michigan capitol.jpg

The Michigan Capitol in Lansing.

(File photo)

LANSING, MI -- Michigan lawmakers debating budget bills for next fiscal year may be hit with some sobering news this week: The state's so-called "surplus" appears to be drying up.

Michigan is poised to bring in $422 million less than previously projected during the current fiscal year, according to a new forecast by the non-partisan House Fiscal Agency, which is projecting another $450 million drop below January estimates for 2015.

The HFA released its report head of Thursday's annual revenue estimating conference, where the Senate Fiscal Agency and the Snyder administration will discuss their own projections, which have not yet been released.

The three parties will settle on revised figures for lawmakers to use as they seek to finalize budget bills by early June.

The HFA projections would offset most of the $971 million in "surplus" revenue identified at a January estimating conference. Of that, $541.5 million was projected to come in between 2014 and 2015, but HFA is now suggesting a downward revision of $872 million for those two years.

The differences reflect adjusted estimates, not actual dollars. House fiscal analysts project that general fund tax collections will drop some $250 million in the current fiscal year but jump back up by $480 million in 2015. Still, those numbers are lower than January forecasts.

House Republican spokesperson Ari Adler cautioned that that the HFA numbers released Tuesday are not final and could even still be adjusted ahead of Thursday's estimating conference.

He noted that the figures appear to mirror a national trend of falling state tax revenues through the second half of 2013 and into 2014. States like Vermont and Kansas have reportedly seen similar declines.

"Michigan is not immune to what is happening in other states," Adler said. "We are a peninsula, not an island. We're not going to make any kind of snap decisions in regard to the budget. Whatever we do will be based around solid numbers."

Earlier revenue estimates had spurred talk of tax cuts in the Republican-led Legislature, which approved a major tax code rewrite in 2011 that cut rates for businesses but eliminated or reduced exemptions and credits for individuals. Recent discussions have focused on road funding increases instead.

Despite the downward revenue estimates, the HFA report painted a picture of a slowly improving Michigan economy. Personal income is expected to rise by 3.5 percent in the current year and another 4.2 percent in 2015, according to the report, and the unemployment rate is expected to continue falling.

Jonathan Oosting is a Capitol reporter for MLive Media Group. Email him, find him on Facebook or follow him on Twitter

