DONATELLI: Snyder shapes up Michigan

Fighting public-sector unions key to real change

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If any state has had its share of economic problems, it’s Michigan. In 2009, battered by a decade of slow growth, recession and the collapse of the auto industry, unemployment soared to more than 14 percent. The state’s largest city, Detroit, has suffered economic and political turbulence, including the indictment and removal of a former mayor on charges of corruption. At the beginning of the past fiscal year, the state budget was $1.5 billion in the red, and long-term state liabilities were continuing to mount.

In November 2010, voters swept Republican Gov. Rick Snyder into office, along with Republican majorities in both the state House and Senate. A tax accountant by training, Mr. Snyder has also been an executive at Gateway Computer Co. and the head of a venture-capital firm. He had not previously been a candidate for political office. He boasts a friendly and informal style, noting that he sometimes violates Statehouse rules by forgetting to wear a necktie.

But there is no arguing with his results. Since Mr. Snyder’s election, he has espoused a vision of making Michigan more business-friendly to create jobs and provide better public services at lower cost. Mr. Snyder revamped the state corporate-tax structure in his first year. He scrapped the hated Michigan Business Tax, which included a gross-receipts tax and was highly complex and riddled with loopholes, and replaced it with a flat corporate-income tax. He also focused on balancing the state budget quickly and without any new taxes. Because of the corporate changes, the Tax Foundation notes that Michigan’s current corporate-tax rank of 49th among the states will improve in future years. Unemployment has fallen to 8.5 percent, just above the national average.

“We’ve made a great start on our goal of creating jobs for all who want to work,” the governor noted in a recent interview for GOPAC’s candidate-training program.

Mr. Snyder thinks that too often people confuse improving programs and services with spending more money.

“People need to stop thinking of the state as an ATM machine,” he says.

Rather, Mr. Snyder seeks to adopt “best practices” for all state services and emphasizes quality and “customer service.” As an example, he cites his improvements in education, in which he reformed teacher tenure and linked teacher evaluations to student performance in an effort to improve student learning and skills - without additional spending. He also lifted the cap on the number of charter schools the state could authorize and made improvements in online educational opportunities for students in Michigan.

Like many of his colleagues in other states, Mr. Snyder has crossed swords with the teachers unions and public employee unions, generally over his plan to require a greater contribution from public-sector workers to fund their own pension and health care plans.

Citing his business background, he says, “The numbers have gotten totally out of whack. Public pension and health care benefits now far exceed what is available in the private sector. We can no longer afford the status quo.” He notes that his reforms have reduced state obligations to retiree health and pension plans by a cumulative $5 billion and that his pending proposals would save an additional $15 billion.

Like most of his colleagues, the governor is frustrated that more help is not forthcoming from our nation’s capital. “Why can’t we ever see some positive action in Washington? We’re doing our job in the states. It would be nice if Washington began to seriously address our national problems.”

Mr. Snyder is particularly interested in helping to revitalize Detroit. The state’s largest city has seen tough times in recent years and has endured a number of economic and political setbacks. His plans call for the state to help stabilize city finances so that Detroit can offer better services and hopefully entice businesses and jobs to return. Mr. Snyder is especially focused on improving local public safety and transportation as ways to enhance economic development.

Many of the steps he has taken to turn around the state have not been popular with certain interest groups, but Mr. Snyder takes the negative reaction in stride. “Our goal is to make this a better state to live and work [in]. I firmly believe our program will benefit the citizens of Michigan for the long term,” he says.

Mr. Snyder also says he has no plans to slow down the pace of reform in his administration and has listed a number of goals moving forward. He is especially interested in positioning Michigan to be a leader in training individuals with the right skills to qualify for the jobs of the 21st century. His Pure Michigan Talent Connect program (www.mitalent.org) is focused on exploiting his state’s skilled workforce to be a magnet for attracting growing companies seeking qualified workers.

In addition to improving employment, economic growth and his state’s optimism, what proof does Mr. Snyder have that things are getting better in Michigan?

“Last year,” he says emphatically, “we beat Ohio State. What could be better than that?”

Frank Donatelli is the chairman of GOPAC.

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