Paul Egan Detroit Free Press
Published 6:42 PM EST Jan 9, 2019
LANSING — Continued but slowing economic growth and a flat state checking account.
Those are the projections released Wednesday by the House Fiscal Agency in advance of a conference at the Capitol Friday at which officials are to reach a consensus about how much tax revenue the state can expect to collect over the next three years.
Friday’s forecasts will be critical information for Democratic Gov. Gretchen Whitmer as she sets her first budget, expected to be released the first week of March.
The federal tax cut approved in 2017 “provided significant fiscal stimulus” for 2018 and 2019, but with the impact of that tax cut now waning, “slower … growth is expected,” the report said.
There’s some good news for Whitmer in the report.
It says tax revenues going into the general fund and the School Aid Fund were $567 million higher than anticipated in 2018, and they are now expected to be $135 million higher in 2019 and $95 million higher in 2020 than was predicted at the last revenue estimating conference, held in May 2018.
However, lawmakers already spent most or all of the state’s 2018 surplus when they approved a $1.3 billion supplemental appropriation bill during their lame-duck session in December, and the projected adjustments for 2019 and 2020 amount to little more than a rounding error when assessing tax revenues that total close to $24 billion.
The bad news in the report is that the amount available to spend in the state’s main checking account — the general fund — is either shrinking or growing very little. That’s because lawmakers have already earmarked the fund’s revenue growth for specific expenditures, such as improving the roads ($600 million a year by 2021), sweetening the Homestead Property Tax Credit ($206 million in 2021), and phasing out the personal property tax on manufacturing equipment ($492 million in 2021).
More: Michigan lawmakers approve $1.3 billion in extra spending for 2019
More: UAW talks, Gilbert’s projects likely to make headlines in 2019
Net general fund revenues, estimated at $10.9 billion for 2018, are expected to decrease to $10.6 billion in 2019 and then increase by only $39 million, to just under $10.7 billion, in 2020, before increasing 1.4 percent, to $10.8 billion, in 2021, the report says.
The report projects continued but slowing growth in the Michigan economy, with wage and salary employment growth, which increased 1.8 percent in 2018, edging up 0.8 percent in 2019, 0.7 percent in 2020, and 0.4 percent in 2021.
The House Fiscal Agency report is one of three reports the state treasurer, state budget director and other officials will consider at their conference on Friday.
One set of projections from the state Treasury Department won’t be released until Friday morning.
In late December, the Senate Fiscal Agency released its projections, which forecast continued but slowing growth for the Michigan economy through 2021, as national sales of cars, SUVs and light trucks, which peaked in 2016, decline from 17.1 million units in 2018 to 16.8 million in 2019 and 16.5 million units in both 2020 and 2021.
The Senate agency projected growth in wage and salary employment of 0.7 percent in 2019, 0.2 percent in 2020, and 0.3 percent in 2021.
The Senate Fiscal Agency also projected that general fund and School Aid Fund tax revenues for 2019 and 2020 would come in higher than what officials estimated in May. Its projections were $408 million higher for 2019 and $385 million higher for 2020 than the May projections.
Contact Paul Egan: 517-372-8660 or [email protected] Follow him on Twitter @paulegan4.
- Heather Scoffield: Canada’s political parties are missing the target with tax cuts
- How The Tax Cut Scam Works
- Shocker: The Trump Tax Cuts Mostly Benefitted Rich White People
- Where's My Goddamn Tax Cut, Trump
- Treasury Sec. Timothy Geithner: Obama's push for Bush tax cuts for rich to expire won't slow growth
- Republicans Largely Abandon Running on Trump’s Tax Cuts
- Gov. Rick Snyder still can't see that tax cuts alone create a weaker Michigan
- There's little evidence that corporate tax cuts create jobs, analysis claims
- Gingrich & Anderson: Pass GOP tax cuts by Thanksgiving or get ready for Speaker Pelosi
- Let all the tax cuts expire -- and call it a war tax