CHICAGO — Michigan is expected to see its revenues drop in 2013 — due largely to tax policy changes — followed by an uptick in 2014 and 2015, economists and state budget officials said Friday.

"Michigan is starting its fourth year of economic recovery after nearly a decade-long recession," George Fulton, director of the Research Seminar in Quantitative Economics at the University of Michigan said at a House Appropriations Committee meeting, where the state's twice-annual revenue estimating conference was held. "We expect to see a sustained moderately paced recovery through 2015, extending [the recovery] to six years."

Officials said they expect state revenues to total $19.9 billion in fiscal 2013, down $219 million from the most recent forecast in May, 2012. They expect fiscal 2014 revenues to rise to $20.6 billion — down only $34 million from most recent forecast — and grow to $21.4 billion in fiscal 2015.

General fund revenue in 2012 came in $200 million higher than expected, due mostly to business tax receipts and non-tax revenue.

Gov. Rick Snyder will use the revenue figures to help craft his 2014 budget proposal, which he will unveil Feb. 7. The Legislature will use updated May numbers to craft a final spending plan. The state's fiscal year begins Oct. 1, though lawmakers have approved a final budget by early summer for the last few years.

The revenue forecast predicts a drop of between 4.7% and 6.5% in general fund revenues in 2013, down from 5.4% growth in fiscal 2012, according to Jay Wortley, director of the Office of Revenue and Tax Analysis in the Department of Treasury. The department expects that the tax changes will reduce 2013 general-fund and school-aid fund by a total of $233 million, he said.

"We are projecting pretty dramatic declines in the general fund, and most of that reflects cuts in business taxes," Wortley said. "The policy changes include several items enacted in June that became part of the [current] fiscal year budget," he said, including an increase in the personal exemption level and earmarking some general fund sales tax revenue to the transportation fund.

Led by Snyder, the Legislature in 2011 enacted an overhaul of the state's tax policies, including eliminating the Michigan Business Tax — an expected annual loss of $1.7 billion — and replacing most of the revenue with a new tax on retirement income.

"If the policy changes hadn't been made since May, there wouldn't be much of a change in our estimates," Wortley said.

The state's budget stabilization fund is expected to hover around its current $365 million state for the next few years.

Bright spots in the state's economy include a strong automobile sector, a rebounding housing market, and steady job gains, Fulton said.

Michigan saw job gains in 2012 but at a slower pace — a gain of 48,500 jobs in 2012 compared to 75,300 in 2011. Fulton predicted the state would gain 27,300 jobs in 2013 before steadily increasing to 66,400 in 2015. Michigan averaged annual job gains of 57,000 from 1970 until the state's "lost decade" started in 2000, he said.

By the end of 2015, the state will have replenished just under 40% of the 859,000 jobs lost between 2000 and 2009.

"The pace of job growth was slower during 2012 but we see a sustained, moderately paced recovery through 2015," Fulton said. "We have a ways to go, but we are seeing some forward progress nonetheless."

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