Inside208

New Revenue Estimate Agreement For State Budget – Revenue Sharing Impact

Posted on May 15, 2020 by chackbarth

The House and Senate Fiscal Agencies and Treasury officials met this morning to determine the revised revenue estimates that will be used in developing the upcoming state budget and to make any needed adjustments to the current year state budget.  You can review the Consensus agreement here – https://www.house.mi.gov/hfa/Consensus.asp.

As expected due to the abrupt shutdown in the state’s economy, this agreement identifies current year revenues running about $3 billion below what had been originally estimated back in January for the combined GF/GP and School Aid Fund budgets.  This reduction in state revenues will result in as-yet-to-be-determined level of budget cuts for the current budget and reduced resources to use when crafting the budget for the state’s upcoming fiscal year.  While we don’t know what impact these reductions may have on statutory revenue sharing, Treasury has provided a revised estimate for what the impact will be on Constitutional Revenue Sharing payments that are directly tied to the state’s Sales Tax collections.

This community-by-community estimate for Constitutional Revenue Sharing payments can be viewed here –

https://www.michigan.gov/documents/treasury/FY_2020_and_FY_2021_Projected_Constitutional_Revenue_Sharing_Payments_-_Executive_Recommendation_-_May_Consensus_-_updated_5-15-20_690792_7.pdf

Staff with SEMCOG analyzed these new state sales tax estimates and have calculated the potential bi-monthly budget impact on a per capita basis for a number of local fiscal year variations.  The SEMCOG blog and analysis can be viewed here. 

As more information becomes available on the Governor’s budget reduction plans in the next few days, we will share that information here on our blog.

The results of this consensus also further outline the critical need for additional, direct federal aid to all local units of government, as advocated for by MML and the National League of Cities through the Cities Are Essential campaign.  Economists with the University of Michigan’s Research Seminar in Quantitative Economics specifically highlighted that “State and local governments urgently need substantial help” from the federal government in order to weather this crisis. League members are urged to reach out to their Member of Congress using the tools on the Cities Are Essential campaign page to ask for their support to include direct aid to local governments in the next stimulus package.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

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