Forecast won't change terms of Michigan budget debate

DALLAS -- Michigan heads into budget talks with little change forecast in revenue projections from estimates agreed to in May, according to figures released by Gov. Rick Snyder's administration and legislative economists on Thursday.

Fiscal year 2018 general fund revenue is projected at $10.3 billion. That’s down $101 million from the last forecast, while fiscal 2018 School Aid Fund revenue is now estimated at $13.1 billion, up $114 million from May estimates.

General Fund revenue for fiscal year 2019 — which begins Oct. 1 — is now forecast at $10.3 billion, down $150 million from May’s estimate, while the fiscal 2019 SAF revenue estimate has been revised upward by $134 million to an estimated $13.5 billion. The revenue estimates are based on the most recent economic projections and forecasting models.

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Rick Snyder, governor of Michigan, speaks during a grand opening ceremony at the expanded Toyota Motor North American Research & Development (TMNA R&D) center in York Township, Michigan, U.S., on Thursday, May 4, 2017. Toyota is celebrating the 40th anniversary of the company's research and development operations. Photographer: Sean Proctor/Bloomberg

“We now have agreed upon revenues to finish our work for the release of the state budget in early February, keeping us in great shape to get the people’s business done before the October 1st fiscal year,” State Budget Director Al Pscholka said in a statement. “The pressures on the General Fund as the result of the roads package and property tax relief are real, but with proper planning and being cautious with taxpayer dollars, were are in position to meet our obligations.”

Snyder, a Republican, will propose his budget in February. Pscholka said there’s pressure on the General Fund with a lot of it already earmarked.

“The Consensus Revenue Estimating Committee figures show that it is time to reinvest in Michigan, but we have to do it wisely,” House Minority Leader Sam Singh, D-East Lansing, said in a statement. “Too many families in our state are still struggling to get ahead, which is why we have to put them first when we put together the state’s budget. We need a Michigan where small businesses thrive, where families and seniors aren’t left behind, where kids can get a great education no matter which school they attend and where everyone can afford to get the health care they need. State spending that doesn’t focus on these priorities is spending we can’t afford.”

State Rep. Aaron Miller, R-Sturgis, said he was optimistic that the careful and conservative budgeting process Michigan practiced for the past seven years has strengthened the state’s economy.

“By being diligent on controlling spending and paying down debt, we have been able to dedicate large amounts to K-12 education, and more money for improving our roads, bridges and underground water systems than ever before,” Miller said in a statement. “We cut unnecessary spending and made the best use of the money entrusted to us by taxpayers. Our goal is to continue moving forward in this direction.”

The figures were released as talk of a tax cut is growing in the GOP-led Legislature.

Sen. Jack Brandenburg, R-Harrison Township, and Sen. Ken Horn R-Frankenmuth, co-sponsored legislation on Thursday that would restore the Michigan personal tax exemption that was lost in the recent federal tax reform.

Senate Bill 748 makes changes necessary to maintain the state’s personal exemption and provides an increase in the state personal exemption by $500 to $4,800 by 2021, while remaining tied to inflation. Currently, the state personal tax exemption is scheduled to increase from $4,000 to $4,300 over the next three years. Snyder on Monday proposed boosting the exemption to $4,500 by 2021.

“Any discussion of tax cuts has to be combined with additional spending cuts or revenue increases in other places,” said state Treasurer Nick Khouri in a statement. “And until we can have that broader discussion and identify those other areas, tax cuts right now are a difficult conversation.”

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