Traverse City Record-Eagle


May 16, 2014

State has $616 million less; tax cut is off table

LANSING (AP) — Lawmakers will have $616 million less to spend when shaping Michigan’s next budget, fiscal experts reported Thursday, news that appeared to officially end talk of Gov. Rick Snyder’s proposed tax cut for homeowners and renters.

Budget director John Roberts said the Republican governor’s priorities in coming weeks include securing legislative support for $195 million to help end Detroit’s bankruptcy and raising significantly more money for deteriorating transportation infrastructure.

“With people saying that they’re less interested in moving (the tax plan), our priorities to push right now are definitely Detroit and transportation and the budget,” he told reporters.

Preliminary budget bills approved in recent weeks will have to be trimmed back after the administration and legislative economists settled on consensus revenue estimates that — while trending upward — are lower than what was projected in January. They agreed there is $317 million less in the $20.8 billion combined general and school aid funds this fiscal year, and there will be $299 million less in the budget starting in October.

That likely will mean less money than Snyder originally proposed in February for the prisons, human services and health budgets, said Roberts, who noted legislators have already voted to spend less than the governor suggested in those areas. Details will be ironed out once Snyder and legislative leaders set spending targets as early as next week.

The estimate released Thursday is not expected to affect the current budget but is a more negative assessment four months after experts predicted $1 billion in surplus revenue from the last fiscal year through the next one.

The new forecast came in conjunction with generally positive reports about the state’s economy.

University of Michigan economist George Fulton predicted Michigan will gain 41,000 payroll jobs this year — fewer than increases of around 70,000 the past two years — before adding 60,000-70,000 jobs a year in 2015 and 2016. The U.S. gross domestic product grew just 0.1 percent in the first quarter of this year, though economists expect the economy to pick up the rest of the year.

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