Michigan’s State Treasurer Rachael Eubanks, State Budget Director Chris Kolb, Senate Fiscal Agency Director Chris Harkins, and House Fiscal Agency Director Mary Ann Cleary last Friday reached consensus on economic and revenue figures for the remainder of Fiscal Year (FY) 2020 and for the upcoming 2021 and 2022 fiscal years.
Following last Friday’s Consensus Revenue Estimating Conference, net FY 2020 General Fund-General Purpose (GF-GP) revenue is projected at $11.0 billion, up $235.2 million from estimates agreed to in May. Net FY 2020 School Aid Fund (SAF) revenue is now estimated at $13.9 billion, up $85.7 million from May.
“Michigan’s economy continues to grow at a modest rate,” State Treasurer Rachael Eubanks said. “While today’s agreement does show a slight increase in both the School Aid Fund and General Fund, revenues overall remain relatively flat. The state doesn’t have a lot of extra revenue coming into the Fiscal Year 2021 budget.”
Net GF-GP revenue for the FY 2021 — which begins Oct. 1 — is now forecasted at $11.2 billion, up $274.0 million from May’s estimate, while the FY 2021 SAF revenue estimate has been revised up by $138.0 million to an estimated $14.3 billion.
In FY 2022, GF-GP revenue is estimated at $11.5 billion and SAF revenue is estimated at $14.6 billion. These are the initial revenue estimates for FY 2022.
The modest increases in forecasted revenue from the May 2019 Consensus reflect the slow and steady economic growth of the past year and projected in the coming years in Michigan.
“We inherited some significant budget challenges from the past that are now having a direct impact on the Fiscal Year 2021 budget,” State Budget Director Chris Kolb said. “With unemployment at
4 percent and economists forecasting continued growth, the budget problems we face today are not the result of an economic downturn, but rather a result of past decisions that have kept the state’s General Fund flat for 20 years. The pressures on the General Fund are significant.”
The revenue estimates are based on the most recent economic projections and forecasting models. As with any economic and revenue forecasts, there are potential risks to the estimates agreed to last Friday, including national economic trends, international economic issues, and a significant change in oil and gasoline prices.
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