Step 1 of the Michigan Turnaround Plan: Getting our fiscal house in order

There is a lot of discussion in the world today about the debt being racked up by many nations.  In most cases, this debt was accumulated after years of not following sound fiscal and accounting practices.  America is a good example.  For years we’ve failed to balance our budget, based budgets on overly optimistic revenue forecasts and did not take into consideration the long-term costs of our policy actions.  Our growing debt obligations has led to a great deal of uncertainty about the future.  This has caused job providers to slow investment and consumers to cut back on spending.  Michigan experienced much the same situation during the past decade and this has contributed to our “one state, decade long” recession.

This is why Business Leaders for Michigan made the first step of the Michigan Turnaround Plan about responsibly managing finances.  The Plan is a holistic, fact-based strategy to make Michigan a Top Ten state for job, economic and personal income growth. 

Our original plan called for the state to manage its money the way a responsible household or business would – by balancing the budget without one-time gimmicks, projecting revenues using sound information and projecting spending needs over the long-term.  Fortunately, the state has implemented many of these suggestions during the past year and as a result has been able to start paying down debt and generating a small budget surplus.  As a result, business confidence is up and Michigan’s economy is turning around.

We must build on the solid foundation laid this past year by memorializing in policy or law the practices outlined above so we don’t slip back into bad habits after this Governor and legislature leave office.  We need to continue paying down the billions of debt we racked up the past decade and require that every piece of proposed legislation have a “price tag” attached to it so policy makers understand the consequences of their actions.  We also recommend the state adopt a long-term strategic plan that clearly identifies what we should expect from state government to guide annual budgets.   

Adopting sound accounting practices and fiscal policies don’t get much attention in the news.  But we’ve seen around the world what happens when we ignore these basics.

What a difference a year makes!

This time last year, there was no state budget in place, Michigan had the 48th worst tax climate for business and even basic legislation like removing barriers to local service sharing couldn't get passed.

Today, a structurally balanced budget has been adopted, we're going to have about the 20th best tax climate for business and more legislation has been passed to streamline Michigan government than in almost fifty years!

Could this be why the mood of business owners toward Michigan is so upbeat? Could it also be why we're starting to see an up-tick in hiring and job openings?

Fixing the basics and getting competitive is turning Michigan around!

Holistic Reform Needed To Turnaround Michigan

Michigan's economy didn't get where it is overnight - it took 50 years of growing slower than the rest of the nation.  So we aren't going to correct this situation in year or with just one or two "silver bullets." It's going to take us all supporting a holistic package of reforms - that means we have to put Michigan first and give a little of what we want today for the good of our long-term future. You might think that's going to be a tough sell in a state the leads the nation in unemployment and whose per capita income has fallen to 37th in the nation! In fact the opposite is true - polls say the people want bold reform and recognize it has to include both budget and tax changes. So tell your legislators, who are getting pressured everyday by those that resist change, that you are behind them and will support them if they put Michigan ahead of the short term interests

We Urge Greater Push for Spending Reforms and Combining Best of Reform Proposals into Holistic Plan

We issued the following statement in reaction to the Governor’s Budget Address today:

Business Leaders for Michigan is committed to supporting a comprehensive and holistic plan to transform Michigan’s economy and create jobs.  The Michigan Turnaround Plan we developed recognizes that no one action will turn around Michigan and identified five integral steps that are needed to make Michigan a “Top Ten” state for job & economic growth.

Fiscal, expenditure and tax reforms are the first three steps of the Michigan Turnaround Plan. We need to analyze the details of the Governor’s proposals, but are pleased she has proposed expenditure reforms.  While the Governor’s proposals represent a meaningful step in the right direction, they don’t go far enough to put the State on a stable long-term financial footing, but continue to rely on Federal stimulus funding that is likely to evaporate by next year. 

Click here to read the rest of our statement.

A copy of the budget can be found at: www.michigan.gov/budget

State Budget Reform Update

For better or worse, we now have a state budget in place for the 2010 fiscal year and we need to move forward.  As expected, projections are already coming in that the 2010 state budget will be anywhere from $700 million to $1.4 billion short.  And, the fiscal year 2011 budget process is already beginning and huge deficits are expected there as well. 

We have the same message for Lansing that we’ve had for the past several years:  “We must implement major structural budget reforms so we can get our financial house in order.  We must right size spending to match actual revenues.”  Businesses and nonprofits across the state have been making the tough decisions in order to ensure they can survive and ultimately grow again.  Our elected leaders need to do the same thing.

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