Revenue Estimate Causes Guarded Optimism
REVENUE ESTIMATE CAUSES GUARDED OPTIMISM – State officials reached consensus on the outlook for the state’s fiscal condition late last week and the final results held out some promise. As the House and Senate Fiscal Agencies predicted going into the January Revenue Estimating Conference, the conferees set total estimated revenues for the current fiscal year at $20.6 billion which is nearly $370 million below the fiscal projections established last May. However, in something of good news, the decrease in income is just slightly more than the announced surplus of $353 million on hand when the state closed its books on the preceding fiscal year earlier this month. Conferees also agreed to a revenue total of roughly $21.1 billion for the 2008-09 Fiscal Year, an increase of nearly $465 million over the revenue projections for the current fiscal year.
However, while the revenue numbers for the current fiscal year represent a decline, they total more than $1 billion greater than the final revenues realized in the 2006-07 Fiscal Year. The presence of additional income was attributed to the recently approved Income Tax increase and the recently enacted Michigan Business Tax surcharge. The new numbers, coupled with the year-end revenue surplus, led conferees to indicate the state should not have to enact any significant budget cuts to keep the books on the current fiscal year balanced.
The final predictions—which will form the basis for initial budget discussions—were greeted with subdued optimism by most, but not all, key legislators. While admitting the revenue forecast was “not great,” Senate Appropriations Committee Chair Ron Jelinek (R-Three Oaks) said the numbers provided a “good indication” that prudent decisions would allow lawmakers to “meet this year’s budget and propose a conservative balanced budget for the coming year.” Senate Majority Leader Mike Bishop (R-Rochester) said the news means “we must constantly monitor” the economy and revenues for potential budget impacts. He also predicted “the budgeting process will not be easy” and that legislators would have to come together to “make cuts, control spending and reform government.” Those sentiments were also echoed by a spokesperson for House Speaker Andy Dillon (D-Redford Twp.) who said the fiscal consensus showed that government must continue to enact reforms to ensure the state’s fiscal integrity while working to protect critical services.
