$162M state budget shortfall forecast

LANSING – Some bad news could welcome lawmakers back from Christmas break: A projected $162 million shortfall in the state budget.

A preliminary forecast out this week from the state Senate Fiscal Agency says income throughout the fiscal year that began Oct. 1 will be $212.2 million less than officials estimated in May. Lawmakers used the spring forecast to develop the current budget.

Based on approved general-fund spending, income would fall short and lawmakers would have to cover the gap "by a shift of revenue from other fund sources or reduced spending," the report says.

Meanwhile, the Senate agency forecasts a nearly $173 million surplus for the School Aid Fund by the Sept. 30 end of the fiscal year.

The agency lowered forecasts for the current year because it now says income throughout the budget year that ended three months ago was more than $300 million less than expected in May. Improvements to the economy were offset by "greater-than-expected refunds under the Michigan Business Tax and Individual Income Tax."

Later in January, a conference between the state Senate and House fiscal agencies and the state Treasury Department will develop more official revenue estimates used by Gov. Rick Snyder and lawmakers to make budget proposals.