#FactsMatter, the Citizens Research Council of Michigan podcast

Guy speaks with Senior Research Director Craig Thiel about his recent issue brief looking at Michigan’s efforts to improve early literacy among low-income students, with increased funding and accountability measures. Unfortunately, while the data is still relatively new, the state’s efforts are not yielding hoped-for results.

While Michigan student test scores in several other grades and subjects have shown important (albeit gradual) improvements since the COVID-19 pandemic, the reading proficiency rates for third- and fourth-grade students continue to decline. A recent reminder of this concerning trend was brought to light when the Michigan Department of Education released the Spring 2025 statewide assessment results, showing that fewer than four in ten third graders tested proficient in reading.

The new analysis of third-grade reading results for at-risk students shows that fewer than half of all Michigan school districts have demonstrated improvement in “at-risk” student reading proficiency rates since the end of the COVID-19 pandemic. These district-level improvements, however, varied based on a district’s socioeconomic status.

“We found that 50 percent of high-poverty districts saw improvement in third grade reading proficiency rates among “at-risk” students, compared to just 37 percent of low-poverty districts,” Thiel said.

Guy and Eric Lupher delve into the weeds, discussing the pros and cons — more pros — of allowing local units of government in Michigan to have a local tax option. Michigan is one of just a few states that doesn't allow local governments to levy a local tax without state legislative approval. Most states, including those with conservative leadership such as Indiana and Ohio, provide multiple means for their local governments to raise revenue for their local communities.

One unintended consequence of the prohibition on local tax options is intense pressure on Michigan property taxes, which are among the highest in the nation. Michigan relies too heavily on property taxes for nearly all local government expenses.

"In simple terms, cities and villages should have the ability to determine how they want to operate. They can decide things like how many city council members there should be, whether they should elect or appoint the clerk, and all kinds of other details and niceties related to state and city operations. But these cities cannot choose to levy an alternative tax. They're at the mercy of the state."

The Legislative Power Grab of 1963

Guy and Eric go back to 1963, when the current Michigan constitution was enacted by the people, granting home rule powers and giving cities the authority to levy taxes beyond the property tax.

"But the ink wasn't even dry on the Constitution before the legislature jumped in and said, 'wait a second, you can't do that unless we say you can do it.'"

Was it a power grab? Or was it a statement from the Legislature that it didn't trust the city of Detroit, Flint, or other big cities to be responsible in how they levy these taxes?

"It was both a power grab and putting the foot on the local governments. Just three years before that, Detroit was the first city to levy a local income tax. It didn't need it at the time, nor did it request authority from the state to do so. So I think state legislators were a little gun-shy, right? If Detroit is going down this path, what other cities will follow?

"So yes, it was a power grab; and even back then they had the idea of limiting taxation, but it was also a way to tell local governments, ‘You’re creatures of the state and we, the state, will decide how much power you should have.'"

Guy Gordon chats with Citizens Research Council president Eric Lupher about his study examining how an admissions tax on sports and entertainment venues could help offset some of the costs of providing public services that support these venues and their visitors.

The study, commissioned by the City of Detroit’s Legislative Policy Division, focuses not only on Detroit but also on several other Michigan cities that could benefit from revenues generated by an admissions tax. These revenues could be used to provide benefits such as property tax relief and to invest in attracting future national events to Michigan.

Among the many issues the report, Evaluating Local-Option Admissions Taxes in Michigan, examines are the economic impact of events, admission tax revenue estimates, tax design and policy considerations, revenue generation from comparable cities, the advantages and disadvantages of local-option taxes, and the viability of Michigan having an admissions tax.

In a Nutshell:

Detroit is one of the few major cities in the U.S. that does not levy an entertainment/amusement/admissions tax. While this means the city is not taking advantage of a revenue source commonly used by other cities, it also means that the city can learn from the processes and experiences of others.

Depending on how an authorizing state law would define the base and the tax rates authorized, Detroit could yield upwards of $50 million from an admissions tax.

Revenue from an admissions tax could be used to enhance city services, diversify the city’s revenue streams, provide property tax relief, and put into a fund that could be used to draw major national events to the city.

“Several Michigan cities serve as regional hubs for culture, commerce, sports teams, concerts, and conventions,” said Eric Lupher, president of the Research Council, adding there are even more that host events that, relative to their size, similarly incur service costs. “Detroit stands alone as the largest city in this role, with four major professional sports teams, concert halls, theatres, and other venues that attract attendees from throughout Southeast Michigan and beyond.”

The study concludes that while a new state law would be needed to authorize local admissions taxes, the state legislature should consider allowing cities to impose an admissions tax to enhance revenue streams, help cover costs associated with hosting events, and provide property tax relief.

#FactsMatter host Guy Gordon chats with Craig Thiel, Research Director for the Citizens Research Council, who first wrote about the impact of state budget uncertainty on Michigan’s $200 million School Meals program back in June –before passage of the federal One Big Beautiful Bill Act (OBBBA). Michigan’s two-year-old School Meals program guaranteed universal access to free school breakfast and lunch to all K-12 students across the state, regardless of their income status.

The continued lack of certainty about Michigan’s K-12 budget, due to its not being passed, has already prompted at least one notable district, Okemos, to discontinue its universal school meals program, effective the first day of school. Funding for the state School Meals program, established in response to student food insecurity concerns following the COVID-19 pandemic, has been in place for the last two years. Current funding will end on September 30.

The budget passed by the Michigan House does not include dedicated funding for the universal school meals program. The Governor’s proposed budget and the Senate budget do.

The income-based federal free breakfast and lunch program will continue. However, with the federal government imposing major changes to SNAP and Medicaid through OBBBA, eligibility can change. Thiel explained:

“Right now, no one knows the specific numbers of impact, either nationally or in Michigan, but we do know the general direction: people will be losing access to Medicaid and access to SNAP. And those programs are used in Michigan schools to help identify students for free meals.”

The majority of the $200 million from Michigan’s budget covered the difference between what the federal government covers and the cost of feeding all children. For students, it also removed any stigma associated with the federal income-based food breakfast and lunch program.

Thiel stated that approximately 150,000 to 200,000 additional students participated in Michigan’s School Meals program in 2024-25, compared to 2022-23, according to Department of Education data.

“About 10 to 15 percent of K-12 students would lose access to these free meals.”

Put on your tick spray because we are headed into the weeds! Announcing “In the Weeds,” a new occasional podcast from the Citizens Research Council of Michigan Universe. As described by our host, broadcast giant Guy Gordon, In the Weeds is for “those who are a little wonkier, a little nerdier, and who want to dive deeper” into public policy issues discussed on our regular #FactsMatter podcast.

Joining Guy in the weeds for this first podcast is Research Council infrastructure analyst is Eric Paul Dennis. Eric and Guy piggyback off their conversation in the most recent #FactsMatter podcast on why so many Michigan roads are so bad, road funding dysfunction and why Michigan hasn’t been able to solve this problem for decades. They discuss the outrageous level of complexities involved in accessing the conditions and funding of Michigan’s roads and how Michigan roads stack up, apples-to-apples, against other states. They also discuss badly needed reform of Act 51, a 74-year-old “zombie” bill that is the primary funding mechanism of Michigan road program. Guy presses Eric on whether Act 51 is fair (“no”) or needs-based (“no”).

Eric also makes the case that real reform of Act 51, which could take several years and cost millions, could guarantee that all agencies currently receiving Act 15 funding are held harmless, ensuring that their current level of funding would never decrease under any new road funding formula.

Veteran newscast journalist Guy Gordon speaks with award-winning infrastructure analyst for the Citizens Research Council, Eric Paul Dennis, about his latest update on Michigan’s roads conditions and funding levels. Their conversation covered a lot of, ahem, road, including m road conditions haven’t improved; road funding slightly improved; the challenges of creating a national road funding and pavement quality index; reasons for shortfalls and inefficiencies, the challenges of reforming Michigan’s primary road funding law, Public Act 51 and so much more. Dennis created the State Road Funding Index, using several federal datasets and methods of analysis to create a first-of-its-kind method to quantify and rank each U.S. state’s road funding.

Budget Currently Being Hashed Out by Legislators to Decline by $1.1 Billion; OBBBA to Eat 40% of Expected General Fund Growth by FY2032

The Citizens Research Council today released an analysis of the One Big Beautiful Bill Act (OBBBA), the massive federal legislation signed into law earlier this month that touches nearly every corner of the federal government. The analysis focuses on the likely short- and long-term impacts of OBBBA provisions on Michigan’s budget outlook.

Key provisions of OBBBA include the extension of the vast majority of tax cuts included in the Tax Cuts and Jobs Act of 2017 and an assortment of new – albeit temporary – tax relief provisions for tipped income, overtime pay earners, and senior citizens. Under Congressional rules, the legislation needed to identify significant federal spending reductions to offset the revenue loss attributed to the new tax policies as well as increased military and immigration enforcement spending.

OBBBA also achieves federal spending reductions through shifts in cost-sharing with states – provisions that will have significant impacts on state budgets going forward.

In contrast to much that has been written about the immediacy of certain tax benefits followed by the delay in programmatic cuts, the Research Council’s analysis shows the impact to the FY2026 Michigan budget currently being deliberated by state lawmakers is immediate:

The OBBBA increases state cost-sharing within two major safety net programs – Medicaid and the Supplemental Nutrition Assistance Program. The changes could increase Michigan’s spending on these programs by over $1 billion by FY2032.

It also implements more favorable tax treatment of certain business expenditures under the federal corporate income tax – changes that will have ripple effects on Michigan’s corporate income tax collections, leading to large and immediate revenue declines ($677 million revenue reduction estimated for FY2026).

These provisions mean the state will need to cut around $1.1 billion in General Fund/General Purpose appropriations from the FY2026 Executive Budget proposal. By FY2032, OBBBA’s provisions will absorb around 40 percent of expected General Fund revenue growth.

“For years since the onset of the COVID-19 pandemic, Michigan experienced an unexpected state revenue high driven largely by federal stimulus initiatives,” said Robert Schneider, senior research associate for state affairs and lead author of the report. “Even before OBBBA, it was evident that those days were coming to an end and state revenue growth was returning to pre-COVID trends. With the enactment of the OBBBA, Michigan now faces an added budget challenge that will be particularly severe over the next few budget cycles. State lawmakers should get to work on developing a budget plan that considers these new realities.”

As policymakers in Washington debate major legislation that, as written, would significantly reduce federal spending on Medicaid, Citizens Research Council released a brief primer on Medicaid in Michigan and the impact of those proposed cuts.

Research Council Health Policy Associate Karley Abramson, the author of the paper, discusses the human and economic impacts of the proposed cuts with Research Council President, Eric Lupher. Senior Research Associate for State Affairs Bob Schneider joined the conversation with important context about the effect of the proposed cuts on Michigan’s budget, likely to experience a loss of at least $2 billion per year if the bill passes as is.

“As a matter of policy, Medicaid is relatively complicated, so it is not always easy to understand how a change in the law might impact the actual delivery of health care on the ground,” said Abramson. “If you are not familiar with how Medicaid eligibility and funding work, you would not necessarily realize how dramatically the proposed legislation could impact people and health care providers in the state.”

Medicaid provides health insurance coverage to a significant portion of Michigan’s residents (~23 percent) and is a vital component of the payment mix that health care providers rely on. Medicaid has taken on a larger role in Michigan over the last two decades, with spikes in enrollment during periods of economic downturns (2009 Great Recession and 2021 COVID-19) and the program’s 2014 expansion under the Affordable Care Act.

“We want to help establish the public understanding of how Medicaid works,” said Eric Lupher, president of the Citizens Research Council of Michigan. “Medicaid has such a large impact on the state, both as a share of the state budget and in terms of how many people have health insurance through the program.”

If federal legislation is enacted with substantial cuts to Medicaid, states will be left to respond to problems on two related fronts: the impact on people losing care and the impact on those providing care. Cuts to Medicaid will increase the uninsured population by at least 200,000 residents who will be impacted by the effects of delayed care and increased financial hardship.

On the provider side, the proposed Medicaid cuts may imperil local hospitals, particularly in rural areas, as well as other types of providers. If Medicaid spending is reduced substantially, some rural providers are likely to become unviable, which will not only impact those losing Medicaid coverage but also affect people living in those areas who have secure, private coverage.

Policymakers will face difficult choices as the state is, necessitating cuts to the program, reductions elsewhere, or new revenue sources – none of which are attractive options.

Happy CREC Day! Catch up quickly with Research Council Director Craig Thiel and Senior Research Associate for State Affairs Bob Schneider as they take a few minutes to highlight key takeaways from Michigan's Consensus Revenue Estimating Conference (CREC), held Friday, May 16.

Detroit News politics editor and columnist Chad Livengood sits down with Citizen Research Council’s infrastructure analyst Eric Paul Dennis, PE, discussing the Research Council’s most recently released, 86-page paper: "Data-Driven Assessment of Michigan’s Road Program" which makes the case that Michigan legislators should overhaul the way the state divvies up money for road improvements.

The report was released as there is currently a push by state leaders to find billions of dollars in additional infrastructure funding.

Among other recommendations, it describes Michigan’s primary road funding law, known as Public Act 51 of 1951, as "a decades-long failure."

"The bottom line is that PA 51 is obsolete," the report said. "Increasing Michigan’s road funding without fundamental reform to how it is spent would be a disservice to citizens of the state."

The Detroit News coverage of the research.