CHICAGO -- Michigan lawmakers could have $700 million more than they expected as they put the finishing touches on the 2014 budget, state fiscal officials and economists said Wednesday.
Most of the money is a one-time gain, driven largely by a boost in personal income taxes from investors selling stocks and investments ahead of fears last year of the consequences of the federal fiscal cliff, officials said.
The state Wednesday held its twice-annual revenue estimating conference. Lawmakers will use the figures to help craft a final 2014 spending plan, which they hope to complete by June 1, though the state’s fiscal year does not end until Sept. 30.
The projections were brighter than the most recent conference in January, when officials warned of declining revenues and sluggish growth before an uptick starting in 2014.
Since then, revenues have come in much stronger than expected, as has job growth, though both remain below 2011 and 2012 numbers, officials said.
“The good news is there is growth,” state budget director John Nixon said.
Job growth is also expected to continue, according to University of Michigan economists.
“We have a ways to go, but we’re seeing forward progress nonetheless,” University of Michigan economist George Fulton told lawmakers.
The news comes weeks after the state received a round of ratings boosts from credit agencies, as analysts said they expect to see the state continue to recover from what former Gov. Jennifer Granholm called “the decade of hell.”
The state should see $483 million more than expected in 2013. General fund revenue was revised upward by $397 million and school aid fund revenue rose by $86 million.
Fiscal officials said the state would likely receive $219 million more than expected in 2014. That means legislators could have a total of $702 million more than expected to use in the 2014 budget.
Nixon warned that only $160 million could be used for ongoing programs, as the rest is considered one-time money.
Capital gains and dividend income rose in late 2012 and 2013 as wealthy residents cashed in holdings in fear of the so-called fiscal cliff, said David Zin, chief economist for the Senate Fiscal Agency, one of three state agencies, including the House Fiscal Agency and the treasury department, that craft revenue estimates.
In 2015, the state is now expected to receive $244 million more than it expected last January.
“We are all forecasting baseline growth in both [the general and school aid funds],” Zin told legislators, state Treasurer Andy Dillon, and Nixon. “It looks a lot stronger than what we had in the 2000s, but it’s about half of what we had in the 1990s.”
General fund revenue is expected to grow through 2017, Zin said. General fund revenue will be up by $2.1 billion over 2010, which marked one of the state’s worst years.
On the job front, Fulton predicted the state would add 50,600 jobs in 2013 and 2014, a decline from the 72,400 jobs added in 2012 and 88,500 jobs added in 2011. Michigan’s unemployment rate is projected to remain above the national average, at 8.4% in 2013, 7.8% for 2014, and 7.1% for 2015, Fulton said.
Gov. Rick Snyder’s administration touted the numbers as proof of responsible budgeting over the last two years.
“Michigan’s economy continues to improve and is currently experiencing its third straight year of renewed employment growth,” Dillon said in a statement.
In early April, Fitch Ratings upgraded the state to AA from AA-minus. Moody’s Investors Service affirmed its Aa2 rating and revised its outlook to positive from stable. Standard & Poor’s also revised its outlook on the state to positive, while affirming its AA-minus rating.