State economists in Michigan have delivered their final economic forecast for the year, indicating that tax revenue is stabilizing after years of record surpluses driven by pandemic-related funds. The projected tax revenue for the upcoming fiscal year is $31.7 billion, with a slight increase from January’s estimate. Revenues are expected to gradually grow and reach $32.4 billion for the following fiscal year, with a further increase of about 3.2% anticipated.
During a revenue-estimating conference held at the state Capitol, officials from the Department of Treasury, Senate Fiscal Agency, and House Fiscal Agency discussed the state’s economic outlook and tax revenue projections. State Treasurer Rachael Eubanks highlighted Michigan’s strong and stable revenue and economic foundation, noting the increasing job opportunities and labor participation. This positive economic news is seen as a promising sign for the state’s future budget planning and fiscal stability.
The surplus generated by pandemic-related funds in recent years has resulted in record-setting surpluses for Michigan, including a $9 billion surplus in 2022. However, state budgets are expected to level out in the coming years, with surpluses projected to remain below $1 billion. Governor Gretchen Whitmer proposed an $80.7 billion budget with increased education spending, including funding for free community college for high school graduates and free preschool for 4-year-olds. The Michigan House and Senate are working on passing their own budgets, aiming to align with the governor’s requests.
There have been disagreements among Democratic lawmakers on how to implement Governor Whitmer’s educational proposals, while Republicans have criticized the budget for its size, labeling it as “wasteful spending.” Despite Democratic majorities in both chambers and control of the governor’s office, they will need Republican support for the budget to be approved by two-thirds of lawmakers in the Senate for immediate effect. As the new fiscal year begins on October 1, lawmakers will need to come to an agreement on the budget over the next month to ensure proper funding and allocation of resources.
Overall, Michigan’s economy is showing signs of stability and growth, with tax revenue projections indicating a positive trend for the state’s financial future. The upcoming fiscal year is expected to see continued growth in revenue, providing opportunities for increased investment in education and other essential services. Lawmakers are working towards finalizing the state budget ahead of the July 1 deadline, using the economic forecast as a guide for allocating funds and planning for the state’s future economic development. As Michigan continues its recovery from the pandemic, the outlook for the state’s economy appears promising, laying a strong foundation for continued growth and prosperity.
