by Scott McClallen
Michigan faces a nearly $900 million revenue loss this year thanks to recent tax changes as lawmakers plan a record $81 billion budget for fiscal year 2024.
At Michigan’s Revenue Estimating Conference, state Treasurer Rachael Eubanks, Senate Fiscal Agency Director Kathryn Summers, and House Fiscal Agency Director Mary Ann Cleary reached a consensus on revised revenue figures for fiscal years 2023, 2024, and 2025.
The revenue for 2023-24 is $1.8 billion below the prior forecast.
The school aid and general funds are forecasted at $31.5 billion this fiscal year.
“Michigan’s economy continues to show signs of growth and resilience,” Eubanks said in a statement. “Today’s revenue forecast reflects the tax relief recently provided to retirees and working families. Strong revenue growth has allowed us to provide sustainable tax revenue relief while also maintaining and investing in critical programs to create an environment where individuals and businesses can thrive.”
Tax policy recently changed includes a $428 million drop in revenue this year from the individual income tax rate change, a $600 million drop from corporate income tax earmarks, and an $18 million drop from delivery and installation exemptions.
Other changes, such as the boosted earned income tax credit and retirement tax changes, won’t cut revenue until next year when it will drop revenue by $768 million and $281 million, respectively.
Nevertheless, Gov. Gretchen Whitmer said her strategy to improve Michigan is working.
“Our economic strategy is working because of our efforts to bring thousands of manufacturing jobs home and put money back in people’s pockets,” Whitmer said in a statement.
These revenue estimates are based on the most recent economic projections and carry risks including unexpected changes in the national economy, international economic issues, and population loss.
“The forecasts discussed and revenues agreed to today indicate the nature of Michigan’s economy remains strong,” State Budget Director Christopher Harkins said in a statement. “I look forward to working with our legislative partners to enact a sustainable budget with strategic and purposeful investments that will continue to move Michigan forward.”
After the forecast, State Rep. Ann Bollin, R-Brighton Township, said the proposed budget includes unsustainable spending.
“This is proof positive that we should be reining in spending, paying down debt, and putting more money into the rainy-day fund so that the state has stability in future years,” Bollin said. “It’s time to take a serious look at the budget bills that are on the table and make smart adjustments to prepare for the tough times ahead.”
Bollin said much of the proposed $81 billion budget proposed by the House Democrat majority is pork spending that doesn’t provide essential services.
“Michigan residents want to see their tax dollars used to provide essential services well,” Bollin said. “People want safe communities where they can raise a family, good schools for their kids, and local roads they can drive down without dodging potholes. Instead, they’ve been presented with a bloated budget full of political projects and programs that unnecessarily expand the role of government beyond what their tax dollars can afford.”
The state has a self-imposed June 30 deadline to submit its budget.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org.
Photo “Gretchen Whitmer” by Cjh1452000. CC BY-SA 4.0. Background Photo “Michigan State Capitol” by Corey Seeman. CC BY-NC-SA 2.0.
