May 18, 2004

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 the economic and revenue outlook for the remainder of Fiscal Year 2004 and FY 2005. Overall, the estimates saw little change from January's Consensus estimates.

The FY 2004 GF-GP revenue estimate was basically unchanged, while the School Aid Fund (SAF) estimate was revised downward. Net FY 2004 GF-GP revenue is estimated to be $7.866 billion, up $8.9 million from January. FY 2004 SAF revenue is predicted to be $10.535 billion, down $49.1 million from January.

Today's agreement raised the FY 2005 GF-GP revenue forecast to $7.856 billion, $33.6 million over the January estimate. The forecast for SAF revenues was reduced to $10.960 billion, $38.2 million below January's projections.

"The gradual economic upswing we are experiencing has kept us on track with January's revenue projections," said Treasurer Rising. "However, consensus estimates for 2005 simply won't be enough to off-set spending pressures from Medicaid and other increases. Finalizing a structurally-balanced budget for Fiscal Year 2005 must be our top priority."

Today's agreement does not include revisions to revenue estimates for Driver Responsibility Fees. These revisions will lower FY 2004 GF/GP revenue by $41 million and FY 2005 GF/GP revenue by $48 million.

The Consensus agreement predicts that real Gross Domestic Product, which grew 3.1 percent in 2003, will grow another 4.6 percent in 2004 and 3.7 percent in 2005. Today’s agreement is also based on expectations that Michigan will continue to experience a gradual increase in employment through the remainder of FY 2004 and into FY 2005.

"Last January, we projected a slow start to the year, followed by increasing employment growth. Based on today's presentations, it appears that growth is underway and we are cautiously optimistic it will continue in the months ahead, " Rising said.