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What Businesses Need to Know

As the new fiscal year began on October 1, both Michigan and the federal government found themselves facing budget hurdles. While Michigan avoided a shutdown with a short-term continuation budget, Washington entered a partial federal shutdown. For businesses and community leaders, these developments carry important implications.

Michigan’s Continuation Budget: Funding Through October 8

For the first time in 16 years, Michigan’s Legislature did not finalize a full budget before the start of the fiscal year. In the early hours of October 1, lawmakers approved an eight-day continuation budget that funds state operations through October 8.

The temporary measure provides about $1.57 billion in total funding, including $272 million from the General Fund, to keep state departments running while the full FY 2025-26 budget is finalized. Governor Whitmer is expected to sign the continuation bill, ensuring government operations remain in place without disruption.

Why It Matters

  • Business Stability – The continuation prevents service interruptions in licensing, permitting, and state programs that businesses depend on.
  • Short Timeline – This measure buys only one week. Lawmakers must act quickly to pass the final budget.
  • Key Items to Watch – The full budget deal is expected to include major investments in roads (nearly $2 billion), preservation of universal school meals, and revisions to earmarks and enhancement grants under new transparency rules.

Historic Context

Continuation budgets are rare but not unprecedented in Michigan:

  • In 2009, the Legislature approved a continuation at 1:47 a.m. to fund state operations through October 31. It provided one-twelfth of the General Fund dollars tied to the FY 2010 appropriations targets. Gov. Jennifer Granholm signed it less than an hour later.
  • In 2007, a continuation budget was passed just after 4 a.m., covering operations through October 31 at one-twelfth of the prior year’s spending. Gov. Granholm signed that bill at 5:10 a.m.

This year’s continuation underscores that, while rare, stopgap measures are a tool lawmakers have turned to in times of budget gridlock.

Federal Shutdown: Partial Closure of Government

In contrast, the federal government entered a partial shutdown at 12:01 a.m. on October 1 after Congress failed to pass appropriations bills or a continuing resolution for FY 2026.

What’s Affected

  • Federal Workforce – Hundreds of thousands of employees are furloughed, while “essential” workers, including air traffic controllers and TSA agents, remain on duty without immediate pay.
  • Agencies & Services – Operations at the Department of Education, Commerce, NIH, and CDC are heavily curtailed. FAA furloughs are expected to affect over 11,000 employees, raising concerns about delays in aviation and training pipelines.
  • Economic Ripple – Federal contracts, grants, and reimbursement programs may face delays, creating uncertainty for states, businesses, and local governments that rely on federal dollars.

Why Businesses Should Pay Attention

  • Federal–State Connection – Michigan often relies on federal match dollars for infrastructure, health, and workforce programs. Delays at the federal level could ripple into state and local budgets.
  • Employee & Community Impact – Regions with a significant federal presence may see furloughed employees cut spending temporarily, affecting local economies.
  • Contract Uncertainty – Businesses working with federal agencies should prepare for potential delays in payments or project approvals.

Chamber Perspective

At both the state and federal level, the message is clear: uncertainty around budgets creates challenges for businesses and communities. Michigan has avoided disruption for now, but the October 8 deadline looms. Meanwhile, the federal shutdown adds additional unpredictability.

Our Chamber will continue to monitor developments in Lansing and Washington and share timely updates with members. We encourage business leaders to assess how funding delays could affect operations and to stay engaged in the process.

✅ Bottom Line: Michigan’s continuation budget prevents a shutdown—for now—but the work is far from finished. The federal shutdown, meanwhile, is already impacting agencies, employees, and contractors. Stability in government funding remains essential to keeping Michigan competitive and moving forward.