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January 19, 2007 Budget Hole and Still No Bills

January 19, 2007
The Revenue Estimating Conference determined thatMichigan has a $722 million budget deficit for the current year.  In addition, the 2007-2008 year will see a deficit of $916 million because the single business tax ends on December 31, 2007.  While a replacement tax is expected to be enacted, the Governor must establish the budget based on the deficit produced by the law as in effect.  So all this means that the hoped for tax decrease for businesses through the replacement tax is becoming a less and less likely.  The Governor has not yet released a renewed replacement tax bill but has instead formed an Emergency Financial Advisory Panel with former governors William Milliken, and James Blanchard, as Co-Chairs of a 10 person panel.    See Press Release   (link to http://www.michigan.gov/gov/0,1607,7-168--159742--,00.html)  This Panel is supposed to provide a recommendation for a solution to the state's budget woes by the month's end.  A tall order for anyone.  What might they come up with?  Well, rumors of an expansion of the sales tax base to services is rampant around the Capitol despite Governor Granholm's pledge not to shift any of the business tax burden to individuals.  We'll have to wait and see. June Summers Haas