Michigan’s state government is in about as much trouble as its auto manufacturers, and if the rhetoric in Tuesday’s State of the State address is any guide, Gov. Jennifer Granholm knows that all too well. “The world around us has changed,” Granholm told us, “and it is not changing back.”

Sarah Royce

The economy is the most obvious concern facing those in state government, but it’s not the only problem. State politicos are currently grappling with a larger-than-expected budget deficit in addition to the $2-billion hole left behind by the irresponsible elimination of the state’s Single Business Tax. The state will also need to increase its investment in education and retraining the workforce if it is to emerge from the current economic storm in recognizable form. Granholm laid out a plan that might keep the state from going bankrupt, but to pull it off, she will need far greater political finesse than she displayed in her first term.

Granholm saved this point for the end of her speech, but we might as well address it upfront: The state will need to raise taxes. The simple fact is that former Gov. John Engler’s feel-good tax rates aren’t bringing in enough revenue for these harsh times. Granholm delayed providing much information about her tax plan until the release of her budget today. Although that was probably necessary, given the common misconception that taxes can be cut indefinitely without any consequences, it still leaves few specifics to comment on at this time.

It should be clear that cuts alone will be unable to solve the problem. The state has for years had a structural budget deficit, which the government avoided with one-time fixes – an approach that cannot be maintained indefinitely. The current shortfall in the School Aid Fund alone, for instance, would translate to a mid-year cut of $224 per pupil.

Granholm pledged not to cut public school funding in her budget. That’s the right tactic if Michigan is to develop the educated workforce it will need to be economically viable in this century. But it’ll prove a difficult pledge to keep if she can’t get her tax plan past Republican state senators who remain convinced that just one more business tax cut will make Michigan thrive.

In exchange for not cutting their funding even further, Granholm told the state’s universities she’ll expect them to keep tuition affordable. That might sound reasonable – but it also sounds suspiciously like a deal the governor pitched a couple years back to increase funding if universities limited their tuition increases to the rate of inflation. The University kept its end of the bargain. The state reneged.

Ultimately, of course, the state will need to move beyond its reliance on manufacturing to attract the knowledge-based jobs that will be the backbone of tomorrow’s economy. Granholm acknowledged this in lauding the work of the 21st Century Jobs Fund (while thankfully sparing us a repeat of the episode where she waved a fuel cell around during last year’s address).

Yet the difficult time Granholm had setting up the 21st Century Jobs Fund last year hints at what may be to come. Despite the governor’s frequent appeals to bipartisanship and a “common commitment to Michigan” on both sides of the aisle, the fact remains that the Republicans who control the state Senate will be hostile to many of Granholm’s initiatives.

However, while obstinate Republicans determined to deny Granholm any political successes share some of the blame, they can’t account for it all. Partisanship is expected in our time – it is the governor’s job to cooperate, cajole and convince. Granholm is correct in her assessment that we are at “a decisive moment in Michigan’s journey.” Her ability to fight for her proposals may well determine how the state fares.

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