Michigan will have an additional $498.6 million in revenue in Fiscal Year 2012 according to the May Consensus Revenue Estimating Conference.

I am pleased to hear that the state is expecting increased revenue, and I am hopeful that this is a sign that Michigan’s economy has turned a corner. Indeed, job growth continues to be among the fastest in the nation and the state unemployment rate continues to fall.

With more people working, income tax revenue is improving and sales tax receipts are up. But Michigan still faces serious challenges. Even with the increased revenue estimates, the state faces a budget deficit of more than a billion dollars next year.

While the revenue forecast is a positive sign, we must be careful how we use the projected surplus. No longer should our state government fail to deal with its fiscal reality by relying on budget shifts, loans and federal government bailouts to “balance” the books.

This is only an estimate. Many factors — some we cannot foresee — may change Michigan’s revenue reality in the next 18 months.

Michigan must address its structural deficit to get our state back on track and open for business. We must resist the temptation to use this projected extra money to increase spending and once again kick the budget can down the road.

I believe the higher revenues should be used to reduce our debts and then to give more money to the education of our children.

Instead of spending all the anticipated increased revenue, we should help pay down the state’s pension and health care liabilities which are a major factor for our schools. Currently, these expenses account for 24 percent of schools costs and will eat up 27 percent of their budgets next year.

Education has always been one of my highest priorities. The Senate passed a budget last month that kept the reduction to the K-12 budget at less than 4 percent, compared to cuts to other departments of more than 20 percent.

After we help address the state’s long-term deficit, restoring funding to our schools will be my first priority. We must also continue to reform government and improve efficiencies to ensure we are getting the most for each dollar spent.

I said when we passed our Senate budget plan: “Revitalizing our economy and creating jobs is the best way to address our long-term fiscal situation. Simply put: more jobs equals more revenue.”

As we move forward and finalize the 2012 budget, we must keep that goal in mind. Change is difficult, but building a strong economy is the only way to make Michigan stronger in the long run.