LANSING – The revenue estimate for the current and coming fiscal years signals a budget that will likely see few, if any, major changes from how it looks now.
Revenues to the state’s General and School Aid funds will see small growth this fiscal year and next, the Consensus Revenue Estimating Conference determined Thursday, with revenues to the General Fund a bit lower than previously expected.
The conference determined that current year 2017-18 fiscal year revenues would rise by 2.3 percent – 1.1 percent in the General Fund and 3.1 percent in the School Aid Fund. Revenues to the General Fund, however, will be $101 million less than expected at the last conference in May. That’s made up, though, by revenues to the School Aid Fund coming in at $114 million more than the May forecast.
For the 2018-19 fiscal year, which the Legislature will begin working on in February, revenues to the state’s two main funds will rise by 1.8 percent – just 0.3 percent in the General Fund and 2.9 percent in the School Aid Fund. That’s $150 million less to the General Fund than the May forecast and $133.5 million more than expected to the School Aid Fund in May.
“Steady as she goes but pretty tight as you look out into the future for 19, 20 and 21,” Budget Director Al Pscholka said of the revenue forecast.
The very early forecast for the 2019-20 fiscal year shows similar revenue growth – 1.8 percent to the two funds combined, 0.7 percent to the General Fund and 2.7 percent for the School Aid Fund.
If this forecast holds, then Governor Rick Snyder will be the first governor to leave office without handing off a budget to the next governor mired in shortfalls in 50 years. That said, there are a number of tax and spending policies enacted under Snyder that will continue to take effect well after he leaves office and pose some major budget dilemmas for the next governor.
Snyder will present his recommendation for the 2018-19 fiscal year budget February 7.
And at this point, with little new revenue to spend, the focus among Republicans was on $280 million in lapsed funds from the 2016-17 fiscal year that ended September 30, 2017, as well as paying down debt and increasing the balance in the Budget Stabilization Fund.
Pscholka said he would like to see the lapsed funds put into the Budget Stabilization Fund. His goal is to raise the balance to $1 billion. Based on the meeting he and Khouri had with the credit rating agencies, Pscholka said the agencies might have given the state a ratings upgrade instead of just an improved outlook had the state put more money into the BSF.
Senate Appropriations Committee Chair Dave Hildenbrand (R-Lowell) said Thursday’s consensus contained “relatively good news. Revenue is stable and growing slowly.”
Hildenbrand said the consensus provides a good starting point for budget talks. He said it’s critical in crafting the next budget to focus on appropriate funding for programs and services to allow for efficient services rather than growing them in size.
“The number one priority is to put money back in taxpayers’ pockets,” Mr. Hildenbrand said of the focus after funding programs.
He said he’d also like to see more money placed in the state’s rainy day fund.
House Appropriations Committee Chair Laura Cox (R-Livonia) said she was encouraged by the numbers and agreed with Mr. Hildenbrand that reducing taxes ought to be a priority.
“I definitely think there’s an appetite to do that,” Cox said.
Paying down debt and unfunded liabilities also rank among her priorities in the upcoming budget talks.
House Speaker Tom Leonard (R-DeWitt) said he wants to see some of the lapsed funds used to resolve the standoff on the driver responsibility fee legislation, which would speed up the phaseout of the fees and provide full amnesty to some $600 million in unpaid fees (under the House plan) or partial amnesty (under the Senate plan).
Snyder has voiced concerns about the budget implications of providing amnesty and speeding up the phaseout.
“The money’s there to pay for it,” Leonard said, pointing to the lapsed funds. “That would be at the top of my list is to ensure we’re getting 300,000 people their driver’s licenses back. The time for excuses is over. The governor is the one that’s holding this one up, and we need to get it done.”
This story was published by Gongwer News Service.