LANSING – Former Michigan Governor William Milliken in an interview with Gongwer News Service said Michigan’s government leaders must find deliberate ways to ease the growing partisan bickering that has plagued Lansing this year and change or possibly eliminate the Single Business Tax.
As it now stands, politics now stands in the way of a $3 billion high-tech jobs and tax cut package now on Gov. Jennifer Granholm’s desk. The Republican-controlled legislature has inserted a sunset of the controversial SBT in 2009. Granholm, faced with an all or nothing situation, said she will veto the entire package unless the sunset provision is eliminated.
Eliminating the SBT also would jeopardize the $150 million Venture Michigan Fund, which would be used to invest in Michigan life sciences and technology companies. The tax-credit backed MVF uses the SBT as the credit offered investors.
"We must put aside the kind of one upmanship that is going on, the semi-name calling," Milliken said. "The trust has been broken. I don't think the fault is all on one side or the other. But our leaders must deliberately seek out opportunities to find ways to work together."
Milliken said the partisan splits of today do not yet reach the level of partisan breakdown that occurred during the 1950s and the state's payless payday crisis, but the current situation is very bad.
And if the SBT, which Milliken signed into law in the mid-1970s, is repealed then it must be replaced by another business tax. Businesses, said Milliken who oversaw the Milliken Department Store chain before being elected to the Senate in the 1950s, get government services and must pay their fair share of maintaining those services. Business must be particularly committed to maintain and improve education, Milliken said, because "therein lies our future."
A number of the top officials who worked on development of the controversial tax in the 1970s, including Bob Kleine and former Treasurer Doug Roberts, have been interviewed on the tax's history and value, and have said businesses should not be exempted from paying a state tax. But Milliken's feelings, as the state's chief executive in 1970s who oversaw creation of the only value-added tax in the United States, about the tax have not been probed in recent years.
The tax is the focus of a tax cut and jobs creation plan that is now before Governor Jennifer Granholm, and will likely be vetoed because the plan does not include language repealing a 2009 sunset date to end the tax. The repealer language had been part of the agreement on the tax plan announced two weeks ago, Granholm said, though House Speaker Craig DeRoche (R-Novi) and Senate Majority Leader Ken Sikkema (R-Wyoming) said the repealer was not specifically agreed to. Sikkema has also said the repealer issue should not stand in the way of the final package.
Milliken said in the interview he has not followed the daily details of the latest controversy closely enough to say what Granholm should do with the package. But he said the time is right for changes to the SBT.
When it was adopted during what was, at the time, the state's worst recession since the Great Depression of the 1930s, "one of the virtues of the SBT was its reliability," Milliken said. The tax replaced seven other business taxes in the state, including an inventory tax, which were far more volatile in terms of revenues.
"We were never able to rely on a central source" of business tax revenue, Milliken said. The SBT "helped to provide that stability we so desperately needed." Now, 30 years later, "the time has come" for further revisions and modifications to the tax, Milliken said.
"There's no question modifications, if not elimination of the SBT, needs to occur," Milliken said. He said he did not feel he should suggest how those changes should be enacted. But he rejected the idea that businesses should be exempted from taxes, even though some argue the cost of the taxes are passed onto consumers and having no business tax could spur economic growth.
"We want to be sure we are not over-penalizing business in terms of its impact on jobs and growth," Milliken said. But "business should bear its fair share of the cost of government. Businesses benefit from the services the state provides, and by no means should business be exempted from a reasonable or a fair part of the burden of providing those services."
Education alone is a vital service businesses must help pay for, Milliken said. "No one has more to gain from education than business." (Although Milliken also said the state must do more to improve education. "We are not doing a good job when you think about the efforts in China and India," he said. "We need to have a better educated citizenry, and I'm not just talking about higher education but education beyond college. We need to embrace lifelong education.")
But standing in the way of reaching agreements to make those changes is a growing divisiveness, Milliken said. Partisan rancor and splits within the government have been a major concern of Milliken for some years - he spoke on the issue last spring at the Mackinac Island conference of the Detroit Regional Chamber of Commerce - that his worries are not abating, and with the 2006 elections coming it stand in the way of reaching solutions.
The situation could be worse, and Mr. Milliken recalled that in the 1950s during the payless paydays, when the state was literally broke, the Michigan Manufacturers' Association "said 'We've got (former Governor) Soapy Williams over a barrel, now let's keep him there.' So, it could be worse."
But the partisanship is bad now, and the public is getting fed up with legislators and the executive unable to reach agreement, he said.
The different sides need to find ways to share credit with each other, Mr. Milliken said. "We need to play down our intense partisanship and play up our common interests," he said. "Each side needs to see that the other has merit."
And, "it must be done." Changes can be enacted in an election year, though they will be difficult, he said. And accomplishing them during the election year will depend on "how good they are and how dedicated they are."
Liz Boyd, spokesperson for Granholm, said the governor feels Milliken "could not be more right. It is narrow partisan interests that is standing in the way of getting the job done." The administration is frustrated because it has been working for a year, since it announced its first proposal in January, to reach agreement on a proposal and still disagreements remain, she said.
Ari Adler, spokesperson for Sikkema, said the majority leader also feels frustrated that after so much work the issue remains undone. "The level of rhetoric has increased," he said, and if a solution is not found soon it will be more difficult in the upcoming year. "Doing something to the SBT is always dicey, doing so in an election year is that much more difficult. That's part of the urgency of trying to get it done now."
Matt Resch, spokesperson for DeRoche, said the speaker was hopeful the situation could be resolved because all the parties felt a sense of urgency that action needs to be taken to assist the state's economy. DeRoche knows that each leader has to work with the others, and with other people, to accomplish goals. But he also feels much could be accomplished if Granholm would sign the agreement on her desk. "It would be bad to go into the new year or finish the year on the down note of a veto," he said.
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