A state panel delivered the official revenue numbers that Gov. Gretchen Whitmer and the Legislature are supposed to use to craft the new state budget. But these projections come with warnings of uncertainty amid the prospect of a tariff war and the outcome of spending debates in Washington.
“Although Michigan is America’s cul-de-sac, we are not an island,” said State Treasurer Rachel Eubanks following the Consensus Revenue Estimating Conference (CREC). “There are real and serious implications to federal trade and tax policy, actions that are impacting each state uniquely.”
The CREC is made up of Eubanks and the directors of the nonpartisan House Fiscal Agency and the Senate Fiscal Agency, the top budget advisors to the Legislature. The group hears presentations from experts on the state and national economies, the auto industry and employment.
The CREC determined that overall revenue is expected to be down, but there will be a little more to spend in the School Aid Fund.
Friday’s meeting was the final revenue projection conference scheduled for this budget season in Lansing. But an ad hoc meeting could be convened to address dramatic changes in the economy and the revenue picture. The first conference was held in January, which at the time held a slightly rosier view of the economy.
State Budget Director Jen Flood, who reports to the Democratic governor, said decisions in Congress will have a big impact on the state budget. For example, she said, cuts to the Medicaid health insurance program would require some tough decisions that are not baked into budgeting plans at this point.
“We’re watching closely what’s happening in Washington D.C.,” she said. “But until something is signed into law, we’ll be doing modeling behind the scenes but it’s not something that we would build in at this point.”
The conference came up with a $320 million overall reduction in projected revenue that will force budget writers to scale back their ambitions. House Speaker Matt Hall (R-Richland Twp.) said in a statement he is ready to do that.
“House Republicans are going to do what we’ve promised from day one: truly evaluate state programs for performance, prioritize what works best and what's most important, and get much better value for the taxpayers in our budget,” he said in the e-mailed statement. “Today’s revenue results show that was always the right path.”
Senate Appropriations Chair Sarah Anthony (D-Lansing) said the new numbers should come as no surprise.
“Our country has experienced significant changes since January, including shifting economic policies,” she said in an email. “The full impact of these changes is still unknown, so it’s no surprise that the numbers presented at today’s conference are more conservative than previous estimates.”
A University of Michigan study presented at the conference predicts the state’s auto sector will lose 13,000 jobs over the next three years due to President Donald Trump’s tariff policies.
The report by the UM Research Seminar in Quantitative Economics noted that Michigan unemployment has shown a steeper increase than the national rate, but also said things could change.
“We emphasize that this estimate is very uncertain, both because we believe that the ultimate path of tariffs remains fluid and because of the inherent complexity involved in assessing the effects of such a large change in policy,” it said.
