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DECKER: Michigan’s reform storm

Businessman-governor tries to right-size state government

- The Washington Times - Friday, February 25, 2011

A blizzard slammed the Great Lakes region this week, with blankets of snow and sheets of freezing rain closing roads and taking out power lines. Hundreds of thousands were left without electricity, heat and water (read: no toilets). With no utilities and temperatures in the single digits, my family's lakehouse in south-central Michigan felt like a log cabin in "Little House on the Prairie," with the little house being dropped into the frozen tundra of Sarah Palin's Alaska. This torrent, however, was nothing compared to the storm of controversy surrounding new Michigan Gov. Rick Snyder's new budget.

Announced last week right before Mother Nature unloaded on the Midwest, the Republican's blueprint proposes dramatic cuts across the bureaucratic spectrum in a desperate attempt to save a sinking ship of state. Universities face a 15 percent reduction in their subsidies; state aid to city and county governments will be reduced by 33 percent; state police are losing $3.2 million (which hopefully will stall patrol cars harassing commuters on decaying highways); public funding to research the electric-car pipedream is turned off; 300 jobs will be eliminated in the welfare office; and Lansing's per-student stipend to public schools will be smaller. The overall message is that government can't be all things to all people and balance the books.

As the governor's press secretary, Sara Wurfel, explained to me Thursday, the plan is "to hit the reset button in Michigan for the future by tackling the tough, long-standing fiscal issues that have plagued our state." Tough is the name of the game. So is necessity. When asked about controversial spending reductions, she said, "Tough choices were made and there are some tough cuts, but they are necessary." Michigan currently is facing a $1.4 billion deficit. The Snyder plan would balance the budget for fiscal 2012 and 2013. Such a turnaround can't be accomplished by keeping everybody happy.

The refreshing novelty of Mr. Snyder's vision is that no spending cow is too sacred to be sliced up and skewered - a fact of life more politicians need to embrace. Critics say that means there's something in this budget for everyone to hate. Actor Jeff Daniels, a local hero, protests the winnowing of incentives for filmmakers. Movies shot instate restored some pride to a place suffering from layoffs and a humiliating bailout of two of its Big Three automakers. Surprising Chamber of Commerce types, Mr. Snyder - a successful businessman whose first political campaign was last year's run for governor - is zeroing out numerous corporate incentives. These are being replaced with a low corporate income tax intended to attract new companies to diversify an economy where the unemployment rate is twice the national average.

The governor has guts. In his attempt to wrestle the fiscal mess under control, he's staring down one of the most obstinate and politically active constituencies: old people. Michigan is one of only four states that don't tax pensions, a giveaway he intends to end. While new taxes are always bad, the current system penalizes the young to subsidize retirees - basically a tax on the future to pay off the past. The overall result of all the revenue reforms would be a net tax cut for Michiganders, according to Americans for Tax Reform. Mr. Snyder's work also will be cut out for him when taking on labor over entitlements, particularly his move to save a couple hundred million dollars a year by requiring higher health care premiums for public employees accustomed to having taxpayers underwrite their cushy benefits packages.

There are some potholes on the road to renewed growth and prosperity, the most obvious being whether or not the novice guv can get his tough love passed by the legislature. Republicans have working majorities in the state House and Senate, but the elephant party isn't totally unified, and Mr. Snyder comes from outside the GOP establishment. The fine print in his changes to the tax code might stir opposition from the right, which could be fatal if combined with predictable obstructionism by powerful Rust Belt union goons. Failure to rein in an out-of-control public sector today will spell doom for the Wolverine state tomorrow. Making Michigan more competitive largely will depend on keeping fellow Republicans in line, putting pressure on the Grand Old Party to perform.

I was back home in what used to be known as the Water Winter Wonderland for a board of directors meeting of the Gerald Ford Institute at Albion College, my alma mater. After leaving the White House 35 years ago, President Ford founded the organization to train young people to be active stewards of civic health through voluntarism and dedication to public service. In the aftermath of Watergate, Ford wanted students to consider what constitutes good governance and grapple with questions over the appropriate role of the public sector in American life. How to right-size government is at the center of a battle raging in state houses from Lansing to Lincoln, and everywhere else. Michigan's governor is taking a serious green-eyeshade approach to state finances. It's about time somebody did.

Brett M. Decker is editorial page editor of The Washington Times.

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