On Tuesday several local groups (Kent County RICC, Disability Advocates of Kent County & GRACE/West Michigan Call to Renewal) hosted a forum entitled “Tax Policy, Michigan’s Budget & The Future of Michigan’s Economy.” About 50 people were in attendance to hear two speakers and to come up with ideas on ways to cut costs at the state level. The forum comes on the heels of Governor Granholm’s announcement of her proposed budget plan.
Tom Clay with the Citizen’s Research Council addressed the crowd first. The CRC is a non-profit, non-partisan group, which publishes reports on a variety of social indicators in the state, with an emphasis on the economy. Clay gave a Power Point presentation on the current status of Michigan’s economy. He said that Michigan is in its 7th year of spending cuts and that this year’s budget with the budget is smaller than it was 11 years ago. Clay said that Michigan has a structural deficit and that the state will not grow out of the current economic depression. Michigan’s economy is 50th in personal growth income, 50th in unemployment rate, 50th in employment growth, and 50th in Index of economic momentum.
Clay talked a bit about the factors for the budget problems such as the flight of both the auto industry and office furniture manufacturing jobs, the incremental decline of a business tax, and the growing costs of the prison system in the state. The declining business tax seems to be a major contributing factor, since there has been a decline in the percentage of business’ share of state and local taxes, which has dropped from 43% in 1990 to 37.9% in 2005. Even before the elimination of the Single Business Tax, Michigan ranked number 36 in states with high business taxes. If the Governor allows the SBT to go away without a replacement, Michigan would be the lowest state for business tax in the nation.
I asked Tom Clay to what degree trade policies have impacted not only job loss but also state revenues. He said, “the CRC has not looked at this issues, but without question NAFTA caused jobs to go to other places and has had a major effect on the Big 3 automakers.”
This writer was not able to stay for the afternoon session, which featured Louis Glazer, Michigan Future, Inc., presented the findings and recommendations of A New Agenda for A New Michigan, an agenda aimed at attracting “smart people with talent” who are the key to our state’s future economic success. This agenda promotes an “investment in higher education, build regions that attractive places for people to live, attract export business investment, align K-12 education with a knowledge-driven economy, and new leadership, particularly at the metropolitan level.” The report offered no critique of how the private sector and corporations have contributed to the state’s economic decline and in many ways, the only information presented that suggested that the business community is in any way responsible for the economic decline was the mention of the SBT. There was also no coverage of this forum by the major local news outlets.