In Blog: Factually Speaking

There’s good news, but there’s also bad news. Michigan’s January Consensus Revenue Estimating Conference (CREC)—the first step in crafting a budget for the next fiscal year—was held in Lansing this week, and it looks like Michigan will have some unexpected one-time money left over from last year. On the other hand, we can’t count on continued robust growth of this nature; in fact, the state is looking at less revenue than was projected last May for this budget year and the next.

The conference is required by state law to establish various forecasts, including economic outlook and General Fund (GF) and School Aid Fund (SAF) revenues. It’s held twice a year, and the January consensus becomes the revenue basis for the executive budget proposal released in February, and those reached during the May conference become the revenue basis for the budget that is ultimately enacted.

While Michigan’s total budget has grown in recent years, it still lacks key investments in areas that matter most to our children and families. The Flint water crisis and the financially struggling Detroit Public Schools are symbols of our lack of investment in our children, education, infrastructure and communities. These problems are not unique to Flint or Detroit, although they rightfully get the publicity, and a statewide problem deserves a statewide solution. Unfortunately, I don’t believe a small one-time surplus is going to be enough, and Michigan needs to figure out a long-term solution to reverse the disinvestments that got us here.

At the same time as our past budget failures catch up to us, mounting budget pressures will continue to drain resources. Michigan still has to pay hundreds of millions of dollars each year for legacy Michigan Business Tax credits and for the Personal Property Tax repeal. In future years, we grow more reliant on our General Fund to pay for our crumbling roads, but even that fix didn’t solve the whole problem and will likely need much more. Michigan is currently $9 to $10 billion below its constitutional revenue limit, so while there is room for growth, the political will to grow revenues is not there. There simply aren’t enough dollars to go around.

So the good news is that we have some one-time money to work with, and at a time when additional revenue is desperately needed. The bad news is that it will take long term, strategic investments to ultimately fix these problems that are going to continue plaguing the state. Michigan needs to take a long, hard look at its budget and its revenue structure to make sure that we can provide for our children, families, communities and residents now and in the future.

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