WITH OCTOBER NUMBERS, STATE TAX REVENUES FINISH HIGHER IN 2006-07

November 9, 2007 - General fund and School Aid Fund revenues for the 2006-07 fiscal year will be at least $153 million larger than forecast back in May thanks in part to higher income tax revenues and lottery sales.

October tax revenue figures were released late Friday and showed total revenues for the month of $2.778 billion, up 1.1 percent from the year before.

Even though the 2007-08 fiscal year began October 1, revenues collected during the month accrue back to the previous fiscal year.

For the 2006-07 fiscal year, the state collected $20.552 billion, $118 million more than what was forecast in May by the Revenue Estimating Conference.

The state will not know total numbers for the general fund and School Aid Fund until book closing for the fiscal year - which should occur in mid to late December - said Jay Wortley of the Senate Fiscal Agency.

The increased revenue collections means the general fund could be at least $70 million higher than the May forecast, Mr. Wortley said, and the School Aid Fund could be at least $60 million to $70 million higher than forecast.

That will likely mean some additional money will spill over into the 2007-08 fiscal year, helping the state better manage in case the economy continues to founder.

The state's tax collections were helped significantly by higher income tax collections. The income tax has been a surprise all year long, but October revenues were also helped by the increase in the income tax rate - from 3.9 percent to 4.35 percent - which took effect on October 1. In his notes on the revenue collections, Mr. Wortley said it was difficult to assess how many employers had switched to the new rate during the month, but at least $10 million of the income tax collections stemmed from the new tax rate.

The state netted $587.1 million in income tax revenues during October, up 4.4 percent from October 2006. For the year, the tax raised $6.455 billion, up 3.9 percent from the year before.

But the sales tax, now Michigan's largest tax, finished down in October and for the year. During the month, the tax raised $604 million, down .1 percent from a year before, and for the year, the tax netted $6.565 billion, down 1.2 percent.

Ironically, sales taxes on motor vehicle sales were by 17.3 percent for October, raising $67 million, and by 2.4 percent for the year, raising $732.6 million. But sales tax collections on other sales were down.

Also down for the month and the year was the Single Business Tax. The soon to expire tax netted $236.3 million in October, down 4.9 percent; and $1.799 billion for the year, down 6 percent.

For the year, the largest net losing tax was the real estate transfer tax, which essentially reflects the status of the real estate industry in the state. In October the tax raised $19.9 million, down 9.1 percent, while for the year it raised just $238 million, down 22.1 percent.

Despite high energy prices, the gas and oil severance tax was also down for the month and the year, raising $4.3 million in October, down 24.6 percent, and $65.7 million for the year, down 22 percent.

In October, the tobacco tax was up handsomely, by 17.7 percent, netting $111.5 million. But for the year, the tax was down 1.7 percent, raising $1.249 billion.

The use tax flipped that record, being down in October from the year before - by 3.2 percent, raising $134.1 million - but up for the year - by .5 percent, raising $1.376 billion.

The biggest winner for the year in terms of percentages, however, was the Michigan Lottery. During October sales were up by 4.1 percent, netting $17.1 million, while for the year the Lottery was up by 5.9 percent, for a total of $2.342 billion.

The amount paid to the state's School Aid Fund was up by 8.9 percent for the year, paying $745.8 million to the state's schools.