Michigan to face $2 billion budget squeeze in general fund
LANSING, Mich. (AP) — Tax cuts, increased road construction, past economic development incentives and other factors will combine to reduce or divert state revenue by $2 billion annually in just over four years — the equivalent of 20 percent of Michigan’s general fund account.
That’s a key takeaway from a report issued this past week by the nonpartisan Citizens Research Council of Michigan. It says while the state is rebounding from two major recessions, budget turbulence is ahead due to policy choices in Lansing.
Future lawmakers will be forced to make “many difficult decisions,” according to the report. The $2 billion financial squeeze could be exacerbated by federal funding cuts or another economic downturn.
Here’s why the experts are sounding the alarm.
TEPID GROWTH: The $10 billion general fund is Michigan’s second-largest. Unlike the larger school aid fund and the smaller transportation fund — restricted accounts to which money is automatically dedicated — the general fund accounts for most discretionary spending on things such as prisons, universities, welfare, environmental protection and state parks. But its revenue sources, predominantly income tax collections, are projected to increase very slowly and not keep pace with inflation. Inflation-adjusted revenue is actually down overall since a decade ago and seems to have plateaued.
Read more: http://www.macombdaily.com/general-news/20170806/report-michigan-to-face-2-billion-budget-squeeze-in-general-fund
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