Today, the directors of the House and Senate Fiscal Agencies came together with State Treasurer Rachael Eubanks and State Budget Director Chris Harkins to reach a consensus for projected state revenue for the upcoming fiscal year. At the biannual Consensus Revenue Estimating Conference (CREC) the principals heard testimony from various economic experts on certain key aspects of the state and national economy that will impact revenues.

The Senate and House Fiscal Agencies, along with the State Budget Office, presented revised projections from January’s conference. This includes upgrading their estimates for net income tax revenue by more than one billion. Additionally, they are increasing their estimates for the sales tax growth, net sales and use tax revenue, and consumption taxes. For the current fiscal year, combined general fund and school aid fund revenue estimates were increased by $2.99 billion from the January estimates, for the upcoming 2023 Fiscal Year they were increased by $2.03 billion, and for the 2024 Fiscal Year estimates grew by $1.80 billion.

Key points from the presenters includes:

• • Light vehicles sales should increase, including the Detroit three share
  • Housing will feel the pain of higher interest rates
  • The consumption of goods is expected to slowly trend down, back to pre-pandemic levels
  • 88% of the jobs lost during the pandemic in Michigan have been recovered
  • They’re forecasting continued growth due to key drivers, including employment growth, resiliency in construction and manufacturing due to pent-up demand, and an improvement with the supply chain pressures
  • Inflation in Michigan is projected to be 7.7% this year, the fastest since 1981

Several risks remain, including:

• • The war in Ukraine
  • Future prices of oil remain a large unknown
  • Supply chain issues
  • The fiscal path taken as a result of the midterm election results and which party controls Congress
  • Inflation dynamics
  • The ongoing pandemic, as each surge decreases consumers’ participation in the economy such as eating out at restaurants and shopping in-stores

The legislature and administration will use the agreed upon numbers as they work to finalize the budget prior to the start of the new fiscal year on October 1, 2022.

For more information, please visit Michigan.gov/CREC.

Michigan Legislative Consultants is a bipartisan lobbying firm based in Lansing, Michigan. Our team of lobbyists and procurement specialists provide a wide range of services for some of the most respected companies in America. For more on MLC, visit www.mlcmi.com or connect with us on LinkedIn and Twitter.