Today, the directors of the House and Senate Fiscal Agencies came together with State Treasurer Rachael Eubanks and newly named State Budget Director Dave Massaron to reach a consensus for projected state revenue for the upcoming fiscal year. In order to get a better understanding, they heard from economic experts on the state of the Michigan and national economies. All agreed that while 2020 was a hard economic year due to the pandemic, it would have been worse had the Federal government not provided support such as stimulus payments and additional unemployment benefits.

In the upcoming 2021-2022 Fiscal Year the state will have less revenue to spend than last January’s estimates, however, today’s estimates have been adjusted up from the August 2020 estimates.  The August 2020 estimates were used to finalize the current year budget.  For FY2021, the General Fund/General Purpose (GF/GP) should see $10.2 billion, which is a negative 4.9% growth, but $700 million higher than August 2020 estimates. The School Aid Fund (SAF) should see total revenue of $14 billion, which is a growth of 0.2% and $528.3 million more than August’s projections. In FY2022, GF/GP is projected to grow 6.4% from the prior year and the SAF is projected to see a growth of 2.8%. FY2023 is also estimated to see growth in both revenue streams; 2.5% growth in the GF/GP and 2.1% to SAF revenue.

Highlights from the conference include:

National:

• • • Monthly payroll jobs have only recovered 55% of the jobs lost
    • Payroll employment should begin to accelerate in mid-2021 but won’t reach its prior peak until 2023
    • The unemployment rate should see slow improvement, reaching 4.4% by the end of 2023
    • Light vehicle sales should return to pre-pandemic levels by 2023

Michigan:

• • • Payroll employment recovery continues at a slower pace in the 1^st quarter of 2021, but picks up substantially as vaccines continue to roll out
    • GDP annual growth projected through 2023
    • Inflation should remain moderate to low, staying around a 2% level
    • 2020 was the worst year for wage and salary employment since the 1950s pandemic
    • Sales tax revenue is projected to grow through 2023, boosted by online spending during the pandemic
    • Personal income is estimated to grow through FY 2022

The House and Senate will use the agreed upon numbers as they begin crafting the state budget for the upcoming Fiscal Year, which begins on October 1, 2021. Additionally, the Whitmer administration will use these numbers to create the Executive Budget Recommendations, which should be presented to the legislature the first week of February.

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