Just two days after the House's official swearing in ceremony, I joined some of my colleagues in the Capitol for the Annual January Consensus Revenue Estimating Conference for the State of Michigan. This morning's conference provided an economic outlook and revenue forecasts for fiscal year (FY) 2013 through FY 2014. Participating in this morning's conference was a priority for me because the numbers discussed today become the basis for the FY 2013-2014 budget that Governor Snyder will be presenting to the Legislature in February. I'm looking forward to continuing to be closely involved in this year's budget process and enjoyed the chance to hit the ground running in that regard this morning.
Today's data was presented by economists from the University of Michigan, IHS Global Insight, the House Fiscal Agency, Senate Fiscal Agency, Department of Treasury, and the State Budget Office.
General Fund/General Purpose (GF-GP) revenues for the 2012-13 FY, which began in October, were estimated to be about $8.79 billion, a drop of 5.1 percent from last year. While School Aid Fund (SAF) revenues are expected to be around $11.12 billion (a 2.3 percent increase from last year), that number falls short of last May's forecasts by 0.4 percent. Unfortunately, we're seeing that the significant changes to Michigan's tax policy that have been enacted since Governor Snyder took office continue to have an impact on our state's tax revenue (in a negative way).
As many of you know, Michigan is starting its fourth year of economic recovery after a nearly decade-long recession. Although the national economy has (generally) been improving at a modest pace, it has recently decelerated over the uncertainty surrounding the federal budget, foreign weakness, debt negotiations, and the debt-ceiling decline-- fiscal issues that many predict will affect our state's economic growth through much of 2013.
On the bright side, our country's housing sector and light motor vehicle sales continue to gain (or maintain) momentum. Michigan's personal income is expected to modestly increase for the next three calendar years, inflation is expected to increase (again, modestly), and our unemployment rate is forecasted to decrease to 7.2 percent in calendar year 2015. Much of Michigan's recent job growth was led by gains in manufacturing, professional and businesses services, and health care and social assistance. It should come as no surprise that employment in the construction sector fell by 5,100 workers and government employment has declined by 3,800 workers over the past year. Presenters pointed out that even though we've managed to grow jobs since 2010, growth has been very subdued and employment remains significantly below our peak in January 2000.
As today's presenters noted, we still have quite a ways to go in our economic recovery as a state, but we continue (and should continue) to make slow, steady progress in the coming years. I look forward to playing an important role in the Legislature's budget-related activity and welcome you to get in touch with your reactions and thoughts surrounding today's Consensus Revenue Estimating Conference news. To view the House and Senate Fiscal agency's reports, be sure to visit the below links:
House Fiscal Agency Report
Senate Fiscal Agency Report
State Representative, 68th District