State revenue collections continue to outperform economic metrics, leading to additional money available as the legislature and governor work to finalize the budget for the upcoming fiscal year. The revised revenue was the key takeaway from today’s biannual Consensus Revenue Estimating Conference held today in Lansing. The heads of the House and Senate Fiscal Agencies, along with the director of the state budget office and state treasurer, heard testimony from several experts on the state of the economy and what can be anticipated through 2023. For the current and upcoming fiscal years, the state can anticipate $3.5 billion more collections than was estimated at January 2021’s conference.

The estimated growth over January’s estimates is:

• • FY 2021
    • General Fund-General Purpose revenue – $1,039.3 million
    • School Aid Fund revenue – $1,002.2 million
  • FY 2022
    • General Fund-General Purpose revenue – $776 million
    • School Aid Fund revenue – $707 million

In Michigan, the revenue projections were due in large part to the shift of consumer spending from services to goods, which are taxable. Federal stimulus funds were also a driving force behind the positive outlook. The key metrics are all projected to be solid through the forecast period, including a declining unemployment rate, stable growth in the GDP, and continued growth in net income tax revenue.

On the national level, the GDP is almost recovered, big monthly jobs gains are anticipated over the summer months, and retail sales and vehicle sales are booming. While not alarming yet, the experts did point to some potential concern with growing inflation, however, it’s not projected to accelerate beyond this year.

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, 2021. It was announced last night that Senate Majority Leader Mike Shirkey (R-Clarklake), Speaker of the House Jason Wentworth (R-Farwell), and Governor Gretchen Whitmer have agreed to negotiate the state budget, as well as appropriating federal COVID-19 relief dollars. This is a huge development as previously the legislature and governor weren’t negotiating on the budget and the potential for another round of large gubernatorial vetoes seemed quite real.

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