Updates About Economy

Revenue collections from major taxes and lottery were slightly higher than expected for November, according to a recent November Revenue Report released by the Senate Fiscal Agency (SFA). Compared to November last year, the revenue totals reached $3.0 billion and are up 3%. Revenue from the State Education Tax (SET), individual income tax (IIT) withholding, and Michigan Business Tax (MBT) all came in higher than expected. Net income tax revenue and sales tax revenue were also elevated compared to last year, up 8.3% and 3.6%, respectively. However, net revenue from the repealed Single Business Tax, Michigan Business Tax, and Corporate Income Tax (CIT) collections were collectively 47% lower than last November.

Still, collections to the General Fund came in $95.8 million over expectations. The School Aid Fund also came in at $44.1 million above projections. Because November is the first month for tax collection for the fiscal year, these figures also represent the year-to-date actual vs predicted revenue.

The Michigan Energy giant DTE Gas Co. is asking state regulators to approve an increase in gas rates by 8% for residents and 7.1% for businesses. The company claims they need additional revenue to pay for infrastructure, maintenance expenses, and wage increases. DTE’s 1.3 million gas customers are expected to absorb an increase totaling $237 million starting next October. This amount could be reduced to $163 million if a previously approved infrastructure recovery mechanism surcharge is incorporated into the rates.

This is not the only increase that Michigan consumers have been subjected to in recent history. Last year, DTE raised gas rates by more than $113 million. Attorney General Dana Nessell scrutinized the increases and reaffirmed that her office will work to defend DTE customers. Bob Richard, President and COO of DTE, defended the rate hikes by arguing that the request will allow DTE to continue to invest in the safety and reliability of their energy system while keeping long term costs lower. In early November, DTE’s main competitor, Consumer Energy Co., also raised rates — 8% on residents and 1.4% on businesses.

See Also: AG NESSEL PUSHES BACK ON CONSUMERS ENERGY $436M RATE HIKE PROPOSAL

The Senate Fiscal Agency (SFA) recently released Michigan’s Monthly Revenue Report for September. Total collections generated from major taxes and net lottery proceeds came in at $3.8 Billion, up 0.6% from SFA’s report one year ago. Despite this slight increase, revenue was still nearly $192 million below projections made during the Consensus Revenue Estimating Conference (CREC) this past May. Higher-than-expected Individual Income Tax (IIT) refunds and weaker Corporate Income Tax (CIT) collections were the primary drivers of the shortfall, though stronger returns from gaming-related revenue helped offset some losses. While September marks the end of the fiscal year on a calendar basis, the state’s accrual accounting practices mean that these totals represent eleven months of revenue activity.

General Fund and School Aid Fund tax collections also came up short by $183 million and $19.6 million, respectively. So far this fiscal year, General Fund collections are tracking $267.0 million below projections, while School Aid Fund revenue remains $76.5 million above expected levels. Income tax withholding was slightly higher than last year, but larger-than-anticipated refunds reduced net revenue. Sales tax receipts grew modestly year-over-year but still missed forecasts, and use tax revenue declined by nearly 10%. Corporate tax revenue also lagged significantly, down more than 36% from last September.