Michigan is still feeling its way through a reopening plan, but some state business leaders say it’s not too soon to consider what next steps will best prepare the state for economic recovery.
The most important goal: helping to keep existing businesses open so the economy can grow, said Doug Rothwell, CEO of Business Leaders for Michigan.
Doing that, he said, will require the state to consider its approaches to areas like worker retraining, state tax structure and small business support after coronavirus.
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“During a time of crisis when you have limited dollars, you really need to make sure that whatever you are spending helps as many people as possible,” Rothwell said.
The statewide advocacy group presented the Michigan Legislature with its plan for recovery last week, and now hopes to see its recommendations considered publicly. The plan is built around “shifting existing resources to uses that might be more appropriate right now,” Rothwell said.
“Many of these suggestions are not meant to be permanent, but for what we’re going through right now, it makes sense,” he said.
Shifting the focus toward business growth comes as the state eyes a $6.2 billion budget gap. State budget director Chris Kolb described it “as bad, if not worse than, the Great Recession.” Among concerns are revenue drops in major sectors of the economy, including retail, tourism and dining.
Gov. Gretchen Whitmer announced a further wave of reopening on Monday afternoon, including restaurants and bars at half-capacity beginning June 8. However, some other businesses — including gyms and hair salons — still do not know when they’ll be able to open.
Stabilizing the business climate needs to be a priority as that happens, Rothwell said. That would include providing reasonable liability protections for businesses following the rules of reopening.
Beyond that, the state needs to adapt to new business conditions following the monthslong statewide stay-at-home order and closure of non-essential businesses.
Policy suggestions include:
- Request that the Michigan Department of Transportation and county road commissions prioritize projects considering economic impact and emphasize “shovel ready” projects.
- Review tax structure to see if it aligns with the trends toward remote work and home delivery of goods and services.
- Identify how to accelerate certification programs for in-demand jobs.
The last move, Rothwell said, could particularly help hundreds of thousands of laid-off hospitality workers.
“We need to redeploy workers in the short-term as much as we need to re-skill them,” Rothwell said. “A lot of folks are not going to be able to go back to bars and restaurants, at least for a while, but there are job openings in the grocery, logistics area and health care that weren’t in as high demand before we went into this crisis. Many of those jobs don’t require any skills training.”
Getting people into those jobs without bureaucracy should be a goal, he said.
Looking ahead, Rothwell said, businesses retention needs to be the priority for Michigan, notably in out-state communities where job growth and out-of-state business attraction comes at a slower pace.
“The focus needs to be on retaining and growing existing Michigan companies,” Rothwell said.
Specific policy suggestions from Business Leaders for Michigan toward those goals include:
- Redirect Community Development Block Grant dollars from investments in infrastructure to support small- and medium-sized businesses.
- Focus on helping existing Michigan companies attract their critical suppliers to the state.
- Fund Pure Michigan travel advertising to support the state’s tourism industry.
One way the supply chain is changing for the state’s benefit, Rothwell said, is already playing out as manufacturers shift their production to make personal protective equipment, like masks, which are then sold in-state.
The travel industry, meanwhile, is looking to boost spending in the sector, which generates at least $25 billion per year for Michigan’s economy. Whitmer in October cut the $37.5 million Pure Michigan travel promotion budget.
Several points in the Business Leaders for Michigan plan resonate with the Grand Rapids Area Chamber of Commerce, said Andy Johnston, vice president of government affairs.
Support for worker retraining is among them, he said. “We think there’s going to be a great need for employees to reskill coming out of this pandemic.”
But the chamber will be watching any tax changes coming out of the recommended reviews, he said, particularly as the state moves toward building a budget with billions of dollars in shortfalls.
“We have to get the economic engine going again,” Johnston said. “We are concerned about additional taxes on the business community.”
Rothwell said his group doesn’t plan on making specific tax recommendations. Instead, he encouraged state officials to consider whether items like personal property taxes, sales taxes and income taxes align with how people are working and spending during the pandemic. If those behaviors extend for a year or longer, there could be structural changes warranted, he said.
Business Leaders for Michigan also is looking at the state’s budget deficits, and it plans to discuss that further by mid-June, Rothwell said.
The goal with the recovery plan, he said, is to encourage the state to not just look at the program or spending side, but also consider revenue.
“We tried to make it as simple as we could,” Rothwell said, “... to stimulate ideas and provide a roadmap to get our economy going again.”