(Source: MIRS.news, Published 01/12/2024) The state’s revenue numbers aren’t dropping jaws this time around, but projections released Friday have Michigan’s General Fund and School Aid Fund increasing $417.9 million above last May’s projections for the current fiscal year and $146.9 million for Fiscal Year (FY) 2025.
Back in May, School Aid and General Fund revenue for FY '24 was projected to be $31.1 billion. Friday the Department of Treasury, the Senate Fiscal Agency and the House Fiscal Agency bumped that number up to $31.5 billion.
State Treasurer Rachael Eubanks said, “Michigan’s economy and revenues are strong and stable, laying the groundwork for the upcoming budget process.”
This fiscal year, projections are still 0.9 percent lower than the $31.8 billion that was expected last June, but revenues in 2025 are expected to be 2.5 percent greater. In total, the state is expecting $31.54 billion in 2024, and $32.33 billion in Fiscal Year 2025, according to numbers released during Friday’s Consensus Revenue Estimating Conference (CREC).
The projections, approved by Eubanks, Senate Fiscal Agency Director Kathryn SUMMERS, House Fiscal Agency Director Mary Ann Cleary and State Budget Director Jen Flood, include 2023 policy implementation changes. Friday's conference marked the first time in Michigan history in which all four CREC participants (including State Budget Director Jen Flood) are women. The two legislative appropriations chairs are also women.
The Senate also revised its year-end balances, published in its Economic Outlook and Budget Review on Jan. 5.
A memo from Summers projects a $1.4 billion GF/GP year-end balance, or surplus, and a $525.3 million balance in the School Aid Fund.
An additional memo from the Senate Fiscal Agency's Chief Economist David Zin and Senior Fiscal Analyst Ryan Bergan included information that total state revenue will remain well below the revenue limit, from $11.9 billion in Fiscal Year (FY) 2022-23 to $14.2 billion in Fiscal Year (FY) 2025-26, reaching 24.3% of the revenue limit.
This fiscal year, the state’s General Fund is expected to drop 2.6 percent ($368.6 million) from the projection made when crafting last year’s budget, but the School Aid Fund will increase 0.5% ($87.6 million) from predictions made back in June.
In 2025, General Fund numbers are up 3.1 percent from initial projections, and School Aid Fund revenue is up 2 percent.
The 2024 General Fund is expected to come in at $13.60 billion, a $359.1 million change from May to January. The School Aid Fund is projected to have $17.95 billion, a $58.8 million increase from May to January.
In 2025, the General Fund will have $14.02 billion, a $105.8 million increase from May to January, and the School Aid Fund will hold $18.31 billion, a $41.1 million increase from May to January.
House Speaker Joe Tate (D-Detroit) said the conference “confirmed that the work done by the Democratic majority has kept our economy moving in the right direction.
“We crafted a responsible plan for Michigan that allowed us to put money back into the hands of working families and return thousands of hard-earned dollars to older adults without sacrificing programs and services that benefit millions of residents,” he said.
The consensus was made up of three projections from the Treasury, Senate Fiscal Agency and House Fiscal Agency. All three indicated a decrease in 2024 from the numbers estimated in 2023, and increases in 2025 and 2026.
The CREC numbers also included initial revenue estimated for Fiscal Year 2026, with $14.7 billion in the General Fund, $18.7 billion in the School Aid Fund and $33.41 billion overall.
House Appropriations Minority Vice Chair Sarah L. Lightner (R-Springport) said the latest numbers show there’s room in the budget for a permanent rollback of the state income tax to 4.05%.
“The latest revenue estimates clearly show that there’s absolutely no reason to impose higher taxes on the people of Michigan,” Lightner said.
“Any increases Michiganders have seen in their wages over the last couple of years are still being eaten up by inflation, and families continue to feel the pinch every time they step into the grocery store,” she added. “Even the governor has acknowledged the need to help families struggling with inflation. Let’s support that sentiment, cut the income tax rate back to 4.05% and let families keep more of their paychecks.
With the focus soon turning to the state’s upcoming budget process, Tate did not opine on the state income tax, and said the focus for this year “will again be on maximizing dollars to the benefit of our constituents.
“Michiganders work hard, and they expect government to work even harder to prioritize their needs and improve our state,” he said. “I look forward to working with my colleagues in the House and Senate, and with Governor Whitmer, to continue to advance our goal of putting people first.”
Anthony added that: “while state revenues may fluctuate, our values and priorities will remain constant.
“Our Democratic majorities will continue to budget with integrity, transparency and equity, and continue to invest in what the people of Michigan — from kids to families to seniors — need and expect from their leaders,” she said. “Today is the official start of the budget process, and I am looking forward to getting to work on our next state budget in the weeks and months ahead.”
Senate Minority Leader Aric Nesbitt (R-Lawton) said as the Legislature moves forward in the budget process, “it is important that we focus our efforts on responsible spending policies, including needed investments in education, public safety and transformational infrastructure, as well as putting money back in the pockets of taxpayers.
“We also know Michiganders cannot afford to continue shoveling millions into pet projects,” he said, “unsustainable government bureaucracy and global corporate welfare like Democrats did in 2023.”
When asked about the possibility of and need for new programs to help Michiganders deal with inflation, Flood said “I don't want to get ahead of the official budget release, but I'll say for the administration, continuing to lower costs remains a priority.”
In other news, the state was off by only 1,900 students for Fiscal Year 2023-24 with its proposed estimated pupil memberships from May to January.
May estimates put the state at 1.3936 million students for 2023 and 2024 (1.2431 million in local districts and 150,500 in public school academies. The updated January numbers are 1.3917 million students (1.24 million in local districts and 151,700 in public school academies).
Enrollment numbers are expected to decrease slightly in Fiscal Years 2024-25 and 2025-26, with an estimated 1.3859 million students in 2024-25 and 1.3796 million in 2025-26.
