What’s Driving the $460 Million Revenue Shortfall in Lansing?

Budget season is underway in Lansing as state lawmakers craft a budget for next year

The Michigan State Capitol building.

The Michigan State Capitol building.

“At this point in the year you now are seeing some of the tax revenue start to come in and you can make better projections for how that’s going to play out for the rest of the year. One of the big motivating factors in lowering these numbers yesterday was sluggish corporate income tax collections. It looks like corporate profits are down.”

Jonathan Oostiing, state Capitol reporter for The Detroit News, explains one of the factors behind the projected $460 million revenue shortfall to Detroit Today host Stephen Henderson. 

According to Oosting, Michigan is one of the few states that collects sales tax on gas, so as a result the lower prices of gas mean that there are fewer sales tax revenues collected. That, in addition to sales tax collection in retail also being flat for now, have been reasons for the projected revenue shortfall. There was an increase in personal income tax collection, but it hasn’t been enough to offset the losses.

The plans for the 2016-2017 budget were to give small increases in many different areas. Oosting tells Henderson, “The  goal seems to be to just scale things back at this point.”  Lawmakers were anticipating growth so “every investment is on the table.”

Oosting says Gov. Rick Snyder proposed restoring higher ed funding to the level it was at when he took office but that, “it looks like higher-ed might still be in line for a little increase as it has in recent years, but probably not able to get back to that 2011 level.”

Click on the audio above to hear the entire conversation.