State of Michigan Economic Forecast

May 27, 2021

Great news for the State of Michigan's FY21 and FY22 budget was delivered at the May 21, 2021 Consensus Revenue Estimating Conference. 

An economic forecast is based on the best information available at the time the forecast is prepared. Because information and foresight are not perfect, risks and uncertainties are inherent in any forecast, and variations in the underlying factors can exert either optimistic or pessimistic influences on the forecast. That said, the COVID-19 global pandemic is still considered the primary source of uncertainty in the underlying risk factors. 

 

With that said, however, the Senate Fiscal Agency Sees $3B More Than Expected For FY '21, FY '22

From our friends at MIRS https://mirsnews.com/capsule.php#65233:

The good news keeps coming on the state's revenue picture.

Michigan government should plan for $2.2 billion more than expected in January for the current fiscal year and $1.27 billion more for the fiscal year starting Oct. 1, according to the Senate Fiscal Agency (SFA) in the runup to Friday's Consensus Revenue Estimating Conference (CREC).

"It's a lot of money," said SFA Director Christopher Harkins. "It's a lot to consider."

The "significant boost" in federal money pouring in direct relief, stimulus payments and unemployment insurance boosts has successfully spurred residents to spend money on tangible goods. That's brought up the state's sales tax numbers, as well, Harkins said. 

"What we're seeing is more robust that we anticipated. All the signs are pointing toward a good forecast," he said, adding, however, that the federal money is one-time and should not be counted on year after year.

For those looking ahead to FY '23, the SFA is recommending that $1.47 billion be added to the forecast. Another reason for the rosy estimates is that higher-than-projected revenues for the prior fiscal year means an income tax rollback trigger will not be tripped, Harkins said.

Under the 2015 road plan, the income tax must roll back if state revenues increase over a certain amount.

Revenue estimates agreed to by the SFA, House Fiscal Agency and Treasury are used to base how much money the Legislature and the Governor have to spend for the rest of the fiscal year.

https://www.house.mi.gov/hfa/PDF/RevenueForecast/CREC_Executive_Summary_May2021.pdf

 


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