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June 27 (UPI) — The Michigan legislature is nearing its July 1 deadline to approve its budget bills but the state House and Senate are at odds over anti-transgender and diversity, equity and inclusion provisions.

Earlier this month, the Republican majority in the Michigan House of Representatives passed budget bills that would penalize schools, universities and community colleges for allowing transgender girls and women to participate in girls’ and women’s sports.

Democrats, with a slim majority in the Senate, passed a different version of a budget proposal late last month. It does not include any such provisions or references to DEI initiatives and girls’ and women’s sports.

Michigan’s school aid budget bill will establish how much state funding public schools and institutions of higher learning will receive in the fiscal year beginning on Oct. 1. Since the two chambers passed different versions of the bill, they must find a compromise to send a final version to Gov. Gretchen Whitmer‘s desk.

“Ultimately, education funding bills need to be passed,” Jonathan Hanson, lecturer in public policy at the Gerald R. Ford School of Public Policy at the University of Michigan, told UPI.

“They have to work out some kind of compromise. How do you meet in the middle with respect to some of this language? It’s not immediately obvious how to compromise on those things.”

The house budget proposes withholding 20% of a school district’s discretionary funding if it is in violation of prohibitions on transgender athletes participating in female sports, having curriculum that “includes race or gender stereotyping” or funding “DEI initiatives.”

The same prohibitions apply to public universities and community colleges. Institutions in violation of these provisions could have 5% of monthly operations installments withheld by the state budget director.

The proposals cite President Donald Trump‘s executive orders “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” and “Ending Radical and Wasteful Government DEI Programs and Preferencing” as supporting federal regulations.

Less than 1% of adults in the United States identify as transgender. A smaller fraction of a percent of minors identify as transgender.

Twenty-seven states have passed laws banning or restricting transgender athletes from participating in the sports that are consistent with their gender identity.

In the 2024-2025 school year, about 175,000 Michigan high school athletes participated in sports, according to the Michigan High School Athletic Association. Two transgender students held waivers to participate and both participated only in fall sports.

“It brings up a lot of ‘whys,'” Jay Kaplan, staff attorney with the ACLU of Michigan’s LGBTQ+ Project, told UPI. “Why this inordinate amount of focus? Why does this seem to be a priority?”

Kaplan explained that the athletic association’s waiver system is already a mechanism meant to address concerns people may have regarding student-athlete participation.

“These budgetary provisions, they can be challenged as discriminatory,” Kaplan said. “Our message to these legislators is, ‘Do your job.’ What’s your plan for affordable housing? What’s your plan to bring more businesses to the state and improve the economy?”

The Republican sponsors of the proposals in the house, Rep. Tim Kelly and Rep. Gregory Markkanen, did not respond to requests for comment.

“Our local schools have been asking for the freedom to use state funding how they please, free of overregulation and burdensome government mandates,” Rep. Joseph Pavlov, R-District 64, said in a statement. “Now, thanks to the new budget plan House Republicans have put together, schools are getting exactly that in record amounts of funding. This will go a long way in turning around the decline in educational performance our state has seen for a long time now.”

Kaplan said the political makeup of the legislature and the governor’s office offers some assurance that provisions like the anti-trans house school budget proposal will fail in Michigan. Next year’s midterm elections will be crucial in determining if that level of assurance continues.

“We’re fortunate in Michigan,” Kaplan said. “We’ve done a lot of hard work. The LGBTQ community and allies, we’ve all worked together. Michigan has some very good policies for the LGBTQ. We have explicit civil rights for the LGBTQ. If anyone is singled out, we’re going to challenge it.”

Democrats have a 19 to 18 majority in the Senate with one seat — Senate District 35 — vacant. Whitmer, a Democrat, has the authority to call a special election for the vacant Senate seat, which she has not done.

Republicans took a 58 to 52 majority in the House in the 2024 election. Democrats held a majority in the House chamber since 2023.

Michigan will elect a new governor in 2026 as Whitmer will reach her term limit.

“What we’re seeing from the Republican side is the incorporation of national Republican policy coming from the White House regarding things like DEI initiatives and trans athletes,” Hanson said. “The fact that this is entering into state budget policies and money is tied to focusing on a minority group that is really small, it makes it seem like they’re focusing on things that aren’t really problems,”

So-called Hollywood ambassadors Jon Voight and Sylvester Stallone joined with a coalition of entertainment industry groups for a letter delivered this week to President Trump urging him to support tax measures and a federal tax incentive that would help bring film and TV production back to the U.S.

The letter is signed by Voight, Stallone, all the major Hollywood unions and trade groups such as the Motion Picture Assn., the Producers Guild of America and the Independent Film & Television Alliance, indicating widespread support from the entertainment industry.

“Returning more production to the United States will require a national approach and broad-based policy solutions … as well as longer term initiatives such as implementing a federal film and television tax incentive,” the letter states.

In the letter, which was obtained by The Times, the groups say they support Trump’s proposal to create a new 15% corporate tax rate for domestic manufacturing activities that would use a provision from the old Section 199 of the federal tax code as a model.

Under the previous Section 199, which expired in 2017, film and TV productions that were made in the U.S. qualified as domestic manufacturing and were eligible for that tax deduction, the letter states.

The letter also asks Trump to extend Section 181 of the federal tax code and increase the caps on tax-deductible qualified film and TV production expenditures, as well as reinstating the ability to carry back losses, which the groups say would give production companies more financial stability.

The tax measures — particularly Sections 199 and 181 — are issues the entertainment industry has long advocated for, according to two people familiar with the matter who were not authorized to comment publicly. The letter itself came together over the weekend, they said. It was intended to present different measures that shared the same goal of increasing domestic production, one person said.

“Everything we can do to help producers mange their budgets is important,” said Susan Sprung, chief executive of the Producers Guild of America. “In an ideal world, we’d want a federal tax incentive, in addition to these tax provisions, but we want to advocate to make it as easy as possible to produce in the United States and make it as cost-effective as possible.”

Last week, Trump threw the entertainment industry into chaos after initially suggesting a 100% tariff on films made in other countries. Then, California Gov. Gavin Newsom jumped into the mix, calling for a $7.5-billion federal tax incentive to keep more productions in the U.S.

The proposals on the federal level come as states are upping their own film and TV tax credits to better compete against each other and other countries. Late last week, New York Gov. Kathy Hochul signed the state’s budget, which increased the cap for its film tax credit to $800 million a year, up from $700 million.

The expanded tax incentive program allocates $100 million for independent studios and gives additional incentives to companies that produce two or more projects in New York and commit to at least $100 million in qualified spending.

The program was also extended through 2036, which could help attract TV producers, who often want to know that their filming location is committed if they’re embarking on a series.

Production in New York has been slow, and the state needed this boost, said Michael Hackman, chief executive of Hackman Capital Partners, which owns two film and TV studio properties in the state, as well as several facilities in California. The increase from New York could also push California to increase its own film and TV tax credit program.

Last year, Newsom called to increase the annual amount allocated to California‘s film and TV tax credit program from $330 million to $750 million.

Two bills are currently going through the state legislature that would expand California’s incentive, including increasing the tax credit to cover up to 35% of qualified expenditures (or 40% in areas outside the Greater Los Angeles region), as well as expanding the types of productions that would be eligible for an incentive.

“We have the best infrastructure, the best talent, we have everything going for us,” Hackman said. “So if our state legislature can get more competitive with our tax credits, I think more productions will stay. But if they don’t, this will result in more productions continuing to leave the state and going to New York and to other locations.”