State will get more in taxes
LANSING (AP) – State fiscal analysts reported Tuesday that Michigan is on pace to bring in at least $382 million more in tax revenue than projected earlier this year, which was welcomed news as the governor and lawmakers prepare to pass a new budget.
The nonpartisan House Fiscal Agency estimated that the general fund, Michigan’s main account, would take in $262 million more this fiscal year than forecast in January, and the school aid fund could get $120 million more. But a report issued a day earlier by the Senate Fiscal Agency projected $452 million more in the general fund and an extra $90 million for education.
The governor’s administration, through the Department of Treasury, is expected to issue its estimates Wednesday morning, after which budget experts will come to a consensus on revenue numbers from all three sources.
Gov. Rick Snyder and lawmakers could use the extra money to boost spending, lower taxes or sock away more into savings. Already, Democrats are talking about spending the revenue on education, while Republicans – including Snyder – are saying more should go to road and bridge upkeep if the governor’s proposed gasoline tax and license plate fee increases remain bottled up in the Legislature.
Legislators are aiming to pass the next budget by June – four months before the budget year begins – though sticking points remain over road funding and expanding Medicaid health insurance to more low-income adults. Senate Majority Leader Randy Richardville, R-Monroe, said Tuesday he doubts a transportation deal would be reached by June 1.
The unanticipated revenue is not being attributed to a sudden change in the economy but rather understated estimates of state income tax and business tax collections, according to the Senate Fiscal Agency. 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 key decision ahead for Snyder and lawmakers is determining how much of the new revenue is considered a one-time boost compared to permanent revenue growth that can be built into spending plans year in and year out.