Administration, Fiscal Agencies Reach Consensus on Revenue EstimatesContact: Terry Stanton, (517) 335-2167 Subscribe to Treasury Press Releases
Individual Income Tax Estimates Lowered for Fiscal Years 2014 and 2015
May 15, 2014
State Treasurer Kevin Clinton, State Budget Director John Roberts, Senate Fiscal Agency Director Ellen Jeffries, and House Fiscal Agency Director Mary Ann Cleary today agreed to lower revenue estimates for the current and next fiscal years, as compared to January’s revenue consensus. The reductions are the result of several factors, including: 1) April income tax payments were lower than expected, 2) revised MBT tax credit information, 3) newly enacted policy changes to some tax collection procedures and 4) the severe winter weather.
"Individual income tax annual payments have been weaker than what was projected in January, primarily as a result of pending federal tax policy changes and the so-called, ‘fiscal cliff’ in late 2012,” said State Treasurer Kevin Clinton. “Several states are experiencing similar fluctuations related to capital gains, bonus payments and dividend payments. However, economic activity, both in Michigan and nationally, is expected to continue to improve during the remainder of 2014 through 2016, which will help stabilize income tax payments through 2016.”
While General Fund and School Aid Fund revenue estimates are being lowered from January estimates, revenues are still expected to grow by more than $800 million in both FY 2015 and FY 2016.
Based on today’s consensus, net FY 2014 General Fund-General Purpose (GF-GP) revenue is now projected at $9.319 billion, down $253 million from estimates agreed to at January’s revenue conference. Net FY ’14 School Aid Fund (SAF) revenue is estimated at $11.496 billion, down $64 million from January. Combined, GF and SAF estimates are down $317 million for FY ’14.
Net GF-GP revenue for the 2015 Fiscal Year is now forecasted at $9.826 billion, down $221 million from the January estimate, while the FY '15 SAF revenue estimate has been revised down $79 million to an estimated $11.853 billion.
FY 2016 GF-GP revenue is now estimated at $10.245 billion with SAF revenue estimated at $12.258 billion, down a combined $370 million from the January estimate. According to Budget Director Roberts, the Administration will continue to work closely with legislative leaders to ensure the Fiscal Year 2015 remains balanced and fiscally responsible.
“The good news here is that the economy remains strong and we are in a very good position that allows us to adjust the budget to fluctuations in expected revenues,” Roberts said. “It’s important to remember that, when compared to 2014, we still have increased revenues for making strategic investments in Michigan’s future. I look forward to working with the Legislature to begin target setting so that we can update the budget plan to ensure that we live within our means.”
There are positive and negative risks associated with today’s economic and revenue consensus estimates. Stronger than expected growth in housing construction activity would boost economic and revenue growth, while the timing for outstanding MBT credit claims and a significant jump in oil and gasoline prices are negative risks which would have an opposite effect.