News Photo by Kayla Wikaryasz On Friday, Chelsea Leeck-Putkamer is seen pumping gas at the Shell gas station on Chisholm Street. People will be taxed differently for gasoline after some changes to the state budget which was passed early on Friday

LANSING — Unlike their counterparts in Washington DC, elected officials in Lansing were able to approve a new $75.9 billion budget and avoid a government shutdown.

It took some last-minute negotiating, but the new deal was reached early Friday morning. Republicans and Democrats seem pleased with the deal, although both had to make compromises to get the deal across the finish line.

The new budget increases government spending by $1.1 billion annually for road and bridge improvements, while also giving schools a small increase in per-student funding.

The new budget also includes tax breaks for people who receive tips, work overtime, and receive Social Security.

Many state departments also received cuts to their annual allocations that will help reduce spending and make tax breaks possible.

Some of the cuts in the new budget include a $3.3 million cut to the Attorney General’s Office, a $71 million loss in revenue for the Department of Environment, Great Lakes, and Energy, and the Michigan Economic Development Corp. will lose about $40 million in general fund money.

State Representative Cam Cavitt, R-Cheboygan, said it is never easy to make cuts, but without them, new tax breaks on tips, overtime, and Social Security wouldn’t be possible.

“Northeast Michigan is built on service and the trades and this tax relief plan will mean that single mothers will bring home every dollar of their tip money at the end of a long shift and that long-sought overtime for working fathers will be even more impactful,” Cavitt said in a press release. “We’re talking about money that will help cover groceries, school clothes, car repairs, and other necessities that are often put off because it’s simply not in the budget for that week. By securing these dollars for our people, we’re delivering for the middle class that’s been forgotten for far too long.”

In order to increase investment in the roads, some financial maneuvering was needed.

A new 24% wholesale tax will be placed on recreational marijuana at the end of the year, with that money going directly into needed infrastructure improvements. That increased tax will be added to the existing 10% excise tax. The money from the excise tax is used for the School Aid Fund and allocated between local municipalities.

The new budget will also change how customers are charged for a gallon of gas. During bargaining, both chambers decided to do away with the 6% sales tax on gasoline and replace it with a 20-cent increase in the current 31-cent gas tax. The sales tax on gasoline is directed to the School Aid Fund and for revenue sharing for local governments. The removal of the 6% sales tax on gas will lead to a loss of about 6% from the pool of money shared by local governments.

Schools will see an increase of 2.5% this fiscal year and it will push the amount schools receive for each student from $9,608 in 2024 to $10,050 this budget year.

In a press release Friday, Gov. Gretchen Whitmer praised the new budget, the investment in roads and bridges, and the ability of both Democrats and Republicans to work out a budget deal that she believes is good for Michigan and its residents.

“Today’s balanced, bipartisan budget is a big win for Michiganders. We brought members on both sides of the aisle together to provide tax breaks to seniors and working families, protect access to affordable health care, feed every child free meals at school, help our students succeed academically, and ensure Michiganders are safe in their communities,” Whitmer said in her release. “I ran for office in large part because I wanted to fix the damn roads. Over the past seven years, we’ve made historic progress, fixing 24,500 lane miles and 1,900 bridges. With this budget, we’re locking in a significant, bipartisan investment to fix state and local roads for decades to come, creating and protecting thousands of jobs in the process. I’m proud to deliver on my promise and look forward to driving on safer, smoother roads long after my time as governor.”

While the State avoided a shutdown, the federal government is still debating a new budget or a Continuing Resolution that would end its shutdown. The federal shutdown began on Oct.1.

Steve Schulwitz can be reached at 989-358-5689 or sschulwitz@TheAlpenaNews.com. Follow him on X @ss_alpenanews.com.