LANSING, Mich. -- A months-long standoff over state work project funding ended Friday night when the Michigan House of Representatives reached a settlement with 31 state departments and their department heads, allowing $370 million from the original $645 million in disputed spending to lapse into state funds rather than be distributed to the intended recipients.
The settlement resolves legal disputes that arose after the Republican-controlled House used a rarely invoked provision of the Management and Budget Act to disapprove nearly $645 million in work project spending in December. The action, which drew criticism from Democrats and some of the speaker's own party members, had set off a chain of legal challenges that eventually produced an opinion from Attorney General Dana Nessel declaring the vote unconstitutional.
How the dispute began
The controversy started on Dec. 10, when the House Appropriations Committee voted along party lines to disapprove $644.9 million in unspent money from the Fiscal Year 2025 budget that the Whitmer administration had designated as multi-year work projects.
House Speaker Matt Hall, R-Richland Township, and Appropriations Committee Chair Ann Bollin, R-Brighton Township, celebrated the vote in a press conference, framing it as a step toward eliminating what Hall called "waste, fraud and abuse" in state spending.
"Today in one swoop, we saw the House Appropriations Committee eliminate hundreds of more millions of dollars in waste, fraud and abuse," Hall said. "This is my favorite Michigan law, because they came up with a law that said one chamber, through their appropriations committee, can cut this waste."
Bollin and Hall argued the work projects represented a "slush fund" scheme that hid earmarks in the budget. The State Budget Office had recommended $2.7 billion in work projects, which Hall had called a "slush fund" that buried spending in the budget.
Democratic backlash and legal challenge
Democrats pushed back forcefully, arguing the cuts would devastate ongoing projects and community organizations that had already been promised funding. Senate Appropriations Committee Chair Sarah Anthony, D-Lansing, held hearings at which leaders of nonprofits and local government entities testified that the House had cut funding for efforts that were well underway.
On Dec. 16, Anthony sought an opinion from Attorney General Nessel on whether the House's action violated the Michigan Constitution. Nessel's office determined on Jan. 7 that the vote was unconstitutional, finding it violated separation of powers principles by effectively creating a "legislative committee veto" that bypassed the bicameral legislative process required by the Constitution.
Nessel's opinion restored the funding in the short term, since Attorney General opinions are binding on state government agencies unless a court rules otherwise. House Speaker Hall had promised to challenge the ruling in court.
The settlement
Rather than proceed with full litigation, the House and the 31 affected departments reached a settlement Friday night. Under the terms, $370 million from the original $645 million in disputed work project spending will lapse into state general funds. The remaining approximately $275 million appears to have been resolved through other means, including projects that were already underway or where the state had already entered into binding contracts.
Gov. Whitmer's office had earlier sent letters to contractors informing them that the State Budget Office was still reviewing existing contracts, obligations and encumbrances, and was awaiting a legal opinion from Nessel's office before taking further action.
"Many of the affected projects are already underway and directly impact Michiganders' ability to access good-paying jobs, quality, affordable health care, public safety services, reliable infrastructure, and other critical services," Whitmer wrote in a letter to affected contractors.
Broader implications
The dispute exposed a structural weakness in Michigan's budget process. A Citizens Research Council of Michigan analysis noted that the Attorney General's opinion, by declaring the single committee veto unconstitutional, effectively strips the legislature of any direct oversight over the designation of work projects, giving the State Budget Director unilateral authority to carry forward any current year appropriation.
"Regardless of your opinion on the specifics of the House's action, one thing remains clear: the AG opinion effectively strips away all direct legislative oversight over the designation of work projects," the CRC analysis stated. "And this lack of a legislative role in approving work project designations would appear to create another 'separation of powers' issue that is at least as serious, if not worse."
The settlement provides closure to one of the most contentious budget disputes in recent years, but it also sets up a new question for the Legislature: how to re-establish a constitutional process for work project oversight before the next budget cycle.
The dispute also arrives at a particularly sensitive moment, with the November midterm elections on the horizon and control of both chambers of the Michigan Legislature up for grabs. The fight over work projects underscored the deepening partisan divide in Lansing over the role of the appropriations process and the proper balance of power between the executive and legislative branches.