Fight brews over possibility of state windfall

Oct 11, 2011

A legislative agency says the state is taking in a lot more money than it expects to spend as the books are about to close on the last fiscal year. The revenue estimates from the state House Fiscal Agency say the state appears to be in line to reap $285 million more than expected.

That includes a $145 million windfall for the School Aid Fund. Some Democrats say a portion of that money should be used to restore cuts to K-12 schools.

“A significant number, at least half of it, came from the School Aid Fund is really supposed to be for schools not for community colleges or higher ed, so I think the money ought to go to schools. We should be reducing class sizes, hiring teachers back, and putting people back to work,” said House Democratic Leader Rick Hammel. The state used a surplus in the School Aid fund to help pay for community colleges and universities in the current budget.         

But Republican leaders say the economy remains shaky, and the state should not be too quick to spend the money.

 “We worked real hard to get our budget under control, to get spending matching income, and I think if we do get any extra money at the moment, we need to either save in our 'rainy day' fund or use it to pay down the debt instead of spending money even more when we look like we may have less money down the road if the economy continues to tank,” said Republican state Representative Chuck Moss. He chairs the state House Appropriations Committee.

There’s also a question of how the Michigan Supreme Court will rule on the state’s extension of the income tax to pensions. The windfall could be helped to cover a revenue shortfall if the court strikes down all or part of the tax.