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State board predicts modest economic growth for Michigan in 2020-21

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The Michigan economy will continue to grow – but at a modest pace that won’t match the national economy’s growth rate. That determination comes from economists and state budget officials.

They met Friday at the state Capitol. Their job is to agree on revenue numbers that Governor Gretchen Whitmer and state lawmakers will use to put together the next state budget.

The state’s economic performance is a key part of those deliberations.

Chris Kolb is the state budget director. He says there’s not much room for new spending.

“As I’ve identified, we have these growing pressures on the General Fund, and so I would expect to see a budget that reflects that," Kolb said. "That we have to meet these ongoing costs – that we have to make these investments, but we also have to match those with some reductions, as well.”

Gabriel Ehrlich is a University of Michigan economist who advised the group. He says the economy can keep growing, but not at the same pace.

“Expansions don’t die of old age, so it’s not just a function of how long it’s been going on, but we do think we’re going to run into speed limits as we face a shortage of workers as we get out into 2022 and beyond,” he said.

Ehrlich says that’s because young people are not joining the workforce as fast as older workers are dying, retiring, or moving. That will affect tax revenue available to fund state services and pay for roads and schools.

Last year, Governor Whitmer and the Legislature were late in agreeing on a budget. That was largely over her demand for a fuel tax increase.

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Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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