10 January 2025
Increased State Revenue Estimates for FY25 and FY26 Should Mean Slightly Easier Budget Negotiations
#FactsMatter, the Citizens Research Council of Michigan podcastAbout
Citizens Research Council Senior Research Associate Bob Schneider sat down today with Research Director Craig Thiel following today’s Consensus Revenue Estimating Conference (CREC) to discuss updated economic and revenue forecasts and analyze what they could mean for Michigan’s current and future budgets.
Officials from the Department of Treasury and legislative fiscal agencies agreed that Michigan’s combined General and School Aid Funds will receive an additional $769 million in FY2025 and an extra $910 million in FY2026, compared to the previous May 2024 revenue forecast.
Thiel and Schneider noted that the increased revenue growth in Michigan will likely ease tensions, to a degree, among policymakers' many competing priorities. Schneider remarked that the stronger-than-expected revenue growth in the School Aid Fund will be welcomed among lawmakers seeking an ongoing increase in the per-pupil foundation grant.
“It makes the budget process very interesting,” said Schneider. “I’m sure road funding and tax relief will be among the many priorities discussed regarding these increased revenue projections. While more revenue certainly makes things a little easier, there will still need to be compromise.”
Schneider and Thiel also discussed that economic projections come with greater economic uncertainty, risk and variability stemming from the incoming Trump administration’s promises of both tax cuts and higher tariffs, as well as about retaliatory tariffs, and uncertainty about what will get done at the federal level and the impact on Michigan.
The CREC exists so that the Governor and lawmakers have the most accurate revenue account possible before starting work on the next fiscal year’s budget. Michigan’s top budget and fiscal officials came together, as they do each year in January and May, to seek agreement on the amount of revenues they expect state government to take in over the coming years. Top state economists also provided the CREC with U.S. and Michigan economic projections and U.S. consumer conditions updates.
The May 2025 conference will provide an update to the forecast before the FY2026 state budget is finalized. Michigan’s budget is required by law to be finalized by July 1 each year.
Officials from the Department of Treasury and legislative fiscal agencies agreed that Michigan’s combined General and School Aid Funds will receive an additional $769 million in FY2025 and an extra $910 million in FY2026, compared to the previous May 2024 revenue forecast.
Thiel and Schneider noted that the increased revenue growth in Michigan will likely ease tensions, to a degree, among policymakers' many competing priorities. Schneider remarked that the stronger-than-expected revenue growth in the School Aid Fund will be welcomed among lawmakers seeking an ongoing increase in the per-pupil foundation grant.
“It makes the budget process very interesting,” said Schneider. “I’m sure road funding and tax relief will be among the many priorities discussed regarding these increased revenue projections. While more revenue certainly makes things a little easier, there will still need to be compromise.”
Schneider and Thiel also discussed that economic projections come with greater economic uncertainty, risk and variability stemming from the incoming Trump administration’s promises of both tax cuts and higher tariffs, as well as about retaliatory tariffs, and uncertainty about what will get done at the federal level and the impact on Michigan.
The CREC exists so that the Governor and lawmakers have the most accurate revenue account possible before starting work on the next fiscal year’s budget. Michigan’s top budget and fiscal officials came together, as they do each year in January and May, to seek agreement on the amount of revenues they expect state government to take in over the coming years. Top state economists also provided the CREC with U.S. and Michigan economic projections and U.S. consumer conditions updates.
The May 2025 conference will provide an update to the forecast before the FY2026 state budget is finalized. Michigan’s budget is required by law to be finalized by July 1 each year.