Gov. Rick Snyder issued the following statement on the consensus reached by the Michigan Department of Treasury, Budget Office, and House and Senate Fiscal Agencies on the economic and revenue figures for the remainder of Fiscal Year 2018 and the upcoming 2019 and 2020 Fiscal Years.
“Projected increases in revenue for both the General Fund and School Aid Fund demonstrate Michigan’s continued economic growth and our fiscal responsibility over the past seven years,” Gov. Snyder said. “We should be encouraged by the state’s progress and positive economic outlook, while remembering the importance of showing financial responsibility to current and future generations. I look forward to working with my legislative partners to get the budget done responsibly by next month, giving municipalities and schools ample time to plan their own budgets. As we finalize spending decisions, I plan to remain focused on sustaining record investments in K-12 education, improving our roads, building up the Rainy Day Fund, and implementing the Marshall Plan for Talent.”
State Treasurer Nick Khouri, State Budget Director John Walsh, Senate Fiscal Agency Director Ellen Jeffries and House Fiscal Agency Director Mary Ann Cleary Wednesday reached consensus on economic and revenue figures for the remainder of Fiscal Year (FY) 2018 and for the upcoming 2019 and 2020 fiscal years.
Following today’s Consensus Revenue Estimating Conference, net FY 2018 General Fund-General Purpose (GF-GP) revenue is projected at $10.46 billion, up $155.9 million from estimates agreed to in January. Net FY 2018 School Aid Fund (SAF) revenue is now estimated at $13.24 billion, up $159.5 million from January. Combined, GF-GP and SAF estimates are up approximately $315 million for FY 2018.
“Today’s agreement is another indication of the continued progress of the Michigan economy. Revenues are up because unemployment is down and incomes are rising,” State Treasurer Nick Khouri said. “The policies of the last seven years have created a framework for economic growth, budget surpluses and paying down long-term debt. Michiganders should feel good about the direction the state is headed.”
Net GF-GP revenue for the FY 2019 — which begins Oct. 1 — is now forecasted at $10.41 billion, up $72 million from January’s estimate, while the FY 2019 SAF revenue estimate has been revised up by $110.4 million to an estimated $13.57 billion.
In FY 2020, GF-GP revenue has been revised up $105.2 million at $10.52 billion and SAF revenue has been revised up $78.1 million to $13.9 billion.
The revision to the GF-GP forecast is driven by strong income tax collections in FY 2018, which the forecast committee attributes to one-time growth and believes will slow in FY 2019. The higher SAF results from higher sales tax, income tax, lottery and state education property tax forecasts.
“With the revenues that were agreed upon today, we now have an accurate and agreed upon revenue forecast on which to enter into target setting to finish our work on the 2019 budget,” State Budget Director John Walsh said. “I have no doubt that this budget will be signed in early June, making it 8 for 8 when it comes to getting budgets done early during the Snyder administration.”
These revenue estimates are based on the most recent economic projections and forecasting models. As with any economic and revenue forecasts, there are potential risks to the estimates agreed to today, including national economic trends, international economic issues, and a significant change in oil and gasoline prices.