Governor Gretchen Whitmer and the state Legislature will have a little more money than initially expected to put together the next state budget. But there is still a projected budget gap in excess of $1 billion to be dealt with before a balanced budget can be wrapped up by the July 1 deadline.
A panel that includes the state treasurer and House and Senate fiscal experts approved the official revenue numbers at its second meeting of the year. This is a critical step in the budget process. The numbers are a little better than earlier this year, but not enough to plug a billion-dollar budget hole, said Michigan Budget Director Jen Flood.
“We know there are some tough decisions ahead, but we’ve done hard things in the past and we can do them again this year,” said Flood, who is a member of Whitmer’s cabinet.
Whitmer and a divided Legislature were late getting the job done last year, missing two deadlines as lawmakers and the administration grappled with cuts to Medicaid and other federal spending programs.
While these new revenue numbers and the economic projections behind them are not a surprise, they come with significant uncertainty surrounding the direction of the economy. A big wild card is the question of how long it might take to resolve the military conflict with Iran.
“We can’t ignore the broader environment, whether it’s federal uncertainty, geopolitical tensions, healthcare prices, rising gas prices,” said state Treasurer Rachel Eubanks. “Those continue to put pressure on budgets across the country, and Michigan is no exception to that.”
Republicans say they will support cuts to balance the budget, but not new taxes or withdrawing money from the state’s “rainy day” fund.
“The work we have done to make sure taxpayer dollars are invested in the priorities of Michigan families is producing results,” said Representative Ann Bollin (R-Brighton Township), who chairs the House Appropriations Committee. “As budget negotiations continue, we must stay the course with a responsible approach that focuses on long-term priorities instead of growing government for the sake of growing government.”
The legal deadline to send a budget to the governor is July 1, which is the start of the fiscal year for many local governments, community colleges and public universities. The state’s fiscal year begins October 1, which is when the Michigan Constitution requires a balanced budget to be in place.
