CHICAGO -- Michigan will bring in $616 million less than expected over the next two years, state fiscal officials said during the state's biannual revenue estimating conference May 15.
Revenues are still expected to be higher than in 2013, but down from the most recent estimates in January.
Officials revised their fiscal 2014 projections downward by $317 million from January estimates. Two-year projections are down $616 million and three-year projections down by $987 million.
Lawmakers will use the estimates to craft a final 2015 state budget by June. Gov. Rick Snyder and lawmakers began to debate cuts almost immediately after the conference.
Despite the drops, state budget director John Roberts said Snyder remains committed to pledging funds to Detroit's bankruptcy and to road funding. "Everybody knows how important Detroit is to the governor," Roberts said, according to local reports.
The decline comes from a lower-than-expected income-tax collections and sales tax revenues due in part to a harsh winter and a decline in capital gains taxes, officials said. Income-tax revenues rose dramatically in 2013 when the fiscal cliff generated high collections.
"It looks like we were too optimistic" in January, said David Zin, head of the House Fiscal Agency, one of the three agencies that crafts the estimates.
Business taxes are also expected to be down more than expected from recent policy changes. The Michigan Treasury Department projects the business tax changes could mean a $68 million decline in 2014. "
Democrats said the downward revisions show that Snyder's policies, especially on business taxes, aren't working.
On the bright side, University of Michigan economist George Fulton told lawmakers that the state is now in its fifth year of a recovery, and is tracking an expanding U.S. economy.