LANSING — Michigan economic experts say the state is in a stable position following mixed projections on revenue and unemployment.
Officials say the state is projected to bring in $780 million less than previously expected this fiscal year, while employment is expected to pick up through 2028.
Drops in state revenue are largely due to a decrease in corporate income tax earnings, which accounted for $340 million in lost revenue last year.
“We had the largest decrease on record in the preliminary numbers, at about 14.9%, and it was the biggest miss among our major taxes,” said Eric Bussis, director of the Michigan Department of Treasury.
The shortfall in revenue may lead to spending cuts and the scaling back of some state programs, since lawmakers know they’ll likely have fewer dollars to work with this year.
Dakota Baker, director of the Northern Michigan Chamber Alliance, encouraged lawmakers to remain focused on programs that benefit the region.
“Certainly resources like housing and childcare. Those continue to be the number one and two issues impacting many of our workforce and economic development abilities in our community,” Baker said. “Any of those programs — Michigan Reconnect, and the Going PRO Talent Fund, just to name a few — are really critical programs that we want to make sure remain funded, remain operational so they can benefit the region.”
The analysis also raised warning signs for fiscal year 2027, which starts on Oct. 1 of this year.
That revenue estimate dropped by $1.1 billion from the previous estimate, likely setting the state up for difficult questions ahead.
Despite the changes in expected tax revenue, Michigan workers are seeing mostly neutral or positive news from the new estimates.
Michigan’s unemployment rate has crept down by half a percent and the state is expected to add 12,000 jobs a year through 2028.
“Measuring from the end of 2025 to the end of 2026, we’re projecting payroll employment to hold essentially flat in Michigan, but growth then does pick up as we move into the back half of the year and into the next couple of years,” said Gabriel Ehrlich, an economic forecaster at the University of Michigan. “Our forecast takes Michigan’s payroll job count to 2.8% above its pre-pandemic level by the end of 2028.”