State Facing New Budget Problems

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State tax receipts for the recently ended fiscal year have been coming in below earlier estimates.

Fiscal analysts say revenues were $20.05 billion, or about $170 million under projections, in the budget year that ended Sept. 30. Most of that shortfall is in the school aid fund.

"Unless we raise the revenue estimates in January for 2007, we have a problem in the '07 budget, especially in school aid," said Senate Fiscal Agency director Gary Olson. "And given what we've seen these last few months, I'm not optimistic that we'll be raising revenue estimates."

Olson said a May revenue forecast was based on a slight increase in employment in the state.

"Employment in the state is lower than it was last May, not slightly higher," Olson said.

Officials with Gov. Jennifer Granholm's administration say they will have to wait until books are closed on the fiscal year in mid-December before deciding what needs to be done to balance the budget.

"While we realize that revenues are down, we are still in the process of closing fiscal year 2006 books, which may affect the bottom line," said Greg Bird, spokesman for the state budget office. "At that point, if it is found that revenues are down, we would have to explore all our options."

For the fiscal year, sales tax revenues were flat, proceeds from the state's main corporate tax were down three percent and income tax receipts were up slightly but fell short of projections, the newspaper said.