Gov. Gretchen Whitmer’s budget team and the Legislature have settled on a revenue prediction of $32.3 billion dollars for the coming fiscal year – a critical step before work can begin on the new state budget.
The wonky session, called the Consensus Revenue Estimating Conference, determined the current year’s revenue is running a little ahead of projections. Economists told budget officials Michigan seems to have recovered most or all of the jobs lost during the COVID-19 pandemic and finances appear to have stabilized.
“We’re excited about the good news we heard today about Michigan’s economy being strong and stable and look forward to putting the final details on the budget, which will come in a couple weeks,” said Michigan Budget Director Jen Flood, who will be Whitmer’s point person on the negotiations.
Michigan Treasurer Rachael Eubanks was joined by Senate Fiscal Agency Director Kathryn Summers and House Fiscal Agency Director Mary Ann Cleary in approving the numbers. Eubanks said the new projection and the fact that there are no big swings in funding for the current budget is a promising sign.
“The revenue picture provides certainty and stability,” she said, “and, secondly, the economy is strong and stable, which lays the groundwork for the upcoming budget process and we are returning to those pre-pandemic norms or whatever the new normal may look like for us.”
The conference’s primary purpose is to help state officials adopt a common revenue number to use while crafting the budget. But it is also a high-level briefing that presents expert perspectives on employment, trends affecting different business sectors and tax policies.
Gabriel Ehrlich is the director of the University of Michigan’s Research Seminar in Quantitative Economics. Ehrlich, one of the presenters, said the state has recovered all or almost all the jobs lost during the pandemic, but 2024 may be off to a slow start. He noted that interest rates affect auto sales, housing and lending -- all of which are prominent sectors of the Michigan economy.
“We expect a little bit of a soft patch for job growth in early part of this year,” he said. “The reality is high interest rates are taking a toll on some of the state’s interest rate-sensitive sectors. But we expect job growth to pick up later this year and then accelerate into 2025. So we expect growth to continue over the next few years.”
Whitmer will formally present her budget proposal next month to the House and Senate appropriations committees, not long after she outlines her policy plans for 2024 at her State of the State address on January 24.
