Michigan’s projected revenue to support a roughly $80 billion state budget is steady and predictable, even if it’s not as flush as it was in recent years. A panel of state budget officials adopted revenue predictions Friday – an important step toward finalizing the next budget.
State Treasurer Rachael Eubanks and the Michigan Legislature’s top budget advisors listened to a round of presentations by economists on the state and national economy, workforce, wages and the auto industry’s transition to producing more electric and hybrid vehicles, and spending patterns by businesses and the public in the aftermath of the COVID-19 pandemic.
University of Michigan economist Gabriel Ehrlich said a lot of indicators show the economy is improving, even if people are not feeling it.
“Economic activity has been strong and people say the economy is lousy, and we have this conversation, why is that? And, you know, the point I wanted to make is that it’s not just that inflation has been high. It’s been especially high in the necessities of life – housing, food,” he said.
Eubanks said state revenue is not as flush as it has been in recent years with COVID relief funds helping to boost the budget. But she said revenue is steady and predictable.
“Like our revenue picture, the economy is strong and stable,” she said in a news conference. “Today, we heard many good reports about the U.S. economy and Michigan economy. For example, individuals are spending, wage increases are outstripping inflation and inflation is stabilizing.”
Governor Gretchen Whitmer’s budget director, Jen Flood, said that overall, the projections were good news.
“Our economy is strong, inflation is cooling, incomes are growing, and our unemployment rate remains at historic lows,” she said.
The state’s General Fund is expected to see a small boost compared to an earlier projection in January, while the School Aid Fund is expected to see a slight drop.
