By Frank Weir
Legal News
Recently retired CMS Energy President and CEO David Joos shared some sobering thoughts about Michigan’s economic condition recently at a Jackson County Economic Club luncheon.
Most Michiganders are abundantly aware that the state is in dire straits, but many lack an understanding of just where the problems are and how they can be addressed, Joos noted.
Joos, now chairman of the board for Business Leaders for Michigan, spoke about that organization’s “Turnaround Plan” before close to 200 luncheon attendees.
Business Leaders is composed of top chairpersons, chief executives and senior executives of “the state’s largest job providers and universities,” the organization’s website claims.
Further, the group states that its goal is to “make Michigan a Top Ten state for job and economic growth.”
But first, the “case for change.”
Joos’ PowerPoint presentation began with a familiar litany:
“Michigan has been getting poorer, smaller and less competitive. The result is a state with chronic budget shortfalls and an unemployment rate far above the national average.
“Incremental changes to the state’s budget, tax and economic development policies will be insufficient to grow the state’s economy. Only a holistic, transformative strategy will do the job.”
Joos added that the state has been in economic decline for a decade and now ranks 50th “in both private job and per capita income growth since 2000.”
In addition, the state ranks no better than average or below average on 100 parameters that measure job creation efforts even though unemployment is one of the state’s greatest crises.
In summarizing the negatives, Joos noted that Michigan:
• has lost more jobs than any state;
• is getting smaller relative to the rest of the country in terms of population growth (and therefore consumers) making it less attractive for business investment;
• is getting poorer due to declining per capita income for nearly 40 years and an accelerating rate of decline in the past decade;
• has declining or flat state tax revenue even with increases to the state business tax and personal income taxes enacted in 2007;
• has balanced its budget in the last decade with “tricks” and one-time fixes while cutting areas that could drive economic growth like higher education and transportation investments;
• is not competitive with other states in a number of areas including: job climate and growth, costs to do business here, higher taxes, assets fail to offset higher business costs, ranks below average in funding support for higher education, and our cities are generally not seen as desirable places to work, live or grow a business.
But all is not lost. Business Leaders has formulated a five-step Turnaround Plan that it believes can start Michigan on the right path out of its morass of woe.
They are: change the way we manage our finances; right-sizing and enacting structural budget reforms; get competitive to attract and retain jobs; make investment that create a great job environment; and accelerate job growth through innovation and entrepreneurism.
Although Joos only had time to touch briefly on each step, he invited listeners to visit the Business Leaders website at:www.michiganturnaroundplan.com or www. www.businessleadersformichigan.com.
He highlighted a few points however.
“In terms of budget reforms, our state government employees are paid more than in any other state when you look at the combination of salary and benefits. They average $18,000 more than workers in the private sector.
“Further, very few contribute for their health care compared to 18 percent of other workers in the state who do contribute.
“There are billions of dollars of savings there. Is it easy to change? No. We are a union state, there are unions representing state employees and negotiations would be difficult.
“But this is what our auto companies have had to do and it can be done for state employees as well.”
Joos noted that health care costs for the state’s teachers are almost identical to state employees. Also, “we have the fourth highest number of school districts in the country. There are 500 districts in the state. We feel services could be consolidated even if we don’t consolidate actual districts.”
Added to that, he said that the state has 1,800 units of government, the seventh highest in the country. “That makes for a lot more bureaucracy as a result and therefore its harder to do business in Michigan.”
Given Jackson’s prison industry, Joos mentioned corrections.
“When you look at the Great Lakes states, we spend much more on corrections in Michigan. This involved how to better manage corrections, parole costs, introducing people back into the community, sentencing guidelines, and imprisoning non-violent offenders.
“It’s complicated but the bottom line is that we spend a lot more money than other states, even Illinois and Indiana.”
Joos is especially concerned about higher education funding.
“We have 28 community colleges and 15 universities. Many think we need to address those numbers but I think a more important issue is that we are not funding higher education at the level we need to” to help create jobs and make the state attractive to outside businesses and investment.”
In concluding, Joos decried a perception amongst outsiders that Michigan is highly adversarial.
“We must work cohesively. Outsiders view us as being very divided: labor versus management, Democrats versus Republicans, racial divides.
“The UAW is viewed negatively due to the plight of the auto industry. There a lot of issues that we need to work together on to address.”
And what if Michigan could become a “Top Ten” state? Joos said it could mean a million more jobs and $7,500 more income per person and $30,000 more income per family.
“So if you want to be involved, the first thing is to get on one of the websites. Become a supporter there. Write to newspapers, talk to your state legislators, move the ball forward,” he concluded.
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