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Michigan News for the Week of May 23, 2016

Week in Review
May 27, 2016 3:00 PM

michigan-23565.pngWeaker-than-expected business and sales tax collections will require the state to cut spending by $460 million by 2017, according to new revenue estimates. As a result, state budget officials say they will recommend smaller increases for some budget items than Gov. Rick Snyder initially proposed to the Legislature, while stressing that emergency funding for Flint and a proposed debt restructuring of Detroit Public Schools will remain priorities. Budget cuts aren't expected in the rest of the current 2016 fiscal year, state budget Director John Roberts said. He added that any spending reduction in 2017 is likely to be achieved with smaller program increases rather than outright cuts.

The middle class in the United States has been shrinking since 2000, and nowhere is the trend more evident than Michigan, according to a study released this week by the Pew Research Center. What makes the Michigan numbers especially distressing: In three-quarters of U.S. metro areas analyzed, the shrinking middle class was partially offset by a rise in affluent households, a trend that didn't occur in most of Michigan.  Adjusted for household size and inflation, Michigan's median household income declined 17 percent between 1999 and 2014 — from a median of $75,370 in 1999 to $62,608 in 2014 — the biggest drop among the 50 states and District of Columbia, the Pew study found.  In 1999, Michigan ranked ninth in U.S. median household incomes. By 2014, the state had fallen to No. 30, according to Pew's data.  Pew divided American adults into three categories: Low, middle and upper income. For a household of three, the study defined middle class as those with an income between $41,641 and $124,925 in 2014.

First-time home buyers can get up to $7,500 toward a down payment and closing costs, thanks to a couple of programs offered by the Michigan State Housing Development Authority. The MI First Home program also is available to past homeowners who lost their homes to foreclosure and have restored their credit for at least three years. The program, which is funded through the sale of bonds, is enjoying a resurgence in the past two years as the state's housing market recovers and its residents re-enter the housing market after The Great Recession.  The state recoups the down payments from the homebuyer if the house is re-financed or re-sold in five years. Otherwise, the amount is tacked onto the back of the mortgage payment schedule, interest-free. While homebuyers welcome the extra cash at closing, it's not costing the taxpayers anything. Money for the program is raised through the sale of tax-free bonds by the state.  MHSDA also is promoting a program called MI Next Home, which puts up to $7,500, or up to 4 percent of the sale price, on the table at the closing for qualified homeowners who need the cash to make the leap to a new home. Qualifying homeowners need a credit score of at least 600 and the new home can cost no more than $224,500, according to statewide rules. Income levels are variable, depending on the community.

Week in Review, hosted by Dr. David Mielke, covers the previous and coming week’s business stories and stock market news while discussing how these events will impact the business world – encouraging you to form opinions on this week’s topics.

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