LANSING (AP) – Michigan could take in $542 million more in revenue than projected four months ago – good news as lawmakers and Gov. Rick Snyder work to finalize a state budget in coming weeks.
The nonpartisan Senate Fiscal Agency said late Monday the additional money will leave Michigan with a $739 million surplus at the end of the budget year. The extra cash could possibly be used to boost spending, lower taxes or be socked away into savings.
The unanticipated revenue was not attributed to a sudden change in the economy but rather understated estimates of state income tax and business tax collections, according to the Senate agency, which typically issues more conservative forecasts. Specifically, much of the windfall can be attributed to people selling stocks and other investments because of worries about potential federal income tax changes before a New Year’s “fiscal cliff” in January.
A House agency is likely to release its own forecast Tuesday, a day before a key meeting that will give the Republican governor and GOP-controlled Legislature a clearer picture of state finances before passing a plan to spend at least $49 billion.
They are hoping to approve Michigan’s next budget by June 1 – four months ahead of time – though arguments over expanding Medicaid health insurance to low-income adults and raising taxes for road repairs could push negotiations into the summer.
According to the Senate report, the state’s $9.9 billion general account will have a $592 million year-end balance. The $13.4 billion school aid fund that pays for K-12 schools, universities and community colleges will have a $147 million surplus.
The report’s authors wrote that while the surpluses are “reasonably healthy,” they will be needed to help balance the 2013-14 budget now under consideration in the Capitol. They also warned that the “marked” boost in tax revenue associated with the fiscal cliff is not expected to occur again.
Vehicle sales are projected to continue rising, from 14.4 million last year to 15.1 million this year and 15.3 million in 2014. The state unemployment rate is projected to drop from 8.1 percent in 2012 to 7.7 percent in 2013 and 7 percent in 2014.
Personal income will grow 0.6 percent this year and 1.9 percent in 2014, the report said.
© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.