State Revenue Increases Less Than Previously Anticipated

The State’s General Fund and School Aid Fund revenue totaled $1.2 billion in March, a 3.6 percent increase over last year’s level. While revenue did increase, it was $45.7 million short of the Senate Fiscal Agency’s forecast. The shortfall has been attributed to weaker-than-expected growth in income tax withholding and insurances taxes as well as greater-than-expected Michigan Business Tax and Single Business Tax refunds.

Net income tax revenue was $329.3 million in March 2014, an increase of 14 percent year-over-year, which is about $21 million below than the original estimate. Withholding payments were 4.5 percent higher than they were a year ago despite also being below predicted levels. The report however did note that sales tax receipts increased 12.8 percent from March 2013, $17.5 million above forecasted levels. This is the first instance of year-over-year growth in sales tax revenue since December 2013, which the agency noted could be due to improved weather.

Use tax collections also fell short, up 12.1 percent over last year, but $11.6 million below forecasted levels. Additionally, SBT, MBT, and Corporate Income Tax collections totaled a negative $6.6 million for the month. Last fiscal year’s MBT revenue is expected to be dominated by several large refunds. The timing of when these refunds will be claimed and processed is expected to significantly affect the accuracy of the monthly MBT estimates according to the SFA.

posted by PAA Online , Friday, April 18, 2014 10:40 AM
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