Michigan’s latest tax revenue forecast wasn’t exactly a feel-good moment. Turns out the state’s piggy bank isn’t as full as expected, which means a lot of awkward spreadsheet-staring and nervous throat-clearing in budget meetings. State finance folks are carefully walking lawmakers through the numbers, trying not to spill their coffee in the process. These are your tax dollars we’re talking about — so let’s take a look at what’s really going on.
Here are Five Fast Facts on Michigan's 2026 budget outlook:
- 😣 Smaller Than Expected - Michigan budget forecasters now think the state will collect around $780 million less for 2026 and $1.1 billion less for 2027. Who ate all of our lunch money?!
- 🤦 Multiple Causes - These revenue shifts are due to a combo of tax changes (like tax breaks passed recently), loss of federal money, and slower economic trends. It all combined like an odd soup of generally icky budgetary news (as if budgetary news isn't icky enough all by itself).
- 💃 Tariff Two-Step - The tariffs haven't been as much of a killer as some thought - about an 11% increase in prices, but businesses have made adjustments to keep things rolling. Cars, in particular, have gotten a bit more expensive, but more domestic production is expected, which could lead to more jobs in the end. 🤞
- 📈📈 Tale Of Two Ups - Over the next two years, unemployment is expected to tick up by .2%, but wages should go up by 3.5%. So it's not going to get any easier to find a job, but those jobs will pay a bit better. That's great...ish. Kind of.
- 🌧️ Rainy Day - One bit of good news is that the state's "rainy day fund" hasn't been touched since 2020 and currently has $2.2 billion in it, so there is (fortunately) money in the bank. Of course, the legislative sharks are already circling it...
🔥Bottom line: Michigan's budget bucket seems to have a bit of a hole in the bottom. It's not a massive problem yet, but Lansing is going to have to make some tough decisions to plug it, and not all of them will spark joy. In short, the budget picture is less “sunny beach” and more “cloudy afternoon with a surprise math test.”
What do you think should be done to fix the budget?
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