Michigan Capitol | Susan J. Demas
In the prelude to budget planning for the next fiscal year, analysts from the Michigan Treasury and the House and Senate Fiscal Agencies met Friday for the first Consensus Revenue Estimating Committee meeting of 2025 to project how much funding will be available in the coming fiscal year.
Alongside sharing their forecasts on available revenue for both the state General Fund and the School Aid Fund, state analysts and University of Michigan economists offered an outlook for the state’s economy, predicting modest growth over the course of the coming year, as Michigan sits on a stable economic foundation.
“We see that the U.S. economy is on solid footing. We do expect modest growth in both the U.S. and Michigan economies. We expect that [gross domestic product] will continue to grow at modest rates. We do expect inflation to level off from our recent highs,” said Eric Bussis, the Department of Treasury’s chief economist and director of the Office of Revenue and Tax Analysis.
“Michigan’s economy has grown throughout 2024 and we expect that to continue. Michigan wages are growing and inflation is biting into that wage growth a bit. Even after adjusting for inflation, we do expect wage and salary and personal income to continue to grow throughout the forecast horizon,” Bussis said.
Additionally the conference projected the state will finish out the 2025 Fiscal Year , which ends on Sept. 30, with $14.72 billion in the General Fund, marking a $457.7 million increase from the $14.26 projected during the conference’s last meeting in May 2024.
The state also expects to close out this fiscal year with an additional $312.7 million in the School Aid Fund compared to the forecast from May, now expecting $18.46 billion at the end of FY 2025.
The conference also set revenue estimates for 2026, with its most recent projection of $34.37 billion in overall revenue representing a more than $910 million increase from last May’s estimate of $33.46 billion. Overall the state expects to see $15.48 billion in the General Fund and $18.89 billion in School Aid revenue.
Analysts also released initial estimates for 2027 revenues, with the state expected to hold $15.74 billion in the General Fund and $19.35 billion in the School Aid Fund.
With the conference at a close, the updated revenue estimates will inform Democratic Gov. Gretchen Whitmer’s FY 2026 state budget proposal, which state Budget Director Jen Flood said would be finalized over the next couple of weeks.
“The governor’s executive budget recommendation for Fiscal Year 26 is going to continue to double down on the kitchen table issues, so helping kids learn; growing jobs in our economy; protecting kids, seniors; reducing crime and protecting access to health care,” Flood said.
After Whitmer’s proposal is introduced, lawmakers will have until July 1 to pass a new state budget, although there is no penalty if lawmakers fail to meet the deadline.
Unlike the past two years when Democrats controlled both chambers of the Legislature, Whitmer will have to contend with divided government during this year’s budget negotiations with a GOP-led House and Democratic-controlled Senate.
While Whitmer praised the analysis discussed at the conference, saying, “Michigan’s economy is headed in the right direction,” Republicans in both chambers have already begun chiming in with their hopes for the upcoming budget, speaking out against corporate subsidies and special projects while calling for the additional revenue to be put toward funding for road repairs and tax breaks for Michigan families.
“We have more than $1 billion in surplus projected over the next two years; we must use these funds wisely by prioritizing funding for our crumbling roads and bridges and providing permanent tax relief to struggling Michiganders,” Senate Minority Leader Aric Nesbitt (R-Porter Twp.) said in a statement.
“I am hopeful that the new balance of power in the Legislature will ensure our next budget focuses on responsible spending policies, including needed investments in education, public safety and transformational infrastructure, as well as putting money back in the pockets of those who need it most,” Nesbitt said.
When asked about road funding, Flood told reporters that “fixing the damn roads” would continue to be a priority for Whitmer.
“We had some productive conversations last year that didn’t get all the way across the finish line, but we look forward to picking those back up and working with leaders in both the House and the Senate on a long term road funding plan this year,” Flood said.
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