Gov. Rick Snyder misses big opportunities in 2011-12

Determined to measure their work against the bipartisan legislative train wrecks of past years, Republicans who run the Legislature are pretty close to their goal of closing up shop for the summer by the end of the week (June 1). That’s three weeks ahead of last year when they overhauled the business tax code and closed a $1.8 billion budget deficit.

If they wanted to make it official, lawmakers could lock their part-time work schedule, along with the requisite pay cut, into the Michigan Constitution. Voters would happily ratify.

But Michigan’s economy demands more -- and so too should Gov. Rick Snyder. 

A balanced budget, more money in the state rainy day fund and reductions in unfunded retirement liabilities are laudable fiscal achievements. But they’ll be short-lived without a reversal of the short-sighted neglect of state assets required for sustained economic growth. For without that sustained growth, the budget again will soon be out of balance. A quarter-billion in budget stabilization funds can be erased with one quarter of negative economic growth. Or a million fewer sales of cars and light trucks.

Snyder last year made a critical mistake by decoupling the New International Trade Crossing (Detroit-Windsor bridge proposal) from the budget process. No bridge? No signature on a Michigan Department of Transportation budget. Since that ultimatum wasn’t made, momentum that might have been fueled by the pressure of budget deadlines was never given time to develop.

While Snyder may be able to authorize the NITC on his own, he can’t reconfigure the gas tax or double registration fees without 56 votes in the House and 20 in the Senate. That's why, with the support of both business and labor, he called on lawmakers in his State of the State address to tackle road funding for the first time in 15 years. It makes little sense to come out in favor of significant fee increases if you're not willing to announce you'll veto a road budget that perpetuates long-term failure without them.

Though the 2013 budget finds the minimum amount of cash required to match available federal funds for another year, it puts off for yet another year the $1.4 billion annual fix really needed to keep the state’s infrastructure in decent repair. Without that kind of money, the decline accelerates. Because Snyder again demurred in lashing a top priority to the on-time completion of the budget, the economic gains from a big boost in infrastructure spending in 2013 and beyond are lost.

Snyder didn’t propose a fix for a higher education budget that will be 29 percent smaller in 2013 than it was in 2003. (As opposed to the Department of Corrections budget, which is 24 percent bigger during that period.) But he might have agreed to one, if Republicans in charge of the budget process thought it important.

When the last all-Republican regime in Lansing produced its final budget, for fiscal 2003, higher-ed spending totaled nearly $1.85 billion. The fiscal 2013 plan devotes $1.4 billion, $36 million more than last year. At that pace, repairing a decade of fiscal damage will take years. Particularly if universities are going to be taking a back seat to last-minute, politically motivated $100 million income tax cuts of dubious economic value.

In its presentation on May 31 at the Detroit Regional Chamber’s Mackinac Policy Conference, the Business Leaders for Michigan is reiterating its position of greater taxpayer support for higher education conditioned upon rational performance standards that measure Michigan schools against their appropriate national peers.

From the start, the aim of the 2013 budget process should have been to recognize that Michigan will soon be short more than a million workers for jobs that require a two-year degree or more, and then to construct a financial and policy structure that fills the expected demand.

Snyder and lawmakers have sought to reward entrepreneurial aspiration with a business tax policy designed to spur job creation by reducing, if not eliminating, the financial and administrative burdens of compliance.

And it’s being done at some political risk -- given who's paying higher taxes instead -- the extent of which won’t be known until November. But whatever the risk, it was determined that it was worth it because the public ultimately will agree to give up some income tax credits to fund a course correction they’re persuaded will lead to a better economy.

Luckily for Republicans, they at least have improving jobs and income growth numbers to back up their argument. But rather than build on a business-backed agenda that calls for tax reform and investment, they’re going home.

Is it easier to tell voters they won't have to pay more for gas or to give them a tax cut? Sure. The hard thing is to make the case that Michigan's competitive position demands more.

Peter Luke was a Lansing correspondent for Booth Newspapers for nearly 25 years, writing a weekly column for most of that time with a concentration on budget, tax and economic development policy issues. He is a graduate of Central Michigan University.

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Jean R
Tue, 05/29/2012 - 9:09am
"From the start, the aim of the 2013 budget process should have been to recognize that Michigan will soon be short more than a million workers for jobs that require a two-year degree or more, and then to construct a financial and policy structure that fills the expected demand..." A little more detail would be great here. In what fields are these jobs going to be? And where did you get these figures?
Tue, 05/29/2012 - 9:28am
We spend more on prisoners than on higher education in this state. Sad really, because Republicans will NEVER vote for a broad based tax increase that this state really needs to repair our roads, keep our environment clean, and making our schools strong. They focus on giving tax cuts to business as a means of encouraging business growth. While I will agree some of this is needed to make our state competitive, it takes so much more to create a strong business climate. Lower utility costs, streamlined businss regulations will also help, but who really would bring a business to Michigan with pot hole-filled roads, failing bridges, and an educational system that cannot produce the empoyees it needs?
Tue, 05/29/2012 - 11:38am
Mr. Luke is one of those perential fault finders. He sees only what doesn't work and ignores what does work. And he gets his wtsh by only focusing on what doesn't work, because with that focus people forget what works. If Mr. Luke ever heard of the 80-20 rule he would find that it is more important to first and regualrly remind people of what works since that is what acheives most of what we need done. Instead as we work on the part that doesn't work so less and less gets done. Mr. Luke complains that our full time Legislature and full time Governor need to work more. As best I can tell California is the only other fulltme Legislature (or at least the only ones getting paid more the Michigan Legislatures) and their State's financial situation is worse than what Mr. Luke claims are is. I wonder why all those other states that are doing better than Michgian with part-time Legislator.
Tue, 05/29/2012 - 1:36pm
I am a job creator when I spend my money in a local business which sells American made and Michigan made products. My money pays others to be able to do work, who in turn make yet other people employed. Lately, other than auto related companies, most Michigan corporations are continuing to move jobs to the south, to Mexico or to Asia. These corporate leaders are devoted to the almighty Dollars that they and their stockholders will share and hoard. Few jobs have been or will be created because of the massive shift of tax dollars to give these corporate tax cuts. Michigan needs to build the international bridge to stimulate short-term and long term job growth. This is a good use of Canadian and American federal tax dollars for the benefit of our citizens. Paying a just amount to get new and good housing to those displaced by the bridge could move whole neighborhoods who could retain family and cultural ties. There is no downside, except Mattie Maroon. Ignore him. In my opinion, Snyder has been quite robotic in signing all of the ALEC created legislation that the lawmakers tried to pawn off as their own wicked ideas. The poor children in our state really got hammered in their loss of money and services that used to keep some semblance of security and dignity. Snyder just wrote them off like out of date Gateway computers. The Emergency Manager law is draconian and unconstitutional. Cuts to schools and to police/fire services have created serious harm to many communities.This suggested tiny tax cut is a transparent effort to show voters how much the legislature loves them. No one believes it. Between the 30 million dollars spent by lobbyists on our lawmakers, the ALEC organization doing the homework for them, these TEA party Republicans are having it pretty good. Their end will come.
David J
Tue, 05/29/2012 - 2:53pm
Couldn't agree with you more, T.W. Donnelly! Thanks for taking time to articulate a response that reflects an INFORMED view (vs. whatever that was that Duane put forth in an attempt to critique Peter Luke's viewpoint). Unfortunately, I fear that a majority of our state's voting public is not as discerning or deliberative in their thinking, but more like Duane; so, I'm afraid "their end will come" only after we've been subjected to even more reactionary legislation under the guise of "job creating" invectives.
Tue, 05/29/2012 - 9:38pm
Maybe we should be asking why they are moving jobs out of Michigan rather then simply looking for someone to blame. Why are we asking those who are keeping jobs here why they are doing that and how they are doing it? I would say those are the ones who better know that then Mr Luke. I would look at those who are successful and ask them why than as Mr Luke is doing by simply blaming the Legislators. DO you think it is better to only look at what we don;t think is working and focus on that as Mr Luke is saying or do you think we should learn what is working and try to replicate it elsewhere?
Kelly Gauthier
Tue, 06/19/2012 - 2:19pm
Wouldn't it be awesome if (just once!) our state leadership and media concerned themselves with what was best for CITIZENS? All I ever hear is what the BUSINESS community wants/needs/demands. I can't recall the last time anyone seemed to care a fig for what the CITIZENS want/need/demand. Whose state is it, anyway?