Revenue projections for the current and upcoming fiscal years were increased at today’s Consensus Revenue Estimating Conference (CREC) in Lansing, giving the legislature more to work with during the budget process. Held in January and May, the CREC gathers economic experts to project the state of the economy in the upcoming years, as well as estimate revenue for the major tax areas in Michigan. The legislature will use today’s figures to begin the process of crafting the state budget for the upcoming 2020-2021 Fiscal Year as well as a possibly adopt a supplemental budget for the current fiscal year.

For the current fiscal year, projected General Fund-General Purpose (GF-GP) revenue was increased by $235.2 million from the May 2019 estimates, while School Aid Fund (SAF) revenue estimates were increased by $85.7 million. Likewise, May estimates for the 2020-2021 Fiscal Year were also increased. Experts estimate GF-GP revenue will be $274 million higher than prior estimates and SAF revenue should be $138 million more than previously projected.

Key points from the conference include:

• • The country is in the midst of the longest economic expansion on record
  • Consumer spending has been a driving growth on the national level
  • The unemployment rate is anticipated to continue to trend downward
  • Light vehicle sales should continue a gradual trend of deceleration
  • The Detroit Three share of sales is the lowest level since 2012, but remains 50% higher than recession levels
  • 2019 was a rough year for job growth in professional services, but it should pick up in the upcoming years
  • There is less concern about a potential recession then there was in 2019
  • Michigan’s unemployment rate should continue to decline through 2022
  • GDP is projected to grow 2.1% this year
  • The state anticipates an additional $50 million in revenue from sports betting and online gaming
  • No pay-outs are anticipated from the Budget Stabilization Fund through 2022

As with every estimation there remain potential risks to the forecast, including:

• • International uncertainty, including tensions in the Middle East and North Korea, as well as trade policy with China
  • There has been some slower global growth, especially in China, Europe, and India
  • Uncertainty with how Brexit will play out
  • Oil prices remain a risk, however, they are less of a risk now than they were during the prior decade
  • In Michigan there’s some uncertainty around the weakness in the baseline sales tax

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