded in mid-August, click here or on the image above.
USDOT hosts Rural Road Safety Peer Exchange
The U.S. Department of Transportation (USDOT) gathered around 30 Midwestern transportation policy experts in Ohio this week for a “Rural Road Safety Peer Exchange.” MAC’s Samantha Gibson represented Michigan counties at the event.
Participants discussed USDOT’s Safe System Approach to eliminating fatal and serious injuries for all road users. Using this method in your community first relies on anticipating human error and second on recognizing human vulnerability. Road design and operation must be “human-centric” and consider the vulnerabilities of roadway users.
Opportunities to promote rural road safety via data sharing were also examined. State DOT’s, local agencies, Tribes, law enforcement, public health, and Highway Safety Offices detailed how to use and share available data regarding crashes, traffic volume, trauma centers, roadway characteristics, etc. to determine high risk locations.
Joni Harvey, deputy coordinator of the National 911 Program for the National Highway Traffic Safety Administration (NHTSA), shared details of the NHTSA plan to partner with the Department of Defense to invest $30 million in a nationwide effort to expand access to prehospital blood transfusion. The initiative aims to establish at least 25 new demonstration programs across the U.S. throughout the next three years.
This partnership aims to advance the goals of the Road to Zero Coalition, an intra-agency partnership led by the National Safety Council, which seeks to eliminate traffic fatalities by 2050.
For more information on this topic, contact Samantha Gibson at gibson@micounties.org.
The U.S. Treasury Department has provided new updates on the ARPA State and Local Fiscal Recovery Fund 2025 Project and Expenditure (P&E) Reports, which were due originally on April 30, 2025 (with a deadline extension to June 26, 2025).
Key takeaways/information shared by the National Association of Counties:
- P&E Portal reopening and reminders: Treasury will begin sending emails to counties that are labeled “Administratively Closed” notifying them that they will be able to submit their reports. The portal has reopened and will remain open until Sept. 16, meaning counties MUST submit their reports by that date.
- Treasury webinars and office hours: Treasury is hosting two specific “Office Hours” that are open to all counties. They will have the opportunity to ask questions and receive technical assistance. Call-in information is below:
- Session 1: Thursday, Sept. 4, 1 p.m.-2 p.m. Eastern:
- One tap mobile: US: +16692545252,,1607399763# or +16469641167,,1607399763#
- Meeting URL: https://hyperlink.services.treasury.gov/agency.do?origin=https://ustreasury.zoomgov.com/j/1607399763
- Meeting ID: 160 739 9763
- Session 2: Wednesday, Sept. 10, 2:30 p.m.-3:30 p.m. Eastern:
- One tap mobile: US: +16692545252,,1616791549# or +16469641167,,1616791549#
- Meeting URL: https://hyperlink.services.treasury.gov/agency.do?origin=https://ustreasury.zoomgov.com/j/1616791549
- Meeting ID: 161 679 1549
- Contacting Treasury with portal issues: All questions/concerns should be emailed to SLFRF@Treasury.gov, where there is a dedicated process for directing and addressing recipient questions. Counties should NO LONGER email COVIDReliefITSupport@Treasury.gov. This email domain is no longer active due to program funding cuts. Staff have also been cut by 33 percent, leading to a backlog in technical assistance support. Treasury will continue to work through emails but may be delayed in their response.
- Public data: The list of counties with an “Administratively Closed” report status are publicly available in the April 2025 Public Data Dashboard (see the new “Status” column in the “Recipients” and “Projects” tabs). In the “Reporting Period Last Submitted” column in the same tabs, you can also view when a county last reported, if at all.
NACo will continue to provide updates as Treasury communicates them.
Northern Michigan CMHs file lawsuit to halt PIHP RFP
Several community mental health (CMH) agencies in Northern Michigan have filed a lawsuit against the Michigan Department of Health and Human Services (MDHHS) in an effort to stop the department’s new Request for Proposals (RFP) for Prepaid Inpatient Health Plan (PIHP) contracts.
The RFP, released in early August, would open all 10 PIHP regions to competitive bidding. Under the proposal, any qualified nonprofit — including private entities — could bid to manage these contracts, which cover the delivery of mental health and substance use disorder services for residents across Michigan.
The Northern Michigan CMHs argue this change would dismantle the state’s publicly governed mental health system, which has operated for decades with strong local oversight. They warn that shifting management to private or outside entities could disrupt care for individuals with severe mental illness, developmental disabilities, and substance use disorders, particularly in rural and underserved areas.
The lawsuit seeks to pause or stop the procurement before bids are submitted. Proposals are currently due Sept. 29, 2025, with contracts expected to be awarded in February 2026. The new contracts are scheduled to take effect Oct. 1, 2026.
MAC is part of a coalition with the Community Mental Health Association of Michigan opposing this RFP process. MAC will share further updates with members as the case moves forward.
For more information contact Jimmy Johnson at johnson@micounties.org.
‘Resilient’ workshop will review Michigan’s economic state
An Oct. 29 workshop will explore the “turbulent waters” that Michigan finds itself in economically.
“A More Resilient Michigan” will be held from noon to 6 p.m. at Michigan State University’s Henry Center in East Lansing.
“As Michigan and the nation face critical economic challenges, resilience and adaptability are increasingly critical to navigating issues like high inflation, anemic economic growth, affordable housing shortages, an uncertain federal government trajectory, depreciating public infrastructure and local government skilled worker shortages. Join MSU experts and state and local leaders to discuss current research on the issues facing Michigan and how it can help communities prepare for the turbulent waters ahead.”
The workshop includes lunch, refreshments throughout the afternoon and a light reception. While the conference is provided at no cost for attendees, registration is required. The event is co-sponsored by the MSU Center for Local Government Finance and Policy.
Among topics to be covered will be:
- Michigan economic forecasts
- House shortages and short-term rentals
- The impact of federal legislation on the state
- Water system finance
- Using AI for infrastructure management
MAC offices closed on Sept. 1
MAC will close its Lansing offices on Monday, Sept.1 to observe the Labor Day holiday.
Normal office hours will resume on Tuesday, Sept. 2 at 8 a.m.
A reminder that filings for MAC Board elections are due on Saturday, Aug. 30. To meet that deadline, any interested commissioner is advised to scan and email their application form directly to melot@micounties.org. A final list of candidates will be posted to MAC’s website next week.
Staff picks
- Genesee County commissioners cement decision to honor late colleague Bryant Nolden (MLive)
- Is the grass greener somewhere else? Communities lure new residents with cash incentives (USA Today)
- Data centers will tax Great Lakes water resources, report warns (MLive)
- Gov. Whitmer declares state of emergency for Houghton and Ontonagon counties (WILX)