State revenue projections are flat, and flat appears to be the new normal as the Consensus Revenue Estimating Conference (CREC) principals put it Friday.
The General Fund (GF) is projected to see a slight increase and the School Aid Fund (SAF) will see a slight decrease in both current Fiscal Year (FY) 2024 and FY 2025, which starts Oct. 1, analysts said.
Final May estimates have the state with $188.1 million more in net revenue estimates for FY 2024 between the GF and SAF compared to the Jan. 2024 CREC estimates, a total of $31.732 billion. Broken down, GF estimates increased $351.4 million from January to May and the SAF estimates decreased $163.3 million between January and May.
For the upcoming budget season, legislators are estimated to have $75 million more to work with than estimated in January, a total of $32.404 billion. Similar to FY 2024, the GF increased by an estimate of $235.6 million and the SAF will decrease by $160.1 million in FY 2025.
Lawmakers will use these numbers to finalize the FY 2025 budget with the governor. The House and Senate each passed their respective proposals this and last week. Negotiations with the Budget Office are expected to begin soon.
Overall Revenue Forecast (General Fund and School Aid Fund Combined)
| Fiscal Year | January | May | Change from January to May |
| FY 2024 | $31.54 billion | $31.73 billion | $188.1 million |
| FY 2025 | $32.33 billion | $32.40 billion | $75.5 million |
| FY 2026 | $33.41 billion | $33.46 billion | $45.4 million |
General Fund
| Fiscal Year | January | May | Change from January to May |
| FY 2024 | $13.60 billion | $13.95 billion | $351.4 million |
| FY 2025 | $14.02 billion | $14.26 billion | $235.6 million |
| FY 2026 | $14.71 billion | $14.89 billion | $178.9 million |
School Aid Fund
| Fiscal Year | January | May | Change from January to May |
| FY 2024 | $17.95 billion | $17.78 billion | -$163.3 million |
| FY 2025 | $18.31 billion | $18.15 billion | -$160.1 million |
| FY 2026 | $18.71 billion | $18.57 billion | -$133.5 million |
The above figures come from the Michigan Department of Treasury.
“This welcome news is only the latest sign that the smart, responsible budgeting decisions we’ve made over the last year are paying off to the benefit of our residents,” said House Appropriations Committee Chair Angela Witwer (D-Lansing). “Michigan’s economic outlook is healthy and stable because we are putting people and hometowns first. With this additional revenue, we can continue lowering costs for families and ensure more money gets back to local communities to serve the people of Michigan.”
The GF is being boosted by higher-than-expected corporate income tax revenue and lower Michigan Business Tax refunds, which has brought in $1.264 billion year-to-date for 2024, higher than every year since 2018 by this time of year. The sales and use growth rate was estimated to be 0.5% in January, but year-to-date it has fallen to -1.4%. The baseline income tax growth is estimated to be negative for FY 2024 just like in FY 2023, causing a slight dent in SAF revenue.
The Department of Treasury, the Senate Fiscal Agency and the House Fiscal Agency all estimate stable income and state tax revenue that is expected to match inflation, at least in the short term.
The state will not pay-in or receive pay-outs from the budget stabilization fund, or “rainy day fund,” until FY 2026, when a $15.7 million pay in is projected.
“Boring is good,” said State Treasurer Rachael Eubanks.
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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