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Gov. Gretchen Whitmer has signed Michigan’s new state budget, ending a months-long stalemate in Lansing and clearing the way for nearly $2 billion in new funding to repair highways, bridges, and local roads across the state.
The spending plan, signed Tuesday, covers state government and education through September 2026. It’s Whitmer’s first budget under a divided Legislature with Republicans controlling the House and Democrats leading the Senate, and includes bipartisan compromises on taxes, education, and infrastructure.
A major piece of the deal targets one of Whitmer’s biggest campaign promises: “Fix the damn roads.”
Beginning Jan. 1, 2026, Michigan will eliminate the sales tax on motor fuel and replace it with a higher gas and diesel tax. That shift ensures every cent drivers pay at the pump goes directly toward transportation funding, an estimated $1.05 billion boost in the first full year.
“We wanted to make sure every penny in taxes that drivers pay at the pump goes straight into roads,” said Jen Flood, director of the Michigan State Budget Office. “This plan gives us stable, long-term funding to actually rebuild roads the right way, not just patch them.”
The budget also introduces a new 24% wholesale tax on cannabis, expected to generate around $420 million each year, much of it is also earmarked for transportation projects.
Flood said the funding mix gives Michigan flexibility to invest in major road reconstruction while still maintaining local and transit systems.
“Drivers have been dealing with orange barrels all summer, and we’re not taking our foot off the gas,” Flood said.
State officials said the goal is simple: Smoother rides, safer roads, and a long-term plan to keep Michigan’s infrastructure moving in the right direction.