For the week of 11/09/07
IN THIS UPDATE:
One Hundred and thirty-one days after the start of the K-12 budget year, Governor Jennifer Granholm has signed the School Aid Budget. The budget was among the last to be signed because they had the least pressure on them for getting checks out. The first checks for school districts go out November 20.
The School Aid budget is one of the larger budgets, providing $13 billion ($34.9 million general fund) for K-12 districts, intermediate school districts and charter schools. The budget is $900,000 ($90,400 general fund) smaller than the 2006-07 Budget.
Among the key provisions is increasing the foundation grant to $8,433 per student. Districts at or above $8,385 in FY 2006-07 would receive an additional $48 per student. Those receiving $7,108, the foundation grant last year, would receive $96 per student. Districts between the old and new foundation would receive an increase between the maximum and minimum increase.
Funding for early childhood programs is increased to $3,400 per child from $3,300. Declining enrollment districts will share in $20 million in assistance. And ISDs will share $80.9 million, a 1 percent increase.
Governor Granholm vetoed $1.3 million for transportation subsidies for large, rural districts (greater than 200 square miles with fewer than 5 children per square mile). Her rational was that during the implementation of Proposal A, all districts that were receiving separate transportation dollars had that funding rolled into their foundation allowance. Since that time, districts have received significant foundation allowance increases.
More information:
SERVICE REPEAL/BUSINESS TAX SURCHARGE PASSES HOUSE
On a 58 to 48 vote the House passed HB 5408, legislation that would repeal the services tax adopted a few weeks ago and replace it with a surcharge on the Michigan Business Tax (MBT).Under HB 5408 the surcharge would be 32.9 percent through 2008, and fall to 23.7 percent thereafter. The legislation also includes a $2 million cap, to limit the amount that larger companies would pay.
The legislation holds the School Aid Fund harmless. The earmarking of revenue to the School Aid Fund would be adjusted in order to hold the SAF harmless from the switch from the services tax to the MBT surcharge. This would involve the additional earmarking of $205 million in FY 2008 and $250 million in FY 2009.
At this point the legislation does not have support in the Senate. Senate Republicans oppose HB 5408, primarily because it would be a permanent tax. In addition, the Senate Republicans say they want to take a look at some other possible alternatives as well. They will spend the next two weeks looking at alternative plans.
If the issue of the repeal is to be tackled; it has to be taken care of this month because the service tax is scheduled to be implemented on Dec. 1.
07 REVENUE PROJECTIONS UP – ECONOMY CONTINUES TO WEAKEN
Early revenue projections for the fourth-quarter of Fiscal Year 2007 suggest the state's General Fund and School Aid Fund may collect $120 million in unanticipated revenue.
However, House Fiscal Agency warns expected downward revisions to Fiscal Year 2008 revenues during the January Consensus Revenue Estimating Conference are expected to wash that all away.
The HFA, which released its revenue projections this week, forecasts that for the last three months of last fiscal year, the General Fund will bring in an extra $60 million and the School Aid Fund will bring in an extra $60 million.
In other news from the agency's Revenue Review, the state's income tax proceeds were up 5.6 percent for the quarter and up 3.9 percent on a year-to-date basis. Sales and use tax proceeds were up 1.3 percent for the quarter and down 0.9 percent on a year-to-date basis. Single Business Tax revenues were down 4.6 percent for the quarter and down 6 percent on a year-to-date basis. Other revenue, which primarily includes the State Education Tax (SET), was up 4.7 percent for the fourth quarter and up 1.8 percent on a year-to-date basis.
Additionally, A Senate Fiscal Agency (SFA) monthly economic report shows the state's economy continued to shrink during September.
The state's wage and salary employment, for example, fell 11,000 jobs between September and August, and was 64,000 jobs below the employment level recorded one year ago. An 18,000-job decline in the government sector more than offset the flat or minimal growth in other sectors, the report noted. Compared with one year ago, job losses in manufacturing accounted for 39 percent of the total loss, while declines in government employment accounted for more than 34 percent.
In September,
LEGISLATURE GOES ON BREAK
The legislature will be taking a two week “FALL BREAK” starting next week. Session is scheduled to resume November 27th.
Brad Biladeau
Director of Government Affairs
Office: 517-327-9265
Cell: 517-281-5733