$320M In Additional Revenue For 2020, $412 Million More For Next
January 15, 2020
According to estimates agreed to Friday by officials, the state expects to see an additional $235.2 million in General Fund (GF) revenue and an additional $85.7 million in support for the School Aid Fund (SAF) for the current fiscal year (FY) 2020.
For FY 2021, officials are expecting an uptick of $274 million in GF and $138 million in SAF.
“Michigan’s economy continues to grow at a modest rate,” said state Treasurer Rachael Eubanks. “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.”
The numbers are an uptick from estimates set at the May 2019 Consensus Revenue Estimating Conference (CREC).
Friday’s CREC set the current year total GF budget at $11.01 billion with total SAF revenues set at $13.925 billion.
In total for FY 2021, officials expect $11.194 billion in GF resources and $14.3 billion in SAF resources.
Friday’s conference also set the first baseline revenue estimates for FY 2022, which would begin Oct. 1, 2021.
Officials expect the state’s GF to grow by $324 million from $11.194 billion to $11.5 billion, an increase of 2.9% over the estimated total for FY 2021.
For the FY 2022 SAF, estimates set growth of $322.6 million over the estimate Friday for FY 2021, moving the total from $14.3 billion to $14.64 billion, an increase of 2.3%.
Revenues Expected To Be $13.4 Billion Below Cap By 2022
As part of the biannual revenue conference, officials Friday also set expectations for how far below the constitutional revenue limit state revenues will be in the coming years.
The official estimate now is that for FY 2019, the state will come in $9.946 billion below the cap.
For 2020, that will increase to $11.54 billion, rising to $12.4 billion by 2021 and peaking at $13.4 billion by 2022.
The 2022 figure led Rep. Julie Brixie (D-Meridian Twp.) to seek clarification from fiscal staff members presenting the data. After hearing what goes into the calculation, Brixie asked Jim Stansell of the House Fiscal Agency about her take on the numbers.
“As I look at this, I see we could increase revenue by $13 billion, with a ‘b,’ and still be below the constitutional limits,” Brixie said.
Stansell responded, “I would agree with that statement, but I’m not advocating that we raise taxes by $13 billion. That’s not my role, or it wouldn’t be very much longer.”
Key Michigan Economic Indicators – Where The Agencies Fall
Any revenue estimates put forth by the House or Senate Fiscal Agency or Treasury rely on a handful of key Michigan economic indicators. The following are how these three agencies see the state’s economy in the coming three years.
– Light Vehicle Sales will fall between 16.7 and 16.8 million units for the current year, sliding to 16.5 to 16.6 million for 2021 and taking another modest drop in 2022 to between 16.4 and 16.5 million units.
– Michigan wage and salary employment will increase this year between 0.6% and 0.7%. For 2021 it will grow by 0.5%, falling off to between 0.2 and 0.4% for 2022.
– In total jobs, the average for the agencies is a net increase of jobs for 2019 of 24,000, an increase of 27,100 for 2020, a total of 22,300 new jobs for 2021 and 14,300 for 2022.
– Local inflation (Detroit Consumer Price Index) stood at 1 percent for 2019, will increase 1.8% this year, drop to between 1.6 and 1.7% next year and rise to between 1.7% and 2% for 2022.
– Since a baseline of March 2010, national U.S. employment growth has grown by 17.2% while Michigan employment has grown by 16.1%.