Advocacy News – Jan. 21, 2026
What’s new: State revenue projections for the next two fiscal years were significantly revised downward, adding new pressure to budget negotiations just as lawmakers begin work on the FY 2027 spending plan.
The numbers: At last Friday’s Consensus Revenue Estimating Conference (CREC), state fiscal experts reduced expected revenues by a combined $779.4 million in FY 2026 and $1.1 billion in FY 2027.
- Roughly $700 million of the Fiscal Year (FY) 2027 decline is attributed to tax policy changes, including:
- The road funding package enacted last year
- Tax exemptions on tips, overtime, and Social Security income
- The remaining $400 million reflects a flattening economy and lower-than-expected business tax collections.
The General Fund and School Aid Fund together make up roughly $33 billion of the state budget.
Ahead of CREC, all three forecasting entities anticipated declines.
- The Senate Fiscal Agency (SFA) was most pessimistic, projecting a $1.314 billion drop in FY ’26 and $1.593 billion in FY ’27. After School Aid Fund adjustments, net declines total $1.14 billion and $1.22 billion, respectively.
- The Michigan Department of Treasury had the least severe outlook, with a $587.1 million General Fund drop in FY ’26 and $858.3 million in FY ’27.
The bottom line: The revised forecast sharpens the debate over spending priorities, structural reforms and the long-term fiscal impacts of recent tax policy decisions. The Michigan Chamber will continue to push for a fiscally responsible, pro-business budget that carefully balances spending discipline with tax restraint.
Go deeper: Read more about CREC’s findings.