Late last week, Michigan lawmakers finalized the FY 2026 budget, marking the conclusion of a notably long and contentious process as the split legislature worked to align on their priorities. For the clean mobility sector, the outcome was disappointing.
Despite early signs of support for continued investment in clean transportation signaled by their inclusion in the Governor’s Executive Budget Recommendation and the Senate Proposal, many of Clean Fuels Michigan’s budget priorities were not included in the final budget. The final budget, which was negotiated between leaders in the House, Senate, and the Executive Office, did not include funding for:
- $1 million for the State Fleet Transition to Zero-Emission Vehicles
- $10 million for EV charging and clean fleet vehicles
The result is a missed opportunity for Michigan to reaffirm its leadership in the next generation of mobility innovation and signal to the market that the state remains committed to competing in a rapidly evolving mobility landscape.
“The mobility sector remains Michigan’s largest and most important economic engine, so it’s disappointing that clean fuels were overlooked in this budget,” Jane McCurry, Executive Director of Clean Fuels Michigan, said.
“We thank Senator Irwin for raising the issue of unfair EV taxes on the Senate floor and Senator Singh for introducing SB 593 to address this inequity. We look forward to continuing our work with the legislature to ensure Michigan’s EV and alternative fuels industries are supported by strong, future-oriented policies that reflect the economic benefits they deliver to our state.”
A Missed Signal at a Critical Time
Michigan’s clean mobility sector represents tens of thousands of jobs across the state. But as federal incentives begin to phase down, including the recent expiration of the federal clean vehicle tax credits, businesses are looking for strong state-level leadership. The absence of critical programs to support Michigan’s clean mobility sector in the FY 2026 budget risks creating uncertainty at a time when the industry is looking for clear signals of commitment and long-term support.
Adding to the challenge, in addition to the budget, the legislature also adopted a new road funding package that failed to include a legislative fix that would have prevented an unfair increase in taxes paid by EV and plug-in hybrid drivers. As a result, beginning January 1, 2026, Michigan drivers will face the highest annual EV registration fees in the country, a significant hurdle to consumers considering making the switch to a more efficient vehicle.
The budget also eliminated annual funding for the Strategic Outreach and Attraction Reserve (SOAR) Fund, the state’s most powerful tool for attracting large-scale private investment. Created in 2021, the SOAR Fund has helped Michigan attract transformation projects in EV, Battery, and other advanced manufacturing applications, creating thousands of new jobs and reinforcing Michigan’s role as a leader in the future of mobility. While the program has faced growing scrutiny from both sides of the aisle and could have benefited from thoughtful improvements, eliminating the program outright removes one of Michigan’s strongest levers to attract new business at a time when other states are aggressively pursuing these investments.
Together, these decisions create higher costs for consumers and a weaker policy environment for attracting new businesses in the clean mobility industries to Michigan.
Recognizing the Wins
Passing a bipartisan budget in a split legislature is a tall order. Even in a difficult budget year for Michigan’s clean mobility sector, there were still some notable wins:.
- The Going PRO Talent Fund was funded at $31 million, supporting critical workforce development initiatives that help Michigan workers upskill and access high-demand careers, including those in advanced manufacturing and the clean mobility supply chain. Maintaining this investment sends an important message that talent remains central to Michigan’s competitiveness.
- Another forward-looking inclusion was the $7.5 million appropriation to the Michigan Department of Transportation to pilot a road user charge program. This initiative will explore sustainable alternatives to the gas tax as Michigan’s fuel mix diversifies and more vehicles rely on electricity and other alternative fuels. The program represents a practical step toward modernizing the state’s transportation infrastructure revenue model.
These inclusions, while not our top priorities, demonstrate that Michigan lawmakers can make smart, future-oriented investments with bipartisan support. We hope to use these successes to help build momentum toward achieving a greater number of our budget priorities in the next budget cycle.
The Path Forward
Michigan is a top state for EV and battery manufacturing, mobility research and development, and clean mobility jobs. Our leadership in the clean mobility sector did not happen by accident. Rather, smart investments and pragmatic policies have created a landscape that attracts businesses from across the clean mobility value chain to build technology, hire top talent, and sell their products right here in Michigan. While the FY 2026 budget may be complete, the work to strengthen Michigan’s leadership in clean mobility is far from over. Several legislative opportunities remain this fall and into the next fiscal year that could help correct course and restore confidence in Michigan’s direction:
- Fixing the EV Registration Fee: Lawmakers can act this fall to address the unfair increase to EV and plug-in hybrid taxes that will take effect in January. A simple legislative fix would restore parity, fairness, and consumer confidence in Michigan’s road funding approach.
- Sustainable Aviation Fuel (SAF) Incentives: The Senate has already passed incentives to jumpstart Michigan’s SAF market, a fast-growing opportunity in the broader clean fuels economy. The House should move swiftly to advance this legislation and position Michigan as a leader in clean aviation technology.
- Michigan Competitive Fuels Policy: Establishing a competitive fuels framework in Michigan would send a powerful market signal, reduce emissions, and spur private investment across the clean fuel supply chain.
- Preparation for the FY 2027 Budget: The next budget cycle will be Governor Whitmer’s last. This represents a pivotal opportunity to realign state investments with Michigan’s long-term economic and climate goals and ensure that clean mobility remains at the center of the state’s growth strategy.
The FY 2026 budget may have fallen short, but there is still plenty of opportunity for Michigan lawmakers to signal why Michigan is a leader in clean mobility through decisive legislative action this fall. Clean Fuels Michigan will continue engaging with lawmakers on both sides of the aisle to ensure that Michigan’s clean mobility priorities are understood, valued, and acted upon. By pursuing near-term wins this fall and shaping a strong foundation for the FY 2027 budget, we can send the right signal to industry: that Michigan is serious about building a competitive, innovative, and sustainable mobility future.