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Michigan's House and Senate fiscal agencies have come out with their revenue estimates for the 2012-2013 fiscal year -- and the news isn't all good.
Both say they expect the state general fund to take in less revenue in the fiscal year that starts Oct. 1 than it will this year as companies pay less money because of the business tax cut that took effect early this year. They expect the drop to be bigger than they forecast in January, with the House agency forecasting $67 million less than January's $9 billion estimate and the Senate agency forecasting $106.4 million less.
Both expect the school aid revenues that help pay for K-12 schools, community colleges and universities to be higher than their January estimates, however. The House Fiscal Agency says it expects revenue to be nearly $151.8 million more than the $11.1 billion expected four months ago. The Senate Fiscal Agency is revising its estimate upward by $84.4 million.
The directors of the House and Senate fiscal agencies will meet Wednesday with state Treasurer Andy Dillon in the House Appropriations Room at the Capitol to set revenue estimates lawmakers will use as they finish work on the budget for the upcoming year. Treasury isn't expected to release its estimates until the meeting.
The revenue numbers the three agree on could mean less money in the upcoming budget for programs paid for with general fund revenues, such as prisons and health care, as separate budgets passed by the House and Senate are reconciled by the end of the month. It also could mean more money for education, as it appears the school aid money will have more funds than expected.
Gov. Rick Snyder has asked that lawmakers have the budget bills to him by June 1, a goal they met last year.
The two agencies' estimates reflect tax changes passed last year that eliminated many tax breaks for individual tax payers while changing the way the state's main corporate tax is structured so businesses pay far less.
The Republican governor said the changes make the individual tax more balanced since it taxes retirement income as well as regular income and will enable businesses to add jobs. Critics say they unfairly tax public pensions and wrongly shift the state's costs onto individuals, including low-income working families who will be paying more.
In the current budget year, the Senate Fiscal Agency expects individual taxpayers to pay $523.1 million than the year before, while companies will pay $1.3 billion less since the business tax cut kicked in earlier this year. In fiscal 2012-13, when more retirement income is taxed and additional changes take place, individual taxpayers are expected to pay $1.4 billion more, while businesses pay $1.9 billion less.
The state continues to take in more money in the current budget year than expected, largely because the state economy is recovering. The House Fiscal Agency estimates the general fund will take in $56.6 million more than the $9 billion forecast in January for the general fund, while the Senate Fiscal Agency expects to see $57.8 million more. The school aid fund could see $135.9 million more than the $10.8 billion expected in January, according to the House Fiscal Agency's estimate, while the Senate expects $150.3 million more than forecast.
That would leave the state with a significant one-time surplus to carry into the upcoming budget year, both agencies said.
Both agencies also said they expect the state to receive more in school aid revenue for fiscal 2013-14 than the $11.4 billion forecast in January, with the House Fiscal Agency expecting $155.6 million more and the SFA expecting $62.7 million more.
But they differ on what will happen with the $9.2 billion general fund forecast. The House Fiscal Agency expects the state to take in $63.5 million more than forecast, while the Senate Fiscal Agency expects it to bring in $79.1 million less since it expects a bigger drop in taxes paid by businesses.
Follow Kathy Barks Hoffman on Twitter: http://twitter.com/kathybhoffman