Deficit continues to dog Michigan’s state budget, according to estimates released Wednesday by the House Fiscal Agency.

The state faces a $300 million to $500 million shortfall in its main checking account this year, according to the agency’s report and figures presented Tuesday to the Senate Appropriations Committee by Gary Olsen, director of the Senate Fiscal Agency, which is slated to release its full report today.

The deficit is due largely to less-than-expected business tax collections. But the hole could be partly filled by a roughly $250 million surplus in the School Aid Fund, due to a slight uptick in sales tax collections as spending has increased with consumer confidence. Income tax receipts also are up slightly.

Both agencies predicted that 2009-10 school aid revenue will be more than $200 million above January estimates. They also forecast further increases in 2010-11.

“I don’t know that I’d call (the estimates) dismal,” said David Zin, an economist with the Senate Fiscal Agency. “With the exception of the Michigan Business Tax, revenues are a little higher than we expected in January.

“It’s not a big change, but at least it’s a change from a minus sign to a plus sign.”

The financial arms of the House and Senate put out their projections in anticipation of Friday’s revenue-estimating summit in Lansing. The state treasurer also will release a report. The agencies will huddle to hammer out consensus estimates that will be used by lawmakers to adjust this year’s state budget and set the spending blueprint for the fiscal year that starts Oct. 1.

The Senate Fiscal Agency estimates general fund revenue at about $6.39 billion for the current fiscal year, $502.4 million less than predicted in January. That would increase to $6.71 billion for the fiscal year that starts Oct. 1, according to its report. The House Fiscal Agency estimates 2009-10 general fund revenue at $6.65 billion, $248.2 million less than the January consensus estimate. The agency predicts the account will grow to $7.01 billion in 2010-11.

Mitchell Bean, director of the House Fiscal Agency, said the school aid excess could be tapped to help offset the shortfall in the general fund. But any such shift is likely to be challenged by the education lobby, which will push to keep the money in the school aid pot.

The agencies’ reports reflect a $350 million-plus shortfall in Michigan Business Tax collections. Bean said the down economy and inexperience with the relatively new tax are to blame. Businesses initially overpaid the tax and then made adjustments in April, qualifying for refunds, he said.

“The business tax is going to be down significantly,” Bean said.

The general fund shortfall will be in the $300 million to $500 million range, he said, when increases in Medicaid and public assistance caseloads and other spending increases are taken into account.

He said there is about $250 million available in one-time federal money to help balance the books. It will be up to lawmakers and Gov. Jennifer Granholm whether they want to use that money now or save it to help balance next year’s budget.

Source:The Detroit News/ Karen Bouffard and Mark Hornbeck