Mary Ann Cleary, Director House Fiscal Agency Consensus Revenue Estimating Conference Overview House Appropriations Committee January 22, 2020
Mary Ann Cleary, Director
House Fiscal Agency
Consensus Revenue Estimating Conference
Overview
House Appropriations Committee
January 22, 2020
1/22/2020House Fiscal Agency2
Consensus Revenue Estimating Conference
University of Michigan
Economic Outlook
AGENCY FORECASTS:
House Fiscal Agency
Senate Fiscal Agency
Administration
State
Economic Forecasts
National
Economic ForecastsCONSENSUS
REVENUE
ESTIMATING
CONFERENCE
Estimates of:
Constitutional
Revenue Limit
School
Foundation Index
Total
School Aid Fund
Revenue
Total
GF/GP Revenue
Budget
Stabilization Fund
Pay-in/Pay-out
FORECAST INPUT FORECAST OUTPUT
Revenue Estimates
House Fiscal Agency3 1/22/2020
Net Individual Income Tax
1/22/2020House Fiscal Agency4
$10,278 $10,402$10,693
$10,431 $10,579$10,907
$11,235
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
May 2019 January 2020
(Dollars in Millions)
Sales and Use Taxes
1/22/2020House Fiscal Agency5
$9,651 $9,967 $10,194
$9,602 $10,042
$10,352 $10,567
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
May 2019 January 2020
(Dollars in Millions)
Combined Business Taxes(Corporate Income Tax / Michigan Business Tax / Insurance Company Premiums Taxes)
1/22/2020House Fiscal Agency6
$890
$831 $854
$1,014
$931 $915 $955
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
May 2019 January 2020
(Dollars in Millions)
State Education Tax (SET)
1/22/2020House Fiscal Agency7
$2,100 $2,167
$2,219 $2,113
$2,171 $2,223
$2,276
$0
$500
$1,000
$1,500
$2,000
$2,500
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
May 2019 January 2020
(Dollars in Millions)
Lottery Transfer
1/22/2020House Fiscal Agency8
$982 $990 $1,000
$1,071
$1,010 $986 $992
$0
$200
$400
$600
$800
$1,000
$1,200
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
May 2019 January 2020
(Dollars in Millions)
January 2020 Consensus Revenue Estimates(Dollars in Millions)
9 1/22/2020House Fiscal Agency
FY 2018-19
January 2020
Consensus
Change From
FY 2017-18
Change from
May 2019
Consensus
General Fund/General
Purpose (GF/GP) $11,108 $91 0.8% $256
School Aid Fund (SAF) 13,560 258 1.9% 78
Total Revenue $24,668 $349 1.4% $334
Note: Numbers may not add due to rounding.
January 2020 Consensus Revenue Estimates(Dollars in Millions)
10 1/22/2020House Fiscal Agency
FY 2019-20
January 2020
Consensus
Change From
FY 2018-19
Change from
May 2019
Consensus
General Fund/General
Purpose (GF/GP) $11,012 ($96) (0.9%) $235
School Aid Fund (SAF) 13,926 366 2.7% 86
Total Revenue $24,938 $270 1.1% $321
Note: Numbers may not add due to rounding.
January 2020 Consensus Revenue Estimates(Dollars in Millions)
11 1/22/2020House Fiscal Agency
FY 2020-21
January 2020
Consensus
Change From
FY 2019-20
Change from
May 2019
Consensus
General Fund/General
Purpose (GF/GP) $11,195 $182 1.7% $274
School Aid Fund (SAF) 14,318 392 2.8% 138
Total Revenue $25,512 $574 2.3% $412
Note: Numbers may not add due to rounding.
January 2020 Consensus Revenue Estimates(Dollars in Millions)
12 1/22/2020House Fiscal Agency
FY 2021-22
January 2020
Consensus
Change From
FY 2020-21
Change from
May 2019
Consensus
General Fund/General
Purpose (GF/GP) $11,519 $324 2.9% --
School Aid Fund (SAF) 14,640 323 2.3% --
Total Revenue $26,159 $647 2.5% --
Note: Numbers may not add due to rounding.
Constitutional Revenue Limit-$
2.2
-$3.
0
-$3.
7
-$3.
2 -$2.
2
$0.1
-$0.
2
-$1.
0
-$0.
6
$0.0
$0.2
-$2.
4
-$3.
9
-$4.
2
-$4.
4
-$4.
2
-$5.
0
-$5.
3 -$4.
7
-$8.
0
-$7.
6
-$5.
6
-$5.
2
-$7.
0
-$8.
5 -$7.
4
-$8.
1
-$9.
2
-$8.
7
-$9.
9
-$11
.5
-$12
.5
-$13
.4
Am
ou
nt
be
low
/ab
ove
lim
it
*Jan. 2020 Consensus Estimates
Total state tax and other revenue collections are $11.5 billion lower than the limit set in the State
Constitution (9.49% of adjusted state personal income) for FY 2020.
13 House Fiscal Agency 1/22/2020
(Dollars in Billions)
January 2020 Consensus Forecast
1/22/2020House Fiscal Agency14
Budget Stabilization Fund (BSF) Calculation
FY 2019-20: No pay-in or pay-out required
FY 2020-21: No pay-in or pay-out required
FY 2021-22: No pay-in or pay-out required
Budget Stabilization Fund Balance
House Fiscal Agency15
$1
,26
4.4
$9
94
.2
$1
45
.2
$0
.0 $8
1.3
$2
.0
$2
.0
$2
.1
$2
.2
$2
.2
$2
.2
$2
.2
$3
65
.1
$5
05
.6
$3
86
.2
$4
98
.1
$6
12
.4 $7
10
.0
$1
,00
6.0 $1
,14
8.6
$1
,18
9.1
$1
,23
1.4
$1
,27
5.3
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20*
FY21*
FY22*
* HFA Estimate
Dollars in Millions
The estimated FY 2020 BSF balance is 4.8% of combined GF/GP and SAF revenues. With interest and
payments tied to the Detroit Bankruptcy, it will increase by about 3.5% a year absent deposits or withdrawals.
1/22/2020
Balance Sheets
House Fiscal Agency16 1/22/2020
General Fund Balance Sheet
House Fiscal Agency17
FY 2019-20
Baseline
FY 2020-21
BEGINNING BALANCE $838.0 $591.8
REVENUE
General Fund (GF/GP) Revenue $11,012.1 $11,194.5
Revise the income tax earmark to SAF (HB 4125) ($173.2) ($179.4)
Misc. Revenue $2.4 $0.0
Revenue Sharing ($490.1) ($490.1)
TOTAL REVENUE $10,351.3 $10,525.0
EXPENDITURES
Initial Ongoing/Baseline Est. $10,002.6 $10,019.9
One-time Appropriations $310.8 $0.0
Economics/DHHS caseload $158.6 $534.0
GF to School Aid $62.7 $45.0
State Psych DHS penalty $62.8 $59.2
TOTAL EXPENDITURES $10,597.5 $10,658.1
TOTAL ENDING BALANCE $591.8 $458.7
1/22/2020
Medicaid Spending Pressures
Medicaid Program
The 23% enhanced federal match rate increase for Children’s Health Insurance
Program (CHIP) will phase out and the last phase down of the Healthy Michigan
Plan federal match to 90% will occur. Projected FY 2020-21 GF/GP funding
increase of $55 million.
Medicaid cost adjustments for medical utilization, inflation, and actuarial
soundness are projected to increase 3% annually. Projected FY 2020-21 GF/GP
funding increase of $175 million.
One-time GF/GP replacement of restricted funds totaling $45 million.
Medicaid Psychiatric Disproportionate Share Hospital
Disallowance
Possible federal repayment for psychiatric hospital claims made on Medicaid from
FY 2000-01 to FY 2008-09 – Total $195 million with repayment over 3-years.
Additional federal audit “look back” costs related to other Health and Human
Services programs could total $23 million.
House Fiscal Agency18 1/22/2020
Additional Spending Pressures
Baseline Costs for FY 2020-21
Full year funding Indigent Defense Standards 1-4 additional funding increase of
$36 million.
Employee economics includes salary increase and retirement costs estimated
increase of $90 million.
Annualizing MSP trooper school $10 million.
Unknown Potential Costs
Legal settlements:
Department of Corrections
Unemployment Insurance Agency (UAI)
Flint water
Adopted Legislation
Raise the Age (FY 2021-22)
Indigent Defense Standards 5-8
House Fiscal Agency19 1/22/2020
School Aid Fund Balance Sheet
House Fiscal Agency20
FY 2019-20
Baseline
FY 2020-21
BEGINNING BALANCE $212.3 $262.7
REVENUE
School Aid Fund (SAF) Revenue $13,925.5 $14,317.5
Revise the income tax earmark to SAF (HB 4125) $173.2 $179.4
General Fund/General Purpose (GF/GP) $62.7 $45.0
Other Restricted Funds $77.3 $72.0
Federal Funds $1,749.6 $1,749.6
TOTAL REVENUE $15,988.3 $16,363.5
EXPENDITURES
School Aid (Adj for lapses/consensus revisions) $15,173.8 $15,307.6
Community Colleges $414.7 $425.7
Higher Ed $349.4 $356.1
TOTAL EXPENDITURES $15,937.9 $16,089.4
TOTAL ENDING BALANCE $262.7 $536.8
1/22/2020
Major School Aid Budget Issues
Baseline Costs for FY 2020-21
Baseline costs are expected to decline by $59 million based on declining
pupils, growing local property tax values, and rising special education costs.
MPSERS experience study revised mortality and other assumptions which will
increase costs by an estimated $189 million.
A foundation allowance increase ranging from $100-$200, would cost
approximately $250 million.
House Fiscal Agency21 1/22/2020
Summary
1/22/2020House Fiscal Agency22
Projected FY 2019-20 ending balance
$592 million General Fund balance
$263 million School Aid Fund balance
Projected FY 2020-21 resources above/below baseline budget
$459 million General Fund
$537 million School Aid Fund balance
www.house.mi.gov/hfa