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Michigan lawmakers get final revenue estimates as they push to finalize state budget | News, sports, jobs

The Michigan Capitol is seen in Lansing on May 24, 2023. Michigan officials expect the state's tax revenue to decline slightly from last year but then recover over the next two years. (AP photo)

LANSING — State economists issued their final economic forecast for Michigan this year, suggesting tax revenues will continue to stabilize, which they say is a positive development after years of record surpluses from pandemic-related funds.

Michigan lawmakers are working to finalize the state budget before its self-imposed July 1 deadline, and Friday's outlook on the state's economic and tax revenue projections gives lawmakers a roadmap for available funding for the fiscal year that begins Oct. 1 and beyond. A preview was also given in January when lawmakers began the budget process, but Friday's was more final.

This year's tax revenue is expected to be about $31.7 billion, up slightly from January's estimate. Revenue is expected to increase gradually and reach $32.4 billion for the fiscal year beginning Oct. 1. A further increase of around 3.2% is expected in the following year.

The financial forecast was announced during a revenue estimates conference held at the state Capitol on Friday and attended by officials from the Treasury Department, Senate Finance Committee and House Finance Committee.

“The consensus today is that Michigan has a strong and stable revenue and economic base to complete the state budget.” said State Treasurer Rachael Eubanks. “Our economy is creating jobs and bringing more people back into the workforce, marking a strong recovery in labor force participation. This is great news now and for our future.”

Funds related to the pandemic have led to record-breaking surpluses for Michigan in recent years, including a $9 billion surplus in 2022, the largest in the state's history. An $82 billion budget spent much of that surplus this year.

State budgets are expected to stabilize in the coming years as surpluses are expected to remain below $1 billion. In February, Gov. Gretchen Whitmer unveiled an $80.7 billion budget with increases in education spending, including funding to provide free community college for all high school graduates and free preschool for four-year-olds.

The Michigan House and Senate have since worked to pass their own budgets and will meet over the next month to reach an agreement that also meets the governor's wishes. So far, Democratic lawmakers have disagreed on how to implement Whitmer's education proposals.

Republicans have generally criticized the budget for its size, with House Republican leader Matt Hall calling it as such “wasteful spending.”

The Democrats have narrow majorities in both chambers and also control the office of governor. But they need to get some Republicans behind the budget for it to take immediate effect, which requires approval from two-thirds of lawmakers in the Senate. The new fiscal year begins on October 1st.

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Anna Harden

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