State tax collection numbers for June have been released. Those figures combined with a new report on the public pension system has Michigan Radio's Political Analyst Jack Lessenberry has thinking about the health of our economy.
When it comes to our state's economy, as the old saying goes, it often seems like if it wasn't for bad news, there wouldn't be any news at all. Yesterday we got two new jolts. The one that got the most attention was how much money the state took in last month.
Now, everybody expected that June's monthly tax collections would be down compared to a year ago. But the actual figures were much worse than the experts thought they'd be.
Revenues were a staggering 16 percent behind that of a year ago -- that's $340 million dollars less. Now, the statisticians in state government expected and planned for a big fall-off. But even given that, the numbers were $120 million less than they expected.
That means further growth in the already gigantic budget deficit the state is facing next year, and probably will lead to some last-minute emergency cuts in this year's budget as well.
Sometimes in a case like this, when you examine the figures closely you can find some silver lining that provides hope for the future. A tiny spurt in the new economy sector, for example.
But this time, the more you look at these numbers, the more depressing they are. Here's one example. The one mysteriously bright spot came where you might least expect it:
Tax collections were way up on motor vehicle sales -- thirty percent higher than the year before. What's that all about?
The number of new cars being sold nationally is the lowest it's been in many years. What's going on here? Then I got it.
Auto workers who have taken early buyouts often got vouchers for new vehicles as part of their severance package. They must be using them. In the past, they might have leased cars. Now, they are buying them at deep discounts and paying sales taxes.
This, however, is obviously a one-time thing. Once you factor away this artificial boomlet, the state revenue situation is even more dismal than it already seems to be. Now, these numbers are going to get a thorough going-over. The legislature is back in session today, and balancing next year's budget is heavily on the lawmakers' minds.
There was another set of new numbers that also came out yesterday, numbers that didn't get nearly as much attention.
But these figures are just as grim. The non-partisan, non-profit Citizens' Research Council took a look at public pension systems, and what they found was fairly terrifying. What the Gongwer News Service now casually refers to as the "economic collapse of 2008" devastated these plans. The state employees retirement system lost more than a fifth of its value. The municipal employees system, almost a fourth of all its assets. Statewide, something like $25 billion dollars in pension funds seems to have vanished. That has enormous implications. Not so much for the beneficiaries. Michigan"s constitution guarantees them that money. I presume that means the taxpayers will have to cover any shortfall. Granted, in the long run, these plans may recover some of their value. But to the extent they don't, it's one more gathering storm.
And if you haven't noticed, we're already in a hurricane.