May 3, 2002

State Treasurer Jay B. Rising, Senate Fiscal Agency Director Gary S. Olson, and House Fiscal Agency Director Mitchell E. Bean today reached a Consensus Agreement on a revised economic and revenue outlook for the remainder of Fiscal Year 2003 and Fiscal Year 2004. According to the agreement, FY 2003 General Fund-General Purpose (GF-GP) revenues will be unchanged from January’s consensus. Because Sales, Use, and Business tax collections have been lower than expected, ’03 School Aid Fund (SAF) revenue is expected to be down $92 million from January’s estimates.

During today’s conference, Fiscal Year 2004 GF-GP revenue was revised downward by $33 million to $8,159 million while SAF revenue was lowered by $106 million, to $10,749 million. January’s forecasts were based on assumptions that the U.S. and Michigan economies would begin to pick up in the third quarter of 2003 and experience moderate growth in 2004. January’s consensus also did not include the impact of a war in Iraq. State Treasurer Jay B. Rising says today’s revenue estimates factor in both the war in Iraq and continued weakness in the economy. "It appears that consumer confidence and spending have not bounced back in the way we expected last January," Rising says. "That means lower sales tax revenue. On the positive side, income tax collections are coming in on target with January’s projections." Michigan’s unemployment rate, which stood at 6.7 percent in March, is now estimated to be 6.5 percent for 2003 before dropping to 6.1 percent in 2004.

Following presentations at the Revenue Estimating Conference, Treasurer Rising and the Fiscal Agency Directors now expect the economy to begin to pick up late in Fiscal Year 2003 and into FY 2004, which begins October 1, 2003. "Today’s consensus makes what has been a challenging 2004 budget even more difficult," says Treasurer Rising. "But, the administration will work aggressively to address these new revenue estimates."