‘Staggering’ drop in state tax revenues projected

LANSING » Michigan will confront multibillion-dollar declines in tax revenue combined with record-high enrollment in government health insurance programs — a double whammy from the coronavirus pandemic that may lead to major cuts in services.

Legislative experts and top officials in Gov. Gretchen Whitmer’s administration agreed to revised budget estimates Friday after hearing economic forecasts. The steep downward revision from revenue estimates issued just four months ago — a combined drop of nearly $6.3 billion this fiscal year and next — was unprecedented.

Revenues in the school aid and general funds, the state’s two main accounts, are projected this fiscal year to fall nearly $3 billion, or 12%, from last year’s levels. The outlook is dire for the next budget, too, with revenues in the major funds coming in $2.2 billion, or 9%, below 2018-19 collections.

“These numbers are staggering,” said Mary Ann Cleary, director of the nonpartisan House Fiscal Agency.

Officials project that the economic downturn will result in an additional 500,000 people needing Medicaid, which covers health care for lowincome residents. That would cost the state $569 million more in the next fiscal year, draining what already will be a smaller $9.3 billion general fund.

“This is potentially as bad if not worse than the Great Recession. We were only able to make it through that because the federal government provided us resources so we could backfill our losses,” said budget director Chris Kolb. “The bottom line is, if we’re going to save lives and provide critical services to Michiganders throughout this crisis, we’re going to need flexibility and support from the federal government.”