Monica Covey
The New York Times


www.RebeccaMich.com



Over most of the past decade, budget deliberations in Michigan have taken on a glum and familiar monotony: What do we cut now?

But the state that experienced an economic downturn earlier, deeper and longer than most of the rest of the country has made an unlikely discovery as its officials closed out its latest financial books: Michigan has a $457 million surplus.

Even more surprising: Revenues, which had sunk or had been mostly flat for all but one year since 2000, have grown. Not a lot, but grown.

Michigan is the most unlikely example of a phenomenon that was unimaginable in most states in recent years. Though nearly all states are required by law to balance their budgets, most have been able to do so only through rounds of painful spending cuts to make up for deep shortfalls in revenue.

Now, however, as a majority of states have begun collecting tax revenues that are on par with or even above expectations, they face some measure of Michigan’s situation — trying to sort out whether the worst is really over, whether it is safe to start spending again, or whether a rainy day fund may be the prudent course.

“Revenues are definitely improving, but it’s just unsure where it’s going to head from here,” said Todd Haggerty, an analyst with the National Conference of State Legislatures, who noted that although revenues in many states have not returned to pre-recession levels, 17 states exceeded their expected personal income tax collections in the first quarter of the current budget year, and 18 states got more in sales tax than they had anticipated.

Even the federal government has seen an encouraging boost in revenues. After declining sharply (17 percent) in the 2009 fiscal year and rising only 3 percent in 2010, federal revenues rose 6 percent in 2011, according to the Congressional Budget Office.

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