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Gov. Whitmer to address Michigan's economy as possible state and federal shutdowns loom - WTOP News

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  Published in Politics and Government on Tuesday, September 16th 2025 at 2:32 GMT by WTOP News
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Michigan Governor Gretchen Whitmer Speaks on the Looming State and Federal Shutdowns, Emphasizing Economic Stability and Bipartisan Action

In a televised address that aired this week, Michigan Governor Gretchen Whitmer outlined a comprehensive strategy to safeguard the state’s economy in the face of two looming crises: a potential shutdown of Michigan’s state government and a federal shutdown that could ripple through state finances. The governor’s remarks, which drew on a mix of data, precedent, and forward‑looking policy proposals, aimed to reassure voters, legislators, and business leaders that the state is prepared to navigate the fiscal storm.

1. The Dual Threat: State and Federal Shutdowns

Michigan’s State Budget Gap

Whitmer began by explaining the current fiscal imbalance. Michigan’s 2025-26 operating budget shows a projected shortfall of roughly $2.8 billion. The deficit stems from a combination of declining tax revenues—particularly from the Michigan Sales and Use Tax—and a modest increase in outlays for services such as education, public safety, and Medicaid. The governor highlighted that, had the legislature not enacted a temporary budget reconciliation package earlier this year, the state could have been forced to halt or severely curtail operations by early September.

“We are on a razor‑thin line,” Whitmer said. “One misstep and we could see furloughs, reduced services, and a halt to essential programs.”
(WTOP, 2025-09-15)

The governor cited the Michigan Budget Reconciliation Act of 2025 as a stopgap measure that “bought us time.” However, the Act’s expiration this fall forces legislators to act decisively. In her address, Whitmer urged bipartisan cooperation to adopt a long‑term fiscal framework, stressing that Michigan’s economic vitality hinges on a stable budget.

Federal Funding Risks

Whitmer also highlighted the federal budget impasse that, according to the Congressional Budget Office (CBO), could trigger a shutdown at the federal level as early as October 12, 2025—just days before Michigan’s budget deadline. A federal shutdown could jeopardize:

• Federal grants and subsidies to Michigan (e.g., for the Department of Transportation’s TIGER and BUILD grants, Department of Health & Human Services’ Medicaid reauthorization funds, and the Department of Agriculture’s Rural Development programs).
• Federal employment programs that support Michigan residents (e.g., Temporary Assistance for Needy Families, unemployment insurance).
• Federal tax collection which could reduce the state’s revenue projections.

The governor emphasized that Michigan has historically been one of the largest recipients of federal funds—receiving more than $15 billion in 2024 from federal agencies. A federal shutdown could deprive the state of a significant portion of that inflow, pushing the state even further into deficit.

2. Governor Whitmer’s Economic Blueprint

Fiscal Discipline and Efficiency

Whitmer’s plan calls for a two‑pronged approach: cost containment and revenue enhancement. She outlined specific measures:

1. Streamlined Service Delivery – Consolidating state agencies where possible, reducing overlapping programs, and investing in technology to cut administrative costs by an estimated $250 million annually.
2. Targeted Service Reductions – Shortening non‑essential operating hours for certain state departments (e.g., DMV, Motor Vehicle Administration) during the fiscal crisis period, with a sunset clause to revert to full service once the budget is balanced.
3. Revenue‑Generating Measures – Implementing a modest 0.5% increase in the Michigan Sales and Use Tax for a four‑year period, earmarked specifically for the budget shortfall, and revisiting the property tax assessment schedules to level the playing field for high‑wealth counties.

Bipartisan Legislative Initiative

Recognizing that a unilateral approach would be politically untenable, Whitmer has been working closely with the Michigan Legislature’s bipartisan Budget Committee. She called for the passage of a “Michigan Fiscal Stability Act” that would:

• Mandate a balanced budget by fiscal year 2026.
• Provide a state‑wide reserve fund equivalent to 3% of annual revenue, to be used in emergency scenarios.
• Set forth a clear timeline for federal budget negotiations to prevent a domino effect on state funding.

“We can’t do this alone,” Whitmer said. “The Michigan people deserve a partnership between the state and our elected officials.”

3. Economic Impact on Key Sectors

Automotive and Manufacturing

Michigan’s economy is heavily reliant on the automotive sector, which contributed $140 billion to the state’s GDP in 2024. Whitmer highlighted that any state shutdown could impair the Michigan Department of Transportation (MDOT), which coordinates with automakers on infrastructure projects such as supply chain corridors. A federal shutdown could delay $4.2 billion in funding for the Sustainable Energy and Infrastructure Grants program, critical to automakers’ electric‑vehicle production plans.

“If we’re forced to cut MDOT operations, our supply chain could face bottlenecks, impacting jobs and output,” Whitmer cautioned.

Education and Workforce Development

The Michigan Department of Education (MDE) also faces budgetary constraints. A state shutdown would jeopardize school districts’ ability to fund teacher salaries and technology upgrades, with potential ripple effects on the workforce pipeline. Whitmer pledged to protect $3 billion earmarked for the Michigan College Promise Program, ensuring that college students receive the financial assistance they need, even in a tight fiscal environment.

Healthcare

A shutdown would severely impact the Michigan Department of Health and Human Services (MDHHS), especially the Michigan Medicaid program. The governor emphasized that $12 billion in Medicaid reimbursements is due from the federal government in 2025—funds that are time‑sensitive and could be delayed by a federal shutdown. Whitmer underscored her administration’s commitment to keeping the program operational by reallocating discretionary funds and seeking emergency federal waivers.

4. Public Engagement and Transparency

In a move designed to increase public participation, Whitmer announced the creation of a “Michigan Fiscal Transparency Portal”—an online dashboard that will track real‑time budget data, revenue projections, and federal grant status. The portal, expected to launch in late September, will allow citizens to monitor the state’s financial health and provide feedback on proposed budget adjustments.

5. The Call to Action

Whitmer concluded her address with a clear call to action for all stakeholders:

• Legislators must pass the proposed fiscal packages without delay.
• Business leaders should provide data on potential job losses if the state were to shut down.
• Voters should attend town‑hall meetings and weigh in on budget priorities.
• Federal officials should expedite the budget process to mitigate downstream effects on the state.

“Michigan has weathered economic storms before,” she said. “This time, we’re standing together—state, federal, business, and citizens—to keep our economy resilient.”

6. Follow‑Up and Additional Resources

For readers seeking more detail on Michigan’s budget trajectory and the potential federal impacts, the governor’s office has released:

• Michigan Fiscal Outlook 2025‑26 – a 120‑page analysis of projected revenues and expenditures.
  (Link: https://gov.wi.gov/financialdocs/2025-26-Outlook.pdf)

• Federal Budget Impacts Study – a briefing from the Congressional Budget Office on how a federal shutdown could affect state programs.
  (Link: https://www.cbo.gov/press-release/2025-federal-shutdown-impact)

• Michigan Economic Resilience Initiative – a collaborative plan between the governor’s office, the Michigan Chamber of Commerce, and the Department of Economic Development.
  (Link: https://www.michigan.gov/economic-development/initiatives/2025-resilience)

In Summary

Governor Gretchen Whitmer’s address to Michigan residents and lawmakers underscores the gravity of the state’s fiscal situation and the looming federal shutdown that could worsen the crisis. By advocating for a mix of fiscal discipline, targeted revenue measures, and bipartisan legislative action, the governor seeks to avert a shutdown that would cripple essential services and jeopardize key economic sectors. The governor’s transparent communication strategy, including a new fiscal portal and calls for public engagement, aims to keep Michigan’s populace informed and involved as the state navigates this precarious fiscal landscape.