Michigan House and Whitmer Administration Pause Legal Battle Over $645 Million in Budget Cuts as Settlement Talks Begin

The Whitmer administration and Michigan House Republicans have agreed to put a legal fight over GOP-ordered budget cuts on hold because a settlement may be in sight.

In a filing last week with the Michigan Court of Claims, the House and the Michigan Department of Technology, Management and Budget jointly informed the judge that the parties have engaged in preliminary but fruitful discussions about the possibility of resolving this dispute.

Last year, Republicans on the state House Appropriations Committee used a unique authority to block $645 million in budget items that were already approved and signed into law. Michigan Attorney General Dana Nessel, a Democrat, held in a formal opinion that the law used by the GOP is unconstitutional because it violates the separation of powers clause of the state constitution.

Republicans are challenging that opinion and filed a lawsuit to stop the spending. Court of Claims Judge Michael Gadola ordered the State Budget Office to put a halt to spending more funds while the case was being sorted out.

At this point, it appears about $370 million in community grants remains at stake because it is either unspent or not legally committed. The remaining funds are for projects in districts represented by both Democrats and Republicans, which may be a motivating factor.

This dispute is playing out as the governor and the Legislature are working on the final budget of her administration.

"We're hoping to get back to some standard operating procedure," said a Whitmer administration official familiar with the process.

The legal battle emerged after House Appropriations Chair Matt Hall announced the committee had stripped $645 million in funding from dozens of multiyear projects without approval from the Michigan Senate or governor. House Republicans argued the move was necessary to cut waste and overreach.

Attorney General Nessel had previously ruled that the law House Republicans used to make the cuts was unconstitutional, saying it violated the separation of powers by allowing one legislative body to override the other.

The state had already faced preliminary injunctions from Judge Gadola ordering the state budget office to freeze spending on the disputed projects while the legal dispute continued.

Now with settlement talks underway, both sides appear to be working toward a resolution that would allow the $370 million in community grants to move forward while addressing concerns about the constitutional authority used to make the cuts.

The negotiations come as Michigan officials work to finalize the governor's budget proposal, which includes various spending initiatives and policy priorities for the state.