March 19, 2024

Finding a way forward

Feb. 14, 2007
“Our future is directly tied to our ability to develop, attract, and retain concentrations of skilled people.“

-- Mark Murray, president of Meijer, Inc., commenting on Michigan‘s future in the State‘s Emergency Financial Advisory Panel Report

Americans have never been keen on taxes, going back to the days of the Boston Tea Party. And the anti-tax mantra has accelerated since the presidency of Ronald Reagan to the point where any suggestion of raising taxes has become a cardinal sin.
It doesn‘t help that government often wastes our tax dollars with an obscene ineptitude. For instance, the news last week that $9 billion of our tax dollars have gone missing in Iraq. Turns out that the Bush administration bundled up 363 tons of cash in bricks of $100 bills and flew it to Iraq during the early days of the war to help with reconstruction. Then the money simply... disappeared. Apparently, people (including contractors already on our payroll) just showed up in Baghdad with garbage bags and shoveled in the loot under any pretense, with no accountability.
So who can blame Michigan citizens for grumbling over the news that Governor Granholm has proposed a 2% tax on services to help balance the state‘s budget? The services would include everything from haircuts to auto repairs, lawyers, accountants and movie and concert tickets.
But give her credit, because after five years of cutting hundreds of millions from Michigan‘s budget and laying off tens of thousands of state employees, Granholm has made the case that we‘re at a turning point. Do we invest in our state‘s future, or let it dwindle into obscure poverty, like a northern version of Louisiana or Mississippi?
The question of new taxes in Michigan comes down to basic needs: Do you want police protection when you need help? Do you want a good education for your kids? Do you want good roads to drive on? Do you want to attract new jobs to Michigan by keeping our universities up to snuff?
Are those things worth a 2% tax on services? State officials claim that for an average family of four with a household income of $57,300, the new tax will add about $65 per year.
On the other hand, in a survey by the Detroit Free Press last week, two-thirds of state residents said they‘d prefer more budget cuts, rather than a tax hike. But that‘s an impractical vote for more potholes, or no cops on duty when a crackhead is scratching at your back door.
As a warmup for her State of the State speech, Gov. Granholm gave the Michigan Press Association an earful at its convention in Grand Rapids on Feb. 3. Looking trim as a whip and bantering with the skill of a Broadway star, Granholm gave the press both barrels on what‘s up with Michigan‘s economy.
“Tax revenue to the state has dropped 30 percent since 1999,” the Governor said. There was $11.5 billion in tax revenue to spend on state services in 1999, compared to $8 billion this year.
Much of the state’s tax revenue has slipped away due to the hit on the auto industry. Granholm noted that in 1986, the Big Three automakers held a 72% share of the auto market in America. That market share has slipped to 52% in 2007, and is expected to dip to 45% in 2011.
So it’s a repeat of the age-old story in Michigan that when the wheels blow out on the auto industry, we all suffer: fewer tourists, fewer homes sold, fewer restaurant visits, fewer retail sales. Like a virus, the Big Three‘s misery becomes our misery.
“Lack of sufficient diversity in our state’s economy has caused massive problems,” the Governor noted -- something other governors have been saying for decades.
At her State of the State speech last week, Granholm vowed to hold the line on funding education and things like cops and roads, under the rationale that no forward-thinking high-tech company is going to move here if the state degenerates into a dump.
The Bill Gates types contemplating a move to Michigan want guarantees that their employees will have adequate police protection; and that we‘ll maintain strong universities, brimming with brainy young researchers. If we can‘t provide the basics, we won‘t attact new industries to our state.
In fact, there is some good news for Michigan on that score. Google Inc., established a base in Ann Arbor last year, bringing 1,000 new jobs and 1,200 spin-off jobs to an area that the Internet giant believes will become the Midwestern version of Silicon Valley, thanks to the proximity of the University of Michigan, MSU and other schools.
And last year, the Legislature voted to provide a $4,000 scholarship to every qualified student in the state -- enough to complete two years of community college. “We’ve got a goal of doubling the number of college grads in Michigan in the next seven years,” Granholm said.
So look at the bright side. We have an opportunity here to be the Comeback Kid. We‘re down so far that we can‘t look anywhere but up. But the solution to our state‘s problems might involve the word no one wants to hear...
***
Footnote: -- In the greetings prior to her Michigan Press Association speech, Governor Granholm asked if the Express planned to cover the 99th Annual National Governors Association Conference in Traverse City on July 20-23. We promised to be all over it, like syrup on pancakes.
The last time the Governor‘s Conference was held here in 1987, a young chap from Arkansas by the name of Bill Clinton turned out to wow the crowd. His path led from TC to the White House.
This time, with 1,200 attendees and governors from all 50 states in attendance on the eve of a wide-open presidential campaign, you can expect the upcoming conference to be a doozy. There‘ll be Homeland Security issues, war protesters, presidential candidates, Arnold sightings, Northern Michigan‘s chance to shine... the works.

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