Michigan’s tax revenues are nosediving as Democrats in Lansing haggle over the biggest budget in state history.

“Michigan’s major taxes and net lottery revenue totaled $1.6 billion in March 2024, down 24.7% from March 2023. March 2024 tax collections were approximately $169.6 million below the Senate Fiscal Agency’s (SFA’s) projection for the month, based on the consensus revenue estimates adopted in January 2024,” according to the SFA’s Monthly Revenue Report for March.

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The lower than expected tax collections conspired with higher than expected tax refunds to bring in $210.1 million less than officials predicted for March. For the fiscal year to date, the general fund is down $339.4 million and the state’s school aid fund is short about $20 million from consensus revenue estimates set in January.

Sales tax receipts were down 7.7%, while vehicle sales tax collections were down 9.7%.

Net income taxes for March dropped 60.8% from the same time in 2023, coming in $81.5 million less than expected.

“Individual income tax refunds totaled $1.3 billion, an all-time record that was 26.2% above the previous all-time record set in February 2024 and 66.7% above the level in March 2023,” according to the SFA.

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The dour revenue report comes as Democrats in control of the Michigan Legislature negotiate the details of what could be another record-breaking budget, with the Senate proposing $81.9 billion in spending and the House $80.9 billion. Gov. Gretchen Whitmer proposed an $80.7 billion budget.

The current fiscal year 2023-24 budget set a record for state spending at $81.7 billion.

While Democratic leaders like House Speaker Joe Tate insist the budget plans are “centered around ensuring families are stable and local public services are well-funded,” their Republican colleagues have a different perspective.

“A year ago, Democrats celebrated their new majority by blowing through the state’s $9 billion budget surplus in record time. Now, they plan to continue their spending spree by picking the pockets of Michigan taxpayers to the tune of a $700 million tax hike, raiding $670 million from the teacher pension fund and a garbage 1,200% tax increase on trash,” Sen. Jim Runestad, R-White Lake, said in a statement.

“Michigan residents simply cannot afford the higher taxes and crippling debts that will come from this Democrats gone wild party-now-and-make-them-pay-later disregard for our state’s future economic prosperity.”

Porter Township Senate Republican Leader Aric Nesbitt offered a similar take in comments to Michigan Advance.

“It took less than two years for this governor and this Democratic majority to break the bank, and they have nothing to show for it,” he said. “Surprise, surprise, it takes more than corporate welfare and DEI training to improve our state’s economy.”

“This budget and the process the past year and a half has been an insult to taxpayers and a gigantic waste of their money,” Nesbitt said. “They deserve better.”

Republicans in both chambers have raised concerns about budget plans that will divert $632 million in scheduled payments for the state’s pension system for teachers to other priorities like electric vehicle chargers, drones, and growing government jobs.

Despite a $25 billion liability for the Michigan Public School Employees’ Retirement System, line items in the proposed spending plans include $110 million for the “Public Safety and Violence Prevention Fund,” $15 million for community and neighborhood groups, $15 million for drones, $12 million for museum grants, $6 million for symphony orchestras, $5 million for a pilot study to track Michigan drivers as the first step toward a road use tax, $3 million in electric bike incentives, and other spending.

The budget proposals also cut out Whitmer’s request for “free” Pre-K and community college.

“Senate Republicans offered more than 70 amendments to make better use of Michigan’s tax dollars. We tried to redirect outrageous corporate welfare handouts, irresponsible DEI dollars and other politically motivated pet projects to more commonsense areas of real need, such as infrastructure investments to fix crumbling bridges, proven training for teachers and students to bring fourth graders out of the bottom of national percentages for proficiency, greater public safety to crack down on the fentanyl crisis, protecting vulnerable children by filling a 280-employee hole to hire more Child Protective Services caseworkers, and this list goes on,” Runestad said.

“Democrats shut every single Republican amendment down,” he said. “Sadly, Michigan taxpayers will not be able to afford the bill when the party’s over.”