Michigan's chance for success after deep cuts? Look to Snyder's next years in office
At a recent daylong conference I attended on making Michigan more prosperous, not one speaker I heard mentioned cutting taxes.
That’s probably not surprising considering the summit, sponsored by Michigan State University’s Land Policy Institute, was attended mostly by local government officials, executives of nonprofit organizations and other community leaders.
Ideas developed in breakout sessions at the conference included improving public transportation, embracing cultural diversity and incorporating entrepreneurship education in the sixth through 12th grades.
The MSU confab drove home an important point that sometimes gets lost in the current high-decibel debate over taxes: We can’t just cut our way to prosperity.
I get what Gov. Rick Snyder is trying to do in “reinventing” Michigan, and I applaud him for taking bold steps to address chronic budget deficits, poor educational performance and fiscal problems in local governments.
Businessman Snyder is leading a classic corporate turnaround strategy: quickly and deeply cut costs, identify lurking liabilities buried in the bowels of the company’s financial statements and deal with as many of them as possible in the first year.
In the second year, when the financial picture likely brightens, the CEO declares his strategy is working.
But if the cuts are too deep, the future of the enterprise can be threatened.
Just ask the workers at Chrysler, who watched their former bosses at Daimler and Cerberus strip the company of money to develop new products, leaving the automaker severely weakened in a highly competitive business.
Snyder recently told me that once the state is financially stabilized, he wants to end the annual cuts to such areas as higher education and revenue sharing to local governments.
That makes sense, considering that Snyder has repeatedly said a better-educated citizenry and more attractive cities were among his top priorities.
But some of my friends in the world of public policy say they aren’t so sure Snyder and his Republican colleagues who control the Legislature will walk the talk.
They think the Republicans are intent on continuing to shrink the size of state government for years to come, regardless of any economic recovery.
You can bet, for instance, that if an improved Michigan economy results in a surplus of tax revenues, there will be intense pressure by Republicans to cut taxes again, rather than increase spending on higher education or cities.
That would be a mistake, say those who believe the state is losing economic competitiveness because of a poorly educated work force, bad roads and the loss of bright young people who are flocking to Chicago and other vibrant cities outside of Michigan.
“I understand that we need to have a moderate tax policy, but a poor quality of education leads to a poor standard of living,” said Doug Stites, CEO of Capital Area Michigan Works, a job-training agency in Lansing.
“States that have a high level of education in their work forces, without regard to their tax policies, have high standards of living,” said Stites, who headed Michigan’s work force development programs under former Gov. John Engler.
I think Snyder gets it. He supports the expansion of high-speed rail that young people want in Michigan. And his economic development strategy focuses heavily in retaining and attracting talent.
Ultimately, the decisions he makes in his second, third and fourth years in office will be as important to Michigan’s future as the difficult ones he’s making now.
Email Rick Haglund at email@example.com.