LANSING – The loss of one-time revenue from the previous fiscal year, changes in tax policy, increases in business tax credits and declines in individual income tax annual payments are among the reasons the Senate Fiscal Agency on Wednesday downgraded its revenue estimates for the current fiscal year by nearly $288 million below the January 2014 consensus estimate.

The report by the agency comes on the heels of the House Fiscal Agency dropping its revenue estimates by more than $422 million between the General Fund and the School Aid Fund, and it comes a day before both agencies will combine their estimates with the Department of Treasury at the May revenue estimating conference.

And the news doesn’t get better for the fiscal year 2014-15, either. The report says the 2014-15 General Fund budget could be left with a negative balance of $151 million when including all the factors the Senate has so far approved in the upcoming budget.

“This negative balance could be resolved by using funds remaining in the Roads and Risks Reserve Fund and by lowering the Senate-proposed deposit into the Michigan Health Savings Sub-Fund,” the report indicated. Meanwhile, the agency’s fiscal year 2014-15 SAF revenue estimate, combined with the Senate-passed SAF appropriations and the Senate-passed HICA legislation, results in a $169.2 million SAF surplus, it said.

The agency projects GF and SAF revenue will total about $21.6 billion in fiscal year 2014-15. That represents a 3.6 percent increase from the current year, but is nearly $378 million below the January 2014 consensus estimate. General Fund revenue is expected to total about $9.8 billion, an increase of 4.3 percent from the current fiscal year, while SAF revenue will rise to an estimated $11.8 billion (a 3 percent increase). But increased revenue from stronger economic growth will be partially offset by slightly greater reductions in revenue due to business tax credits and tax policy changes, the report concluded.

In fiscal year 2015-16, GF and SAF revenue will total about $22.4 billion, about 3.7 percent higher than the revised estimate for the upcoming fiscal year but still more than $466 million below the January 2014 consensus estimate. General Fund is estimated at $10.2 billion and SAF about $12.2 billion (increases of 4.4 percent and 3.2 percent, respectively).

The SFA projects a positive $437.5 million in the General Fund at the end of the current fiscal year. And after running in the red in the upcoming fiscal year for the General Fund, the SFA projects a positive $85.9 million balance in fiscal year 2015-16. The SAF is projected to be at $169.2 million for the upcoming fiscal year, followed by $213.7 million in 2015-16, the report said.

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