CHICAGO - Michigan's general fund revenue is expected to enjoy a modest increase over the next few years, economists said Friday. State officials and lawmakers gathered in Lansing Friday to reveal their latest estimates on the state's tax revenues, employment, and economic outlook through 2019.
The new figures mark a big upswing from the most recent conference in January, when economists warned of a $325 million shortfall in the current year that they said came from an unexpectedly high number of businesses cashing in tax credits.
Those refunds are still expected to continue climbing, officials said Friday - costing the state almost $900 million in 2016 - before coming back down again and eventually being phased out.
But overall, lawmakers should have an additional $218 million this year that they can use for the upcoming budget, officials said.
Budget Director John Roberts told local reporters that the money will likely go to roads. That's one of Gov. Rick Snyder's top priorities and lawmakers last week agreed to meet over the summer to figure out a plan after voters shot down a sales tax increase in early May.
The House and Senate Fiscal Agencies, with the Department of Treasury, all come up with separate estimates and then reconcile them for lawmakers twice a year. Gov. Rick Snyder and lawmakers will use the figures to craft a new 2016 budget that will take effect on Oct. 1. Snyder wants to sign the spending plan into law by next month.
The new figures show that fiscal 2015 general fund revenue totals $9.72 billion, up $224 million from January estimates. School aid fund revenue in 2015 is now expected to reach $11.8 billion, down $6 million from January projections. Together, the revision totals $218 million.
Fiscal 2016 general fund revenue is now revised up by $121 million compared to January projections, while school aid revenue is revised down by $42 million.
"Economic activity in Michigan continues to be strong, with employment and income growth remaining positive," Roberts said in a statement. "We are optimistic the state's economy will continue its positive trends not only through the remainder of 2015 but also through 2016 and 2017."
Income tax revenue is expected to climb modestly through 2017 while sales tax will grow but more slowly due largely to the drop in gasoline prices, said Jay Wortley, chief economist at the treasury department.
"Income is expected to increase over the next few years because we all think employment and earnings will continue," Wortley told lawmakers.
Income tax revenue, which declined slightly in 2014 to just over $8 billion, is expected to pick up the pace in 2016, bringing in around $8.6 billion to $8.8 billion, due to rising annual payments and fewer refunds, he said. The revenue could climb to $9.3 billion in 2017.
Sales tax revenue brought in $7.36 billion in 2014 and Wortley said he expects the revenue to bring in anywhere from $7.4 billion to $7.6 billion in 2015, rising steadily to up to $8.2 billion in 2017.
The state's employment is relatively flat, mirroring general U.S. employment, and Michigan has still not regained the employment levels it had in 2007, according to David Zin of the Senate Fiscal Agency.
"It was bad in the first quarter everywhere. The question is what will happen in the future," Zin said.