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Michigan Revenues Expected to Grow

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Every so often a key group of Michigan leaders will gather for what they call a Consensus Revenue Estimating Conference. It's a fancy name for what is, in reality, a look down the road at how much money is now available, how much is known to become available, and how much might be out there for the state to use to pay its bills, conduct its business, and grow the economy for its citizens.

That group, including the new incoming State Budget Director Al Pscholka, conducted one of those pow-wows today, and by their estimation the state has a positive outlook and can look ahead to positive growth in state revenues over the next three years.

State Treasurer Nick Khouri was joined by Pscholka, the Senate Fiscal Agency Director Ellen Jeffries and the House Fiscal Agency Director Mary Ann Cleary to arrive at some sort of consensus on economic and revenue figures for the remainder of the current Fiscal Year 2017 and for the upcoming 2018 and 2019 Fiscal Years.

Following the Consensus Revenue Estimating Conference, net FY 2017 General Fund-General Purpose revenue is projected at $10.290-billion — up $152-million from earlier estimates agreed to back in May. Net FY 2017 School Aid Fund revenue is now estimated at $12.457-billion — up $55-million from May.

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State Treasurer Khouri says, "Today's consensus revenue conference once again confirms the positive outlook for Michigan's economy." He adds, "The growing economy supports modest, but positive growth in state revenues during the next three years."

Net General Fund-General Purpose revenue for FY 2018 (which begins October 1st) is now forecasted at $10.523-billion, down $84-million from May's estimate, while the FY 2018 School Aid Fund revenue estimate has been revised upward by $22-million to an estimated $12.783-billion. Due to those higher than expected revenues, the state has nearly $330-million in added one-time revenue to invest in the FY 2018 budget.

In FY 2019, General Fund-General Purpose revenue is estimated at $10.589-billion and School Aid Fund revenue is estimated at $13.132-billion. Those are the initial revenue estimates for FY 2019.

Pscholka says, "With the additional revenues that were agreed upon today, we now have an accurate and agreed upon revenue forecast on which to finish our work for the release of the budget in early February." He adds, "While today's news is very positive, it is important to remember that we have some one-time revenues for 2018 that will not be built into the ongoing base budget and we will be facing a number of budget pressures in 2019. Our track record of taking a long-term view of state finances and building fiscally responsible budgets is strong and that will not change."

The revenue estimates today are based on the most recent economic projections and forecasting models. As with any economic and revenue forecasts, there are potential risks to the estimates agreed to, including national economic trends, international economic issues, and a significant change in oil and gasoline prices.

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