Michigan's $9 Billion Surplus Spending Raises Questions About West Michigan Services

Where Did Michigan's Money Go?

Michigan lawmakers had $9 billion in expected surplus funds at their disposal in January 2023, according to a new analysis from the Mackinac Center for Public Policy. Many Michiganders today wonder what happened to that money, and whether the spending was worth it.

The short answer is that lawmakers spent it all. The better question is whether the spending was worth it for families in West Michigan communities from Grand Rapids to Muskegon.

Education Spending Doubles, But Quality Lags

Schools were the biggest beneficiaries of Michigan's surplus. The school aid budget increased from $13.0 billion before the pandemic to $18.9 billion in the current budget, representing a $5.8 billion gain.

That increase equals 40 percent of what the state collects from the income tax. Between state, local, and federal sources, schools now receive an average of $23,867 per student.

Yet despite the massive increase in funding, the quality of public education in Michigan still falls behind that of other states, according to the Mackinac Center analysis.

Medicaid Gets Massive Boost

Medicaid received the next biggest increase in annual spending. The federal government decided not to enforce eligibility rules during the pandemic, and the number of recipients in Michigan increased from 2.5 million to 3.2 million.

Enrollment has since returned to 2.5 million people, but the financial impact remains. Total spending at the Department of Health and Human Services increased from $26.5 billion in 2018-19 to $39.3 billion today.

The federal government pays the bulk of Medicaid costs, and total state spending on the department increased from $7.5 billion to $11.4 billion, a $3.8 billion increase.

This means West Michigan hospitals and healthcare providers are managing significantly higher caseloads while dealing with federal funding uncertainties that threaten their financial stability.

Roads Get Historic Funding

Roads were the next biggest priority, and the transportation budget increased from $3.5 billion in 2018-19 to $5.4 billion in the current budget.

Part of the extra spending comes from a marijuana tax hike, but 80 percent of the money came without tax hikes. Road funding is at historic levels and should be sufficient to repair roads faster than they deteriorate.

Motorists may see long-term improvements in road quality after all the increases in spending on repairs, particularly along major routes like I-94 and I-196 that connect West Michigan communities.

Higher Education and State Police Get Smaller Increases

The state spends $788 million more on higher education, mostly on new scholarship programs. The state also spends $220 million more on the state police, and $215 million more on the Department of Environment, Great Lakes and Energy.

Corporate Welfare and Pork Spending Explode

Lawmakers have also spent on various expensive but nonrecurring priorities. They authorized $6.8 billion in selective business subsidies since 2020 and $4.4 billion on pork projects, or what some call legislatively directed spending.

When Democrats took majorities in both chambers of the Legislature in 2023, corporate welfare was their top priority. They authorized $4.7 billion in selective subsidies over their two years of control.

These authorizations included money for electric vehicle plants that got shifted into other things and site preparation for a semiconductor plant that was never built.

Lawmakers may have learned from their mistakes and authorized no new business subsidies in 2025. Legislators are now spending less on pork projects, or legislatively directed spending. This type of spending ballooned to $1.8 billion in fiscal year 2023-24, but it has since come down to $360 million in the current fiscal year.

Even so, $360 million is roughly what it takes to operate a fifth of the state's community colleges for a year.

The Bottom Line for West Michigan

The Mackinac Center analysis notes that motorists may see long-term improvements in road quality after all the increases in spending on repairs. But other priorities don't seem to have paid off.

Lawmakers spend more on education, but the quality of public education in Michigan still falls behind that of other states. The state also spends much more on Medicaid to chase federal matching funds. Expensive business subsidies have not paid off. And there's been an explosion of pork spending that is being reassessed.

It's a paltry return in public services for spending so much more money.

West Michigan families are paying the price through higher taxes, increased insurance costs, and uncertain public services. As the state continues to grapple with budget priorities, the question remains: is Michigan spending enough, or is it spending the wrong things?