- Associated Press - Wednesday, May 13, 2015

LANSING, Mich. (AP) - Gov. Rick Snyder and lawmakers will work to finalize the next state budget in coming weeks on the heels of positive revenue projections months after they were forced to cut spending when companies unexpectedly redeemed recession-era tax incentives credits worth hundreds of millions of dollars.

The House Fiscal Agency on Wednesday estimated that general and school aid fund revenues are $68 million higher in the current fiscal year than estimated in January and $59 million higher for the budget year starting in October. Its Senate counterpart issued a rosier projection - $189 million more this year than estimated previously and $80 million more next year for Michigan’s two largest accounts, which account for 40 percent of the $52 billion budget.

The Senate Fiscal Agency attributed the uptick in current-year revenues to economic growth, “strong corporate profits” and higher income tax collections from investment returns. It credited the 2015-16 projection to an improving economy while noting gains will be partially offset by increased business tax credits and less revenue from a cut in taxes that manufacturers and others pay on equipment.

Companies are expected to redeem $1.6 billion in credits alone this year and next. Michigan’s overall liability for the incentives is $9.5 billion into the early 2030s, according to the Senate report.

The Snyder administration and legislative economists will meet Friday to settle on revenue numbers. Legislators hope to finalize the spending plan by early June, though a push for a permanent road-funding fix could delay the timeline by a month, said Republican Sen. Mike Kowall of Oakland County’s White Lake Township.

But Senate Appropriations Committee Chairman Dave Hildenbrand, a Lowell Republican, said he would prefer to finish the budget soon and adjust it later if there is a deal to pump significantly more into the transportation budget. Voters last week resoundingly rejected a sales tax increase that would have triggered more spending on road and bridge construction.

“Local governments, a lot of their fiscal years start July 1. School districts start July 1. I think we need to at least let them know where it stands at this point so they can begin their planning,” he said. “We need to take some time on road funding. To have the budget delayed because we don’t have a solution on roads I don’t think is good service to the people of Michigan.”

House Speaker Kevin Cotter, who unveiled a new road plan Wednesday that relies mostly on diverting general fund dollars to transportation, told The Associated Press one reason he moved quickly after Proposal 1’s defeat was to “leave open the opportunity to include pieces of this plan in the ‘16 budget.”

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House Fiscal Agency report: https://1.usa.gov/1L2Ixgt

Senate Fiscal Agency report: https://1.usa.gov/1Ff8BUY

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Follow David Eggert at https://twitter.com/DavidEggert00

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