Budget pressures mounting from tax credits, spending
obligations, and minimal revenue growth

LIVONIA, Mich. – August 1, 2017 – Despite several years of economic rebound, Michigan is facing a turbulent period for balancing the state budget according to a report issued today by Citizens Research Council of Michigan.

“Tax credits and promises by previous legislatures and the governor to fund roads and personal property tax relief are starting to come due to the tune of $2 billion a year,” said Craig Thiel, Citizens Research Council research director. “Minimal state revenue growth in future years, combined with the prospect of federal funding reductions in important programs like Medicaid and the Supplemental Nutrition Assistance Program (food stamps program), means that Michigan will have some tough choices ahead balancing future state budgets.” 

Three key takeaways from Citizens Research Council’s new report Challenges Ahead in Balancing the State Budget 

  1. The State of Michigan is facing a new turbulent period despite several years of economic rebound. Tax credits and promises by previous legislatures and the governor to fund roads and personal property tax reimbursement are starting to come due to the tune of $2 billion a year and possible federal cuts are on the horizon.
  2. Budget pressures will force the legislature to make tough choices with no future significant unrestricted General Fund revenue sources, and minimal growth of current revenues.
  3. Michigan could see $2 to $5 billion in diversions by FY2022, equal to 20 to 45 percent of the current General Fund budget. Moving into the next decade, this means that Michigan has the potential for a very challenging budget environment.

“Michigan’s fiscal landscape is showing signs of a developing a structural budget deficit similar to that which plagued our state through the first decade of this century. We undertook this analysis with the hope that our objective, impactful research will help pave the way to sound public policy decisions before this becomes a major problem. said Eric Lupher, president, Citizens Research Council of Michigan. “We are proud to be a trusted resource to policymakers across the state for 101 years.”

The paper is available at no cost on the Citizens Research Council’s website, www.crcmich.org.

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To arrange an interview with either Eric Lupher or Craig Thiel contact:

Janine Krasicky Sadaj 248-514-4558 (cell) or janine@j9media.com.

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