Updates About Economy

The Michigan Energy giant DTE Gas Co. is asking state regulators to approve an increase in gas rates by 8% for residents and 7.1% for businesses. The company claims they need additional revenue to pay for infrastructure, maintenance expenses, and wage increases. DTE’s 1.3 million gas customers are expected to absorb an increase totaling $237 million starting next October. This amount could be reduced to $163 million if a previously approved infrastructure recovery mechanism surcharge is incorporated into the rates.

This is not the only increase that Michigan consumers have been subjected to in recent history. Last year, DTE raised gas rates by more than $113 million. Attorney General Dana Nessell scrutinized the increases and reaffirmed that her office will work to defend DTE customers. Bob Richard, President and COO of DTE, defended the rate hikes by arguing that the request will allow DTE to continue to invest in the safety and reliability of their energy system while keeping long term costs lower. In early November, DTE’s main competitor, Consumer Energy Co., also raised rates — 8% on residents and 1.4% on businesses.

See Also: AG NESSEL PUSHES BACK ON CONSUMERS ENERGY $436M RATE HIKE PROPOSAL

The Senate Fiscal Agency (SFA) recently released Michigan’s Monthly Revenue Report for September. Total collections generated from major taxes and net lottery proceeds came in at $3.8 Billion, up 0.6% from SFA’s report one year ago. Despite this slight increase, revenue was still nearly $192 million below projections made during the Consensus Revenue Estimating Conference (CREC) this past May. Higher-than-expected Individual Income Tax (IIT) refunds and weaker Corporate Income Tax (CIT) collections were the primary drivers of the shortfall, though stronger returns from gaming-related revenue helped offset some losses. While September marks the end of the fiscal year on a calendar basis, the state’s accrual accounting practices mean that these totals represent eleven months of revenue activity.

General Fund and School Aid Fund tax collections also came up short by $183 million and $19.6 million, respectively. So far this fiscal year, General Fund collections are tracking $267.0 million below projections, while School Aid Fund revenue remains $76.5 million above expected levels. Income tax withholding was slightly higher than last year, but larger-than-anticipated refunds reduced net revenue. Sales tax receipts grew modestly year-over-year but still missed forecasts, and use tax revenue declined by nearly 10%. Corporate tax revenue also lagged significantly, down more than 36% from last September.

The ongoing Federal Government shutdown is expected to affect many areas in Michiganders lives. Notable impacts include the following:

• Nearly 30,000 civilian federal employees will be either ordered to work without pay or furloughed until Congress reaches a deal. Those ordered to work will receive back pay after the shutdown is over

• All active-duty military personnel, including the National Guard, will carry out their duties without pay

• Short term funding has been made available to both food assistance programs SNAP and Women Infants Children (WIC). Each state has received contingency funds that have estimated to be sufficient for one week of operations, however states may have additional dollars to spend. In Michigan, we are expected to have funds to continue the program for a couple weeks.

• Michiganders on Medicare and Medicaid will continue to receive benefits, but communication delays from the agency are expected

• The Veterans Health Administration, which falls under the Department of Veterans Affairs and is also Michigan’s largest employer, is expected to be 97% operational

• Retirement, disability, veterans, and health care benefits that are covered under federal programs will continue, but delays are expected due to reduced staffing

• The US Postal Service will remain open and mail is expected to arrive on time

• The Michigan Department of Education will also remain open. In a memo, State Superintendent Michael Rice explained that any issues the state needs to elevate to federal officials for guidance will likely be delayed until normal operations resume. He also noted that federal reimbursement-based funding to local schools will be delayed