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A sliver of good news from the revenue conference

The State's key financial agencies released their consensus revenue estimate today, updating their predictions for state tax revenue for both this fiscal year and next. The consensus estimate for School Aid revenue for this year (2009-10) is now $10.75 billion, up $292 million (2.8%) from the estimates made in January. The estimate for next year (2010-11) is now $10.83 billion, up $352 million (3.4%) from the January estimates. These new projections may limit school aid cuts for next year to the $118 per pupil passed by the Senate earlier this spring, or possibly reduce it even more.

However, these figures include the remaining Federal stimulus funds which Michigan received in 2009. Half of the $1.2 billion stimulus package was used to prevent late cuts to the 2008-09 school aid budget; some $450 million are being used in the 2009-10 year. That leaves some $184 million for next year (2010-11), after which the ARRA funds will be exhausted.

News for the state's General Fund budget is not so good: the conference estimates predict a further $244 million shortfall this year, when compared with January's estimate. They do predict a 6% recovery in GF revenues next year compared to the revised predictions for this year.

The agencies make these formal estimates twice a year, in January and May, and these numbers must be used by the Legislature in formulating a balanced budget.

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