Updates About Economy

The Michigan Senate recently approved SB 723 with bipartisan support. If successful, this bill would increase the total tax capture cap from $1.6 billion to $3.5 billion, set new limits on individual projects, and update eligibility criteria under the Brownfield Redevelopment Financing Act. It also adds new transparency requirements, including enhanced reporting and a searchable database of approved projects, and directs a portion of additional tax capture toward housing, child care, small business, and placemaking programs. The legislation passed 20–13 and has been transmitted to the House for consideration.

The Senate also passed two related bills aimed at strengthening long-term economic planning in the state. SB 213 and SB 214 would create a Strategic Advisory Board within the Michigan Strategic Fund. The board will take on the task of developing a 10-year statewide economic development plan. Once completed, the plan would be updated annually by the Michigan Economic Development Corporation (MEDC). Both bills similarly passed the Senate 20–13 vote before being received by the House.

Separate legislation to revive a modified version of the Good Jobs for Michigan program has also been proposed by Sen. Sam Singh (D-East Lansing). SB 472 and SB 473 were reported unanimously by the Senate Regulatory Affairs Committee and would restart the incentive program, which expired in 2019, with updated requirements related to job creation and wage standards. The bills include additional eligibility and compliance provisions and are intended to help the state’s economic development strategy. Discussion between the House and the Senate on the bills are expected to continue into the new year.

As we enter the new year, we will also begin seeing new wages in Michigan, according to the state’s Improved Workforce Opportunity Wage Act. Michigan’s minimum wage is set to increase from $12.48 to $13.73 per hour. Tipped employees, who receive 40% of the minimum wage, will see their hourly minimum wage increase to $5.49 per hour, assuming the employee exceeds the $8.24 tip threshold.

Revenue collections from major taxes and lottery were slightly higher than expected for November, according to a recent November Revenue Report released by the Senate Fiscal Agency (SFA). Compared to November last year, the revenue totals reached $3.0 billion and are up 3%. Revenue from the State Education Tax (SET), individual income tax (IIT) withholding, and Michigan Business Tax (MBT) all came in higher than expected. Net income tax revenue and sales tax revenue were also elevated compared to last year, up 8.3% and 3.6%, respectively. However, net revenue from the repealed Single Business Tax, Michigan Business Tax, and Corporate Income Tax (CIT) collections were collectively 47% lower than last November.

Still, collections to the General Fund came in $95.8 million over expectations. The School Aid Fund also came in at $44.1 million above projections. Because November is the first month for tax collection for the fiscal year, these figures also represent the year-to-date actual vs predicted revenue.