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Tuesday, July 05, 2005

Granholm: Michigan's Economy In Crisis - Legislature Extremely Unproductive

LANSING - Michigan's economy is in a crisis and the Legislature has not sent her any bills to address that situation, Gov. Jennifer Granholm said Tuesday, calling this 93rd Legislature so far extremely unproductive.

"They have put on my desk about 50 bills that range from reapportioning the Potato Commission to the dead animals composting act, to, I know they're still wrangling with repealing the horseshoers lien act, when our economy is in crisis," Granholm said in an interview with Gongwer News Service. "So we need to get serious about restructuring the state's economy and putting people to work."

The governor also said that major differences remain between her administration and the Legislature on the 2005-06 budget, which she said has proven to be the most difficult of the three in her administration to complete.

Restructuring the state's economy is like "turning a battleship," she said, but even though it will be a long-term project to change the economy, positive signs are starting to appear in Michigan's economic landscape.

Looking ahead to the 2006 election, Ms. Granholm also said that she intended to be honest with the voters about the difficulties that the state is having and will face in converting its economy. People will understand the difficulties, she said, and she was confident that she could win re-election even if the state's overall unemployment rate is little changed from its current 7.1 percent. And with a message of building jobs and "courageous" economic restructuring, Granholm said Democrats could also retake both the Senate and the House. Granholm said that while the Legislature is taking a break, she hoped there is "not much of a pause of action" in the Capitol.

She released a letter to lawmakers Tuesday (shortly before the Senate announced it canceled its Wednesday session; the House previously said it would meet, but no voting is expected) saying that while she hoped all had some rest during the Fourth of July weekend, "unfortunately, our time for rest was short."

The letter said, "No significant legislation to create jobs, expand education opportunities, protect children or restructure our economy has reached my desk." She called for the Legislature by August to send her legislation giving tax breaks to businesses without "shifting the burden to Michigan families," making a "significant investment" in new technology businesses, revamping the Merit Award, enacting her "Jobs Today" proposal on downtown development and school construction, protecting children from sex offenders and putting restrictions on violent and sexually explicit video games.

In the interview, she said so far the Legislature has sent her less than a third - 54 to be specific - of the bills she signed a year ago when there were 186 acts signed by this time. Traditionally, though, the pace of legislative bill passing is slower in the first year of a Legislature than in the second. By this time in 2003, for example, Granholm had signed 37 bills.

While recognizing the difficulties lawmakers and her administration face in enacting the budget and working on economic issues, Granholm was very critical of the Legislature's work on the budget and economic policy.

Granholm was encouraged that lawmakers were coming to her way of thinking on the need to restructure the state's economy, on enacting "tax relief" for the state's manufacturing businesses and to make changes to the Merit Award. All of these proposals are "interrelated," she said, but considerable work needs to continue to resolve these issues. Those issues will all be part of what the legislative/administration workgroups will review when they begin this week, Granholm said.

Because the budgets for the first two years of her administration were focused on cutting, Granholm said the budget for the 2005-06 fiscal year "has been the most difficult because we have cut so much. And the question is how do we balance the budget and preserve the quality of life. We've proposed a balanced budget that does that."

But there are wide gaps between what she has proposed and what the two houses of the Legislature have thus far proposed. While she said the Senate and the administration are closer in many respects, she was sharply critical of the House-passed omnibus budget bill, both in how it was passed and in what it does.

"The House had a much more draconian budget proposal," she said, adding the House version was also a very partisan budget proposal, she said. "You know, they say they don't want to pick winners and losers and yet they picked winners in areas represented by Republicans and losers in areas represented by Democrats. That's not the way it's going to end up however."

Asked how the Price of Government, the book both her administration and legislators had taken as their guide to developing the budget, had influenced the process, she said of the House process it had influenced it dramatically.

"When you introduce a bill on a Tuesday and vote it out on a Wednesday and have no hearings whatsoever on the ramifications of that bill, I think it has changed entirely, dramatically the situation," she said of the omnibus bill. "You have all kinds of unintended consequences that come from a budget process that is so cloaked. You need transparency in a budget process, you need people who are affected to come and saying, 'This how I'm going to be impacted by this cut.' And often when you are transparent often citizens come with better ideas on how to structure your budget."

Granholm said she was "shocked" by how little public input there was into the House omnibus budget.

Many of her own budget proposals - such as a provider tax on physicians and more money for high school students - did not survive in the legislative process, and Granholm recognized there would be other changes as the budget talks progress.

Asked when the budget is completed if she would have to accept that Medicaid recipients may have to pay more in co-pays for treatments and pay premiums for coverage than she had anticipated, Granholm said she might. But the Republican proposal for co-pays and premiums represents a cost shifting, she said, and just as legislators have criticized cost shifts in other areas they need to be careful not to see their efforts bounce back with higher costs on businesses and taxpayers if individuals cannot get medical services.

Drafting the budget is integrated and integral to the longer-term, harder task of converting the state's economy from its heavy manufacturing base to a more high tech-based economy, the governor said.

While the state still ranks in the worst tier of states in terms of unemployment, and while state revenues - while appearing to recover somewhat this year - remain stagnant, the state is starting to see its efforts to attract new businesses into Michigan pay dividends, Granholm said.

"We are seeing a massive shift," she said. The number of international research and development headquarters that have located in Michigan have increased, as have the number of small businesses, plus the fact the state remains number 2 in terms of business locations according to Site Selection magazine shows Michigan is attractive to businesses, she said.

But more needs to be done to expand the state's image globally and make it a part of the international economy. Turning in her chair and rushing to the conference room's bookshelf, Granholm seized a copy of The World is Flat by New York Times columnist Thomas Friedman and said the book, which discusses the global economy, is a "clarion call" to Michigan to enact changes to attract international business.

"This is a call to action," she said. "We have got to wake up."

Still, she acknowledged making these changes are difficult, like "turning a battleship." And the changes will have to be part of her re-election campaign in

Author: Staff Writer
Source: Gongwer News Service

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