Planned School Aid Funding went to the movies!

STATE FACES YET ANOTHER REVENUE SHORTAGE – Going into Friday’s Revenue Estimating Conference, both the House Fiscal Agency (HFA) and the Senate Fiscal Agency (SFA) have predicted the state will face a deficit in the 2008-09 Fiscal Year that will approach $500 million. The numbers from the May Revenue Estimating Conference establish the income levels that legislators will use in both adjusting the current fiscal year’s spending and in developing the budget for the next fiscal year. The continued economic gloom led Granholm Administration officials to admit there would have to be changes made to the Governor’s hoped-for spending plan.
Ironically, part of the state’s revenue shortage is, in part, fueled by a portion of the federal stimulus program that revises the appreciated depreciation schedules used by business. Forecasters contend that adjustment will cost the state some $94 million in tax revenues. According to SFA Director Gary Olson, another contributing factor to the shortage has been the success of the state’s recently adopted film production tax credits. While interest in film and television production in Michigan has ballooned since the credits were passed, legislators were stunned to learn the program will cost the state revenue in the short term. Mr. Olson pointed out the fiscal agencies had indicated the program carried an unknown cost to the state when the legislation was being considered. Now, he said, those estimates were available with the SFA setting the total cost to the state at $110 million.
The HFA predicts the General Fund and School Aid Fund revenues will be down by some $434 million when compared to the income numbers established at the January Revenue Estimating Conference. The SFA is even more pessimistic in its outlook estimating the state’s revenue stream will be some $550 million below the January numbers. That, the SFA suggests, means the per pupil foundation grant increases proposed by Governor Granholm for the coming fiscal year and already endorsed by the Senate cannot be paid.