Tax revenue is rising in Michigan, home to U.S. automakers buffeted by the recession, and job growth may resume next year for the first time in a decade, according to State Treasurer Robert Kleine.
Sales-tax receipts rose 4 percent in the first quarter of 2010, and income taxes went up in March, Kleine said yesterday at the Milken Institute Global Conference in Los Angeles. The state had the highest jobless rate in the nation last month at 14.1 percent, according to the U.S. Labor Department.
The gains show even the states most affected by the longest recession since World War II may be starting to rebound. The U.S. economy added the most jobs in three years last month as the effects of the slump diminished.
“It feels great to finally touch bottom,” said J. Ben Watkins, Florida’s director of bond finance who appeared with Kleine. Revenue is projected to rise next year, he said. Unemployment in Florida reached 12.3 percent last month, the highest rate in records dating back to 1976.
Michigan is in no danger of becoming insolvent, said Kleine, the state’s treasurer since 2006. He said Michigan has cut costs by consolidating 18 departments into 11 and may require newly hired state workers to pay more toward their retirement pensions. The state’s debt is rated AA- by Standard & Poor’s, the fourth-highest, and Aa2 by Moody’s Investors Service, the third step from the top.
In Florida, cash reserves shrank to $1 billion from $6 billion, while fees were raised for government functions including vehicle registration and divorce filing, Watkins said. The steps helped the state cope with the recession, he said.
Florida will confront a challenge in 2012, when federal stimulus payments of $3.5 billion a year are projected to end, Watkins said. Legislators will have to find new sources of funds or programs to cut as a result, he said.