Last month it was reported Michigan’s economy will keep growing albeit at a slower rate than recent history, which will result in stable tax revenue growth.
With that news, the state of Michigan and new Gov. Gretchen Whitmer are gearing up to create the 2020 fiscal year budget. The Democratic governor will be drafting her first budget proposal in the next month as it is due to the Republican-led Legislature in March.
The budget year for Michigan starts on Oct. 1 and after eight years of former Gov. Rick Snyder getting the process completed by June, it will now be up to Whitmer and the Legislature to keep the streak alive.
With that in mind, the Cadillac News wanted to know what the taxpayers and general public think should be spending priorities. An online survey was placed on both the Cadillac News’ Facebook and Twitter accounts seeking input from readers. The choices readers had to pick from in this unscientific survey included roads and infrastructure; education funding; school safety and security; public health and safety; prisons and corrections; veterans affairs; environmental clean-up and protection; perfluoroalkyl and polyfluoroalkyl substances also known as PFAS; chronic wasting disease; tourism; and other.
Of the responses received during the roughly weeklong timeframe the survey was available to readers, two-thirds of the responses said education funding and veterans affairs should be given attention in the upcoming budget while one-third of the respondents cited PFAS and tourism as needing continued funding and focus in the proposed 2020 budget.
But every single person who responded to the online survey said they believed public health and safety, environmental clean-up and protection and roads and infrastructure needed to be a focus in the state’s 2020 budget.
As for the reasons why they picked those things for the state to focus on, readers stated things such as the aforementioned issues are concerns for everyone while some of the issues that were not highlighted were only issues that impacted selective members of the state’s populous.
Others stated that while the need for action regarding the state’s failing roads and infrastructure is a given the state also needs to include a look at where all the money previously allocated has actually gone. They also said education funding seems like a no-brainer but the state also needs to review common core and the goals and limits we are placing on our educators.
When it comes to public health and safety, one reader said that directly corresponds with the Flint water crisis. As for why veterans were important to focus on funding from the 2020 budget, one reader said there needs to be increased support for employers hiring veterans. They also said there needs to be a focus on retraining programs, mental health services, and support for veteran homeless shelters.
In environmental preservation and clean up, one reader said we live in Michigan and we only have one planet to live on. As for tourism, much like the environmental need, living in Michigan the economy depends on tourism and it is essential that it succeeds.
In January, economists gave a largely positive update to state officials but also warned of risks. U.S. vehicle sales, which peaked in 2016 and historically have tracked closely with the auto state’s economic fortunes, are projected to dip from 17.1 million in 2018 to 16.5 million in 2021. The state already is bracing for previously announced job cuts at General Motors.
“Looking into the future, there are more clouds on the horizon now than there have been in a while. That being said, we are forecasting continued and slower job growth over the next three years — along with low unemployment, tame inflation and meaningful income growth,‘ said Gabriel Ehrlich, director of the University of Michigan’s Research Seminar in Quantitative Economics.
He said the state economy has “rarely been better than this.‘
But combined revenue in Michigan’s two main accounts, the $13.5 billion school aid fund and the $10.7 billion general fund, is estimated to be flat from the last fiscal year. That is partly because more money is being shifted to the transportation budget and there was a one-time boost in income tax revenue that is not expected to carry forward. The accounts are projected to grow by 1.6 percent, or $394 million, in the next budget year — with all but $18 million of that growth coming in the school fund.
Revenue is forecast to be $265 million higher this fiscal year than what was forecast in May.
Budget director Chris Kolb, who started the job last month, noted that the general fund is the same size as it was nearly two decades ago due to various tax cuts along with 2015 laws that are diverting more money to road construction.
“All those create more pressures on us, and we have to aware of that,‘ he said. “Going forward, the numbers don’t increase much when it comes to the general fund. So we have to come up with a very reasonable, thoughtful plan to spend those dollars very carefully and to work on the governor’s priorities.‘
The forecast released by state Treasurer Rachael Eubanks and the director of nonpartisan legislative fiscal agencies projects modest growth in employment along with a low jobless rate. Michigan is entering its ninth straight year of job increases, though the forecast’s projection of 4.5 million jobs in 2021 would remain roughly 200,000 below the 2000 peak.
In November, Detroit-based GM announced plans to shut factories and lay off workers, including about 3,300 at four U.S. plants — two in Michigan — and over 8,000 white-collar workers. The company said Friday it has 2,700 jobs at other plants for factory workers slated for layoff.
Ehrlich said GM’s move will result in the loss of 16,000 Michigan jobs over two years, including from “spillover‘ effects on the rest of the economy.
Associated Press reporter David Eggert contributed to this report.