Analysis: Michigan makes huge strides in 2011

By Phil Power/Center for Michigan and Doug Rothwell/Business Leaders for Michigan

Michigan has much to be thankful for as this year comes to a close: Better managed state and local government, a brighter economic outlook and more efficient delivery of public services. Our state's turnaround has begun, but in many ways the hardest work still lies ahead.

A year ago, our two organizations held a summit, "Common Sense Reforms for a New Michigan" invLansing. We drew nearly 400 people, including newly elected Gov. Rick Snyder and many legislative leaders for a discussion of structural changes we felt were needed to turn around Michigan and put us firmly on the path to prosperity.

The summit resulted in recommendations to improve state and local government efficiency, business climate and quality of life in our state.  We also pledged to report on progress one year later -- hence this column. There is much progress to report.

For the first time in nearly a decade, Michigan has adopted (on time) a structurally balanced budget that doesn't depend on accounting gimmicks or one-time fixes and begins to pay down the state's unfunded debt.  This budgetary discipline and improved financial condition have resulted in improved reports from several bond rating agencies.

Local government and school employees are now required to contribute 20 percent of the cost of their health-care benefits, a level that more closely matches what most private sector employees pay. It is our hope that the state employee unions follow suit and ratify these changes. The Legislature also adopted a series of reforms that make it easier for local government units to share services, thus reducing costs for local taxpayers.  Incentives are now in place for both schools and local governments to adopt best management practices, and a "dashboard" showing the metrics of progress is in place.

A new, simplified corporate income tax that ends double taxation on entrepreneurs and small businesses has replaced the complicated and (some say) job-killing Michigan Business Tax, which itself replaced the widely disparaged Single Business Tax. Previously saddled with nearly the worst business tax burden of any state, Michigan now has a tax climate about average among the states.

At the same time, state government is now looking at burdensome and complex regulations to see which can be repealed or fixed. And state economic development policy is less tilted toward government "picking the winners" for support and more dependent on the workings of the free market.

In what might be the single most important trend in 2011, the political and legislative gridlock that had bedeviled Michigan for nearly a decade was broken, replaced by high legislative output and a spirit of collaboration between Gov. Snyder and the Republican-controlled Legislature. One-party control tends to grease the skids for legislative work, though. It is our hope that Snyder, legislators and others can create a culture of bipartisanship that Michigan needs in the long term.

And there is much more yet to be done.

As our state gradually emerges from a period of economic decline, it's important to develop clear spending priorities.  As of now, too much of our limited resources are consumed by spending on prisons and rising health care costs.  And at the same time, we see deterioration in areas that are crucial toMichigan's future competitiveness, especially state support for our universities and our roads, bridges and parks.  We hope that as our economy comes back and state revenues rise, we attach far-seeing priorities on using resources to jump start our distinctive, durable, strategic competitive assets: higher education, infrastructure, cities/communities and natural resources/environment.

Facts matter. Trust matters. Journalism matters.

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Mike R
Tue, 12/06/2011 - 1:36pm
While I generally commend Mr. Powers and the Center for Michigan on their efforts to seek bipartisanship and moderation in Michigan government, I have to say I am very disappointed and dismayed at the one-sided, blanket approval this editorial gives to the radical conservative agenda perpetrated on Michiganders by the monolithic, selfish, and socially destructive Republican machine. Where is mention that they are driving out and away the best teachers by demonizing them, lowering pay, curbing benefits, virtually eliminating tenure, and chilling free speech in enacting a draconian system of punishment for even discussing union affairs? Where is the condemnation of the dismantling of the public education system by giving a green light to anyone, no matter how unqualified or how bad the track record, to open more charter schools and siphon more tax money away from public schools? It's very short-sighted to commend a one-party government for its productivity, forgetting that "absolute power corrupts absolutely". We are witnesses to the decline of democracy, freedom, and fundamental fairness in Michigan right now. Rich Snyder may be a well-intentioned, moderate, common-sensical governor (the jury is still out on that), but as of now he is firmly in bed with his neo-Nazi brethren in the legislature. I would like to see Mr. Powers return to the balanced criticism of the Republican (and Democratic) excesses he has shown in his past pieces.
David J
Tue, 12/06/2011 - 5:23pm
While the "neo-Nazi" perjorative is a bit "over the top," Mike R. articulates a well-reasoned response to Mr. Power's and Mr. Rothwell's "Analysis." I, too, expected MORE BALANCE vs. endorsing the "in control" party's reactionary politics that have constantly provided lip-service to bi-partisan compromise (vs. real deliberative processes that require sacrifice from ALL stakeholders, including business interests and taxpayers, not to mention keeping lobbyists "at bay"). I would have at least expected him to conclude with something to the effect that "when it comes to Midwest state government, at least we're NOT WISCONSIN -- or OHIO." :)
Thomas W. Donnelly
Tue, 12/06/2011 - 2:11pm
Some months ago, I participated in the citizen forums sponsored by your organization. Christie McDonald was great as moderator, and most of the participants were even-tempered in their wishes and remarks. One of the most salient themes over and over was that all levels of education, from pre-school to university, was the key ingredient in helping Michigan to prosper.And I know that your group very dutifully shared all of these findings with the legislature and the governer. But the actions of the law-makers have been detriment to all aspects of the educational process.If it was not funds cut to education, it was an overriding effort to demoralize the ranks of public school employees who are charged with delivery of that important education. What happened? Didn't the lawmakers get the message that education was the main key to both short-term and long-term success in our beloved State? If they heard it, why did they do so many things that were antithetical to the goals of public education?I am up to my eyebrows with the Grover Norquistian claptrap that our collective goal is to starve the beast of government and rely so heavily on the "job-creators" in our business communities. I applaud your efforts to bring sense to our problems, but yours appears to be the same business oriented attitude that will never bring us what we need: a potent work force and challenging jobs to employ our citizens. Balancing a budget is no success if it is tilted away from what is good and helpful to people. I am disappointed in our legislature, in our governor and in the Center for Michigan, for being in the hip p You can do better!ocket of big business.
Tue, 12/06/2011 - 2:20pm
We're still spending more on prisons than education in Michigan. Attorney General Rick Shutte appears to spend an inordinate amount of resources on reversing the medical marijuana referendum's passage even though "the sky hasn't fallen" since its passage. Prisons are tax-supported institutions that have their own set of well-financed lobbyists, unlike the poor and unemployed that saw medicaid, unemployment and the low-income tax credit significantly cut while business owners got a break without any promises to hire new workers. Decriminalizing marijuana would save hundreds of millions of tax dollars while lowering the profits and influence of Mexican cartels. Of course, with 900,000 citizens prosecuted annually nationally for its use, that would effect the employment of judges, prosecutors, police, drug counselors, food service workers, construction firms, prison guards and corporate shareholders all "fighting evil" on the tax-payer's dollar. Conservatives have no problem cutting public school costs by repeating that money doesn't provide good outcomes while our federal military budget has doubled in the last ten years with their blessing. Why does an effective military require more and more money but a quality education does not? Do we need more billion dollar planes or $10 million dollar drones? I'm all for streamlining government, but let's not ignore the sacred cows and elephants in the room in Michigan and nationally. Synder may get high marks as a corporate lobbyist but not as a visionary that sees a world in need of more green technology from light rail to windmills. We have the manufacturing capabilities to build both. Germany and China are the leaders due to mandated goals - more government of course.
Aaron Surma
Tue, 12/06/2011 - 2:48pm
what criteria is used to measure our governor/state? do you have a scorecard? i'm new to the site, but i don't see one anywhere. it seems like there have been a lot of failures as well. Financial Manager legislation and the failed DRIC bridge come immediately to mind. i look forward to reading more and i support your goal of voter education/participation.
Wed, 12/07/2011 - 11:15am
Local government and school employees are now required to contribute 20 percent of the cost of their health-care benefits, a level that more closely matches what most private sector employees pay. It is our hope that the state employee unions follow suit and ratify these changes. The Legislature also adopted a series of reforms that make it easier for local government units to share services, thus reducing costs for local taxpayers. Incentives are now in place for both schools and local governments to adopt best management practices, and a “dashboard” showing the metrics of progress is in place.
I, too, am optimistic about our State's future, but not really because of anything happening in Lansing. Most local governments - particularly the communities that enjoy professional management - had been reducing all benefits, sharing services and trimming staff well in advance of Snyder assuming office. Lansing's efforts and dialogue w/r/t local governments have been redundant at best and damaging at their worst. Furthermore, the dashboard "metrics" used by most communities have very little correlation with local budgetary activity. However, requirements to prove collaborative activity and planning with other local have forced us to take a healthy look at what we're doing - or not doing - and seek ways to gain efficiencies. But again, we were already doing this. Michigan will survive, but it will be because of people in local government. And probably in spite of Lansing.
Joe M
Thu, 12/08/2011 - 4:46am
Thanks, but no thanks. Government is not a business and tax revenues are not meant to be a revenue stream for venture capitalists, aka MEDC.
Bob Martel
Sat, 12/10/2011 - 4:31pm
Phil, While I would agree with you that, on balance, Governor Snyder has been a positive influence on our State, I am surprised that in article on this topic you would choose to totally overlook the extremist, right-wing agenda coming out of the State Legislature and Senate. If Governor Snyder does not have the courage to use the power of his veto as he did with HB 4326, this regressive agenda will have a devastating impact on Michigan aligning us with other hot-beds of tolerance and understanding such as Alabama, Mississippi and Texas. Bob