Economists warn a trade war could force changes in the state budget
An international trade war could reduce how much money Michigan has to spend on roads, schools, and health care. That’s the word from economists who testified on Friday before a state budget panel that included the state treasurer, and state House and Senate budget directors.
The panel’s job is to determine how much revenue is available as the governor and the Legislature put together the state budget. The picture is stable at the moment as the economy hums and employment is high.
But the panel was warned a trade war between the U.S. and China could disrupt the economy.
Rachael Eubanks is Governor Gretchen Whitmer’s state treasurer.
“Certainly if we see any of that, we will be prepared to get back together as necessary to adjust,” she says.
Whitmer is looking for two and a half billion dollars to fix and upgrade roads. Anything that shakes the economy and reduces revenue would make that job more difficult.
Eric Bussis is the state treasury’s chief economist. He says Michigan’s budget appears stable at the moment.
“These estimates assume that we see the status quo of the last couple years in terms of trade policy. Unaccounted for are the escalations in the U.S.-China trade war that could potentially happen,” he says.