State tax revenues $2.1B above projections

LANSING » Projected tax revenues in Michigan’s two major accounts will be $2.1 billion higher than previously anticipated over two years, driven by increased federal unemployment benefits and consumers’ online purchases in the coronavirus pandemic.

Economists in the Legislature and Gov. Gretchen Whitmer’s administration agreed Friday to economic and fiscal forecasts.

For the current budget year, revenues in the general and school funds are projected to total $24.3 billion — down $505 million, or 2%, from last year but $1.2 billion above an August estimate. The combined revenues for the 2021-22 fiscal year are $25.3 billion, up $1 billion, or 4.3%, from this year. It is $875 million higher than a prior projection, which would nearly wipe clear a potential $1 billion shortfall that had been suggested months ago.

One legislative fiscal agency projected the state also may have a $3.7 billion surplus from last fiscal year, though the books are not yet closed.

The Democratic governor will use the rosier-than-anticipated numbers to craft her third annual spending plan, which will be delivered to the Republican-controlled Legislature in February.

“The revenue shortfall this year in not nearly as severe as we had feared,” said state Treasurer Rachael Eubanks, also noting that $900 billion in federal COVID-19 relief was enacted weeks ago. “Our economy is still in need of recovery and assistance from the federal government.”