Gov. Rick Snyder

CHICAGO -- Michigan expects to collect $541 million more than expected over the next two years, economists and state officials said Friday at the state's twice-annual revenue-estimating conference.

The state will already enjoy a $429 million surplus from 2013, which will leave Michigan state government with $971 million more than expected through 2015.

Overall, state revenues are expected to drop slightly, by 0.4%, before rising 5.4% in 2015 and 5% in 2016.

Republican Gov. Rick Snyder and lawmakers will use the latest figures to craft the 2014 budget over the next several months. Legislators have already started to debate possible tax cuts.

The GOP controls both houses of the legislature.

There will be another revenue conference in May before the budget is finalized.

The larger-than-expected revenue is part of an overall economic picture that is largely rosy, economists said.

"Overall the news is good," said George Fulton, a University of Michigan economist who presents his research to the estimating conference. "We're expecting continued forward progress."

Budget Director John Nixon said about a third of the $971 million comes from one-time sources. He said the state will have about $300 million extra to build into the new budget.

"As has been the case for the last three years, fiscal responsibility must be priority one," Nixon said in a statement released after the conference. "We have to consider what options provide the best long-term solution for our citizens and the state of Michigan as a whole."

Economist David Zin with the Senate Fiscal Agency said if revenues come in as projected, the state would not make any deposit or withdrawal from the budget stabilization fund in 2014. But it would deposit $97.5 million in 2015 and $60.3 million in 2016.

General fund revenue is projected to total $9.5 billion in fiscal 2014, up $126 million from the most recent revenue-estimating conference last July. Revenue in the school aid fund is expected to total $11.5 billion in 2014.

General fund revenue in 2015 was revised upward by $206 million, and 2015 school aid fund was revised up by $119 million.

The state's unemployment rate, still higher than the national average, is expected to decline by around 1% annually through 2016, predicted Fulton. The rate is projected to be 8.2% in 2014, 7.3% in 2015, and 6.4% in 2016.

Michigan lost 857,700 jobs in its 10-year recession starting in 2000, economists said. So far, 458,700 jobs have come back, according to Fulton. The state expects to add another 192,000 during the next three years.

"There's still substantial ground to be made up," Fulton said.

The state is beginning to see some small population growth after years of losses, economists said. And commercial real estate continues to rebound, as seen in places like downtown Detroit.

Snyder will give his annual state of the state address Jan. 16. He's expected to release his budget recommendation the first week of February.

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