Proos: Michigan surplus ‘not a lottery ticket’

Senator urges caution as state prepares Fiscal Year 2017 budget

Senator John Proos

Senator John Proos

LANSING, Mich. — State experts forecast Michigan’s economy will continue to improve and the state will have an estimated $575 million surplus this year, said Sen. John Proos.

“Once again, it is great news that Michigan’s economy continues to recover and create jobs,” said Proos, R-St. Joseph. “The state’s increased revenues are a direct illustration of our economic growth and making government live within its means. The projected $575 million surplus could be used to help fund important priorities, but it’s not a winning lottery ticket.

“It is critical that we remain cautious with this one-time surplus, since our state still faces increased spending pressures going forward.”

State fiscal leaders from the Senate, House and executive branch and economists from across the state met Thursday for the annual January Consensus Revenue Estimating Conference at the Capitol. Their economic and tax revenue projections are used to draft budget proposals for the next fiscal year, which will begin Oct. 1.

The announced surplus was largely attributed to business tax credits that were not refunded in the 2015 fiscal year as expected. That savings will carry over to the current fiscal year.

“By being fiscally responsible with taxpayer dollars, we can invest more in key priorities, such as fixing our roads and teaching our kids — while also improving efficiency,” Proos said. “I have done much to keep spending down. The reforms I achieved as chair of the prison budget subcommittee have kept that budget from ballooning to a projected $2.7 billion — savings that helped us invest more in education and public safety.”

Proos said that the report is only a forecast of revenues and does not take into consideration increased spending pressures like Medicaid expansion costs.

“One of the main reasons we must be cautious with the surplus is that much of that money might already be accounted for in upcoming increased costs in areas like Medicaid,” Proos said.

Michigan was one of several states whose legislatures voted to accept the federal government’s Medicaid expansion program and foot much of the bill. Ultimately, the federal government will pick up the check for the program in those states that rejected the expansion proposal. Proos opposed Medicaid expansion in the Michigan.

According to the Senate Fiscal Agency, the program will cost the state an estimated $143 million in 2017, $180 million in 2018, $220 million in 2019 and more than $300 million in 2020.

“Michigan is doing better, yet we still face challenges and obstacles in our efforts to keep our state on solid economic footing,” said Proos.


Editor’s note: Audio comments by Proos will be available later on the senator’s website at Click on “Audio” under the Media Center tab.