News

Michigan budget surplus projected to reach $9.2B by fall

Gretchen Whitmer
Posted at 6:16 PM, Jan 13, 2023
and last updated 2023-01-13 18:17:05-05

LANSING, Mich. (AP) — Michigan state government is awash in tax dollars.

The state could end the fiscal year with a surplus of $5.1 billion in the general fund and $4.1 billion in the school aid fund, Gov. Gretchen Whitmer's budget director said Friday. The budget year ends on Sept. 30.

Chris Harkins said nearly $6 billion of that total is for one-time use.

"We're still in a very strong position on the balance sheet," he said.

The House Fiscal Agency predicts that revenues have been running high enough to automatically trigger a drop in the income tax rate to 4.05% from 4.25%, under a 2015 law.

"We simply don't know what's going to happen because the books are not closed yet," state Treasurer Rachael Eubanks said.

Separately, Whitmer has proposed removing a tax on pensions and increasing a tax credit for people with low or moderate incomes.

Republicans, who no longer have a majority in the Legislature, would welcome a broad tax cut.

"The hardworking people of our great state do not need more government bureaucracy. They need to keep more of what they earn; after all it is their money in the first place," said Sen. Jon Bumstead, R-North Muskegon.

Michigan's unemployment rate should be down to around 3.9%, a pre-pandemic figure, by the end of 2025, said University of Michigan economic forecaster Gabe Ehrlich.