Demand for cars plus cash reserve leave MI with healthy budget projection
Michigan has money to spend, even if the economy dips into a recession. New budget projections suggest the state could have a $1.2 billion surplus. That’s according to revenue numbers adopted Friday by a board made up of the state’s top budget officials.
The Consensus Revenue Estimating Conference approves revenue projections that will be used by Governor Gretchen Whitmer and the Legislature to write the state budget. That number is $32.4 billion heading into the 2023-24 fiscal year, including the projected $1.2 billion surplus.
Michigan Treasurer Rachael Eubanks said the state appears to be in a good position to weather an economic slowdown. She said a big reason is auto companies still have people on waiting lists for new vehicles.
“What’s different about this upcoming, you know, milder type recession is that there’s not anticipated to be that decline in demand,” she said. “Still people are on waiting lists for vehicles waiting to be fulfilled and there’s still a lot of demand going forward for vehicles.”
The surplus might be large enough to automatically reduce the state income tax rate by some fraction of a percentage point. But Eubanks said that’s not a sure thing — not before updated revenue estimates in the spring.
“Certainly there is potential for a trigger,” she said. “However, to say that is likely at this point I think is a bit premature.”
Chris Harkins is Whitmer’s budget director. He said the available funds could leave room for the governor and the Legislature to consider discretionary tax cuts.
“We would expect to see that in a year where we can certainly buttress that with some of that reserves that we have on the balance sheet and still available to policymakers as they go forward,” he said.
Whitmer has called for expanding the state Earned Income Tax Credit for low-income workers and for ending the state’s pension tax.