Rise In State Revenue Far Exceeds Cost Of Defeated Income Tax Cut

The amount of tax and other revenue flowing into the Michigan state government this year and next is now projected to increase more than previously thought, marking a recurring pattern.

The projected increase was announced at a revenue estimating conference in May, one of two each year that combine the best estimates of the Legislature’s fiscal agencies and Department of Treasury budget officials into a consensus estimate.

Last year, the amount flowing into the state’s largest two accounts (the General Fund and the School Aid Fund) totaled $22.9 billion. At a revenue estimating conference in January, the consensus was that the amount would grow to $23.4 billion for the 2017-18 fiscal year, which ends in September.

But at the May conference, held this past week, the agencies increased their revenue projection to $23.7 billion. That’s $827 million more than those two main accounts received last year.

For the 2018-19 fiscal year, which begins Oct. 1, the agencies’ January consensus was for the state to take in $23.8 billion in those two funds. But in May, that number was revised upward to $24.0 billion, almost $200 million above the January estimate. None of these figures include federal money that flows into the state treasury.

For context, that $827 million in extra revenue the state is now projected to receive in 2017-18 as compared to the previous year is far more than the costs of a proposed income tax cut that was defeated last year. The tax cut would have taken $463 million from the state budget next year. But the proposal was defeated in the Republican-controlled Michigan House in February 2017.