In 1978, Michigan voters approved the "Headlee" tax limitation amendments to the Michigan Constitution of 1963 (Article IX, Sections 24 - 34). Article IX, Section 26 establishes an overall limitation on total state spending each fiscal year. The "Headlee" Amendment also creates two significant limitations on the fiscal relationship between state and local units of government.

Article IX, Section 29 prohibits the state from reducing its share of existing state-mandated programs and requires the state to reimburse local governmental units for any new state-mandated programs.

Article IX, Section 30 prohibits the state from reducing the proportion of total state spending paid to all units of local government as a group below the proportion in effect in fiscal year 1979.