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Michigan Governor will announce budget cuts Wednesday, education cuts not expected

Feb 9, 2015

Michigan's Capitol.
Credit Graham Davis / flickr

The state of Michigan is facing a revenue shortfall, and cuts will have to be made, but one state senator says education is not on the chopping block.

More from the Associated Press:

Gov. Rick Snyder is not expected to cut school districts' per-pupil funding or revenue sharing to local governments to address a shortfall in the current state budget.

Senate Appropriations Chairman Dave Hildenbrand also says universities and community colleges are safe from spending reductions being announced Wednesday. It's the same day the Republican governor also will propose his next budget...

Hildenbrand, a Lowell Republican, says the cuts will hit new programs and existing programs that saw big funding increases.

The AP reports that officials from Snyder's administration have been meeting with leaders of the Republican-led Legislature's budget panels prior to making their decision on cuts.

Officials from the Michigan Department of Treasury announced the projected shortfall last month. At the same time, they announced that the state's School Aid Fund - money that goes to higher education and K-12 schools - had more money than their earlier projections.

From their press release:

Net FY 2015 General Fund-General Purpose (GF-GP) revenue is projected at $9.501 billion, down $325 million from estimates agreed to at the May 2014 revenue conference. Net FY ’15 School Aid Fund (SAF) revenue is now estimated at $11.889 billion, up $36 million from May. Combined, GF and SAF estimates are down $289 million for FY ’15.

"Economic activity in Michigan continues to be strong, with employment growth continuing and vehicle production and sales remaining positive, but current and future year revenue estimates are being significantly impacted by outstanding Michigan Business Tax credits,” said State Treasurer Kevin Clinton. “The credits, many of which were awarded as much as a decade ago, have been a serious risk over the last few revenue estimating cycles, but have now turned to reality.”

Companies are apparently cashing in on these old credits at a higher rate than state budget officials expected.

More from Crain's Detroit Business:

Jim Stansell with the House Fiscal Agency said about $5.4 billion in business tax credits were awarded from 2009 through 2011 and they can be claimed until 2032.

"As the economy picks up, since these are based on meeting certain employment or investment goals, taxpayers may be more likely to claim them than they would have been during the recession," he told Snyder administration officials and legislators on House and Senate budget committees.

We'll find out where cuts will be made on Wednesday.