February 7, 2007
Granholm Calls
for Revenue Enhancements,
Gives Few Specifics in Tuesday's State of the State Address
Governor Granholm delivered a 56-minute speech Tuesday laying out her
vision
for how to bring Michigan's economy back from the brink. The plan was
widely
criticized by Republicans and political pundits for lacking specifics
and
calling for additional programs in the face of an $800 million FY 2007
budget deficit.
The specifics of Granholm's plan, which focuses on additional investment
in
the state, will come in Thursday's budget presentation of the House
and
Senate Appropriations Committee. Her budget will also lay out her plan
to
replace the approximate $2 billion in revenue to be lost when the Single
Business Tax (SBT) expires on New Year’s Eve.
Republicans have released two plans of their own for replacing the SBT
with
a $300-million cut in taxes. It is likely that Granholm's plan, which
will
either be revenue-neutral or constitute a revenue enhancement, will
be in
sharp contrast with the GOP plans. Various discussions of how to increase
revenue have focused on implementing a sales tax on services, raising
the
state's gas tax, or privatizing the state lottery.
Below is an article from today’s MIRS News that summarizes the
speech and
provides feedback from both Republican and Democratic members. Additional
information will be sent when the Executive Budget has been obtained.
MIRS News –
Capitol Capsule, February 7, 2007
Gov Says It's Time To Invest
Gov. Jennifer GRANHOLM never told Michigan exactly how she proposes
to
increase taxes. But during her fifth State of the State tonight, she
made it
clear that tax hikes are on the way.
The governor concluded a lengthy and often times rushed 56-minute address
with a strong, impassioned plea to take the state's "hard and stubborn"
economy head-on, to push forward with her plans to invest, be it in
her
handful of new retraining and education programs or those programs she's
already gotten off the ground.
The Governor made it clear the state's piggy bank was empty and cutting
more
services and cutting more business taxes wasn't going to get Michigan
out of
it. Rather, the Governor said more cuts will leave the state with "potholed
streets," "crumbling bridges," under-funded universities
and unskilled
workers.
To do anything but to invest with confidence and courage in "our
people"
will cause the state to be "sucked backwards on a path of failure
and fear."
"The choice we face right now in Michigan is not right or left.
It is to
advance or retreat," Granholm said. "I say advance."
The meat of the Governor's speech tackled 14 specific legislative directives
or new programs with the promise of "pushing the gas pedal"
on a few other
successful programs such as her 21st Century Jobs Fund and overseas
business
trips.
"It just makes me ready to go," said freshman Rep. Joan BAUER
(D-Lansing)
afterwards.
But the heavy cloud of the $800 million budget hole in the Fiscal Year
(FY)
2007 hung over the entire speech, and while she peppered different budget
promises throughout the speech, Granholm sprinted through the first
44
minutes until reaching her big finish on the state's budget.
Up to that point, the Governor had been interrupted 42 times by applause.
For the last 13 minutes, the joint session of the Michigan Legislature
sat
in mostly silence as the Governor drove home the point that Michigan's
poor
economy is eating away the state budget and the 93 tax cuts she claims
she
signed into law haven't turned things around.
Also, cutting spending alone isn't going to get Michigan to where it
needs
to be.
"The truth is another round of budget cutting alone cannot solve
the fiscal
crisis," she said. "In fact, a cuts-only solution would destroy
the state's
ability to recover."
Rather, she pledged to lay out a tax system where "businesses will
begin to
pay their fair share" but will still be below the national average.
"That is code for I'm going to raise your taxes and I want the
general
public to feel good about it," said House Minority Leader Craig
DeROCHE
(R-Novi).
In exchange, the state will make investments in "education, health
care and
infrastructure." The Governor went as far as to say that she will
not "slash
school funding in the middle of the year."
Granholm predicted this type of response, saying:
"The Naysayers haven't seen my budget yet, but they already know
they are
against it," Granholm said. "Blinded by narrow ideology, stubbornly
fixed on
old solutions that have failed to work in a new economy, they'll say
we
can't afford new investment. The truth is we can't afford not to."
"The Naysayers" first critique out the box will be how the
state could
possibly afford to balance an $800 million budget on top of the several
programs she proposed today.
"She said in the fifth year we'd be totally blown away," said
Sen. Alan
SANBORN (R-Richmond). "I am. I don't know how we're going to pay
for it."
As previously leaked to the media the Governor called on her "Promise
Zones"
proposal to expand free college scholarships to distressed communities
and
required kindergarten and full pre-school funding for 26,000 4 year
olds
(See "First SOS Leak: Let's Pay For College," 2/2/07).
She called for more tourism and business marketing for Michigan, a $100
million private-public venture to recruit alternative energy companies,
a
"Michigan Nursing Corps" to train 500 nursing educators and
"revolutionary
new high schools" in which high school and community college would
be
blended into five years of schools for those looking to go into the
health
care industry.
All the while, she called for an increase in money to hire more cops
and
firefighters and more state child protective service workers to make
sure
children are "placed in safe, permanent homes" and to aggressively
monitor
foster homes. Granholm's address didn't make deep state cuts to higher
education sound probable either, when she said she plans to require
tuitions
to be affordable for Michigan families.
"It was disturbing to sit through a speech that inspired, but that
doesn't
deal in reality," said Senate Majority Leader Mike BISHOP (R-Rochester),
who
took notes during the speech.
As far as proposals to cut government spending, Granholm mentioned three
ideas. The first is cuts in revenue sharing payments to cities and townships
that don't consolidate or share services. She threatened to make cuts
to
schools that don't "embrace a more common sense way to put more
dollars in
the classroom," such as pooling software contracts with neighboring
districts.
The second was a pledge to find lower-cost ways to deal with non-violent
offenders. In information leaked to Booth Newspapers before the State
of the
State, the administration pledged to release inmates that are old, sick
and
non-threatening to the general population.
But tonight she didn't get into the specifics of her plan other than
to say
prison populations would decrease without compromising public safety
and
that parolees need to become productive members of society as opposed
to
someone running up expensive tabs behind bars.
"All I heard in her State of the State was increase taxes and free
prisoners," Sanborn said.
Earlier in the day Michigan Republican Party Chair Saul ANUZIS said
he found
the idea of letting the sick out of prison "intriguing and interesting"
and
thought the Legislature should look at it. He added that he didn't know
if
Department of Corrections management should be in charge of overseeing
such
an effort, seeing they botched the release of Patrick SELEPAK and couldn't
balance their budget last year.
The Governor also pledged to continue waging war on waste and find new
efficiencies within state government, something folks around town have
heard
before. For the statewide audience, however, Granholm emphasized her
unchallenged number of $4 billion in deficits and $3 billion in cuts
she's
made to past budgets.
As far as the 14 new proposals, the Governor's laid out in her spoken
text
(she dropped two proposals from her written text), Granholm focused
mostly
on alternative energy, K-12 education and advanced training for workers.
"By building on innovative programs such as the Kalamazoo Promise
and
alternative energy, she has set a positive course for Michigan's evolving
identity," said Senate Minority Leader Mark SCHAUER. "I also
applaud her for
putting Michigan workers first for educational opportunities and for
proposing real government reform."
She restated her desire to see the state ban on embryonic stem cell
research
lifted and threatened to see it on the ballot if the Legislature did
nothing
with it.
She also repeated her desire to see her 2006 State of the State small
business retirement plan moved (See "What Happened To The MI Retirement
Program," 1/29/07). The third resurrected directive was her call
to increase
the drop out age from 16 to 18, something she asked for in 2003.
Her three other education-initiatives were the expanded pre-school for
26,000 4 year olds, a mandatory kindergarten requirement and the
aforementioned high school/community college hybrid she wants to create
with
Henry Ford Hospital.
On the alternative energy front, Granholm called for "an aggressive,
three-year effort to attract more alternative energy companies to Michigan
through more than $100 million in combined public-private investment.
The Governor embraced Public Service Commission Chair Peter LARK's
recommendation to have 10 percent of the state's energy come from renewable
sources within eight years with the hope of doubling that goal in the
decade
after that.
She asked the Legislature to expand alternative energy renaissance zones
to
attract new solar and wind energy companies and pledged to have 1,000
ethanol and bio-diesel pumps at gas stations across the state.
"Tonight's speech by the Governor was a bold beginning…Michigan
can help
break our nation's dependence on foreign oil," said David HOLTZ
of Clean
Water Action Michigan. "Governor Granholm's proposals for making
Michigan
the leader on reducing greenhouse gas emissions through green technology
are
a remedy for our economy and global climate change and a real turn from
the
past."
On the advanced training front, Granholm mentioned repackaging the federal
dollars the state receives to award free community college tuition to
unemployed workers who want to learn skills needed for "high-demand
jobs."
Republicans stood in applause for this program…likely because she's
talking
about using federal money, as opposed to new money from the state's
General
Fund.
Granholm Drops Two Programs
Gov. Jennifer GRANHOLM dropped four sections from her written State
of the
State speech, opting (likely because of time constraints) not to mention
her
desire to ban smoking in the work place and a health plan called "One
in a
Million," which apparently would "get people walking and running
this year."
Granholm also didn't mention the Michigan Health Information Network,
which
was part of her 2006 State of the State address. This program was instituted
this past year. It put together different medical information on a statewide
system so patients and their doctors would have better, more comprehensive
access to medical records.
Granholm also left out a reference to hubby Dan MULHERN's mentor program.
She was slated to tell citizens that between 2004 and 2006 almost 12,000
kids were mentored by the program.
KEY BILL INTRODUCTIONS:
No Bill to Introduce at this Time.
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