A new business tax cut that took effect this week means the state’s School Aid Fund is expected to see its lowest revenues in inflation-adjusted dollars since the adoption of Proposal A in 1994.
The tax cut is costing the School Aid Fund — the primary revenue source for Michigan’s K-12 schools – about $700 million a year, according to a report issued last week by the state Senate Fiscal Agency.
The report, which provides an update on Michigan tax revenues for fiscal 2011 and estimates for fiscal 2012, includes a graphic shown here that charts School Aid Fund revenues since 1994, adjusted for inflation.
Equated to 2010 dollars, the SAF had revenues of almost $12 billion in 1994, the year Michigan voters approved Proposal A, which shifted the bulk of K-12 funding from local to state revenues.
The fund’s revenues peaked at a little over $14 billion in the late 1990s, in inflation adjusted dollars, and are expected to hit bottom at $10.7 billion in 2011-12, the chart shows.
And that’s despite an improving economy and unexpected increase in sales tax revenues. In fact, because of t