Michigan’s FY25 State Budget: Navigating Economic Predictions and Key Investments
The Detroit Regional Chamber hosted Michigan State Treasurer Rachael Eubanks and State Budget Director Jen Flood to discuss the state budget for the next fiscal year and recommendations for distributing the funds.
Eubanks explained that at the heart of this process within one of the largest treasuries in the country is predicting revenues and managing expenditures, which starts with looking at what is currently happening in the economy, particularly with different parts of inflation, consumer goods and services, and interest rates, which have appeared to mostly recover from the COVID-19 pandemic.
“That is the number one predictor of how our revenues are going to perform as a state,” she said.
The revenue estimates come from the agreements made during the biannual revenue estimating conferences. These estimates are then changed into economic components before being turned into state revenues, which are approved by the legislature.
Strategic Investments and ‘Historic’ Achievements
When outlining the fiscally responsible goals outlined in the FY25 budget, Flood said the state’s strategic investments included enhancing education, reducing crime, improving infrastructure, and expanding health care access—all while paying down $21 billion of debt since Gov. Gretchen Whitmer took office and achieving an all-time high rainy-day fund of $2.2 billion.
Related: FY25 State Budget Wins for Business
Additionally, substantial allocations were made toward free preschool, ongoing support for classrooms, investments in student mental health and safety, as well as programs to enhance literacy and innovative practices.
“And while state government can’t solve inflation on its own, we’ve been laser-focused on what we can do to bring down costs for small businesses and for families,” Flood said. “Between the preschool, [its] meals, community colleges, and the [Michigan] Achievement Scholarship, we’re saving families almost $50,000 per student.”
Future Priorities
Closing out the conversation were questions from the audience, one of which asked about what some of the final spending items are to anticipate later this year. Flood said that leaving about $320 million for legislative priorities in economic development, such as increasing R&D and SOAR redevelopment, will help Michigan’s thriving business environment. Flood also briefly touched on the State Treasury’s plans regarding Michigan’s upcoming Paid Leave and Minimum Wage updates that begin in February 2025.
“I just don’t think we’re at a point yet where we understand the implications,” Flood said. “This will be a big conversation heading into the January revenue meeting.”
