MUSKEGON--Gov. Jennifer Granholm came to friendly Muskegon County territory Wednesday to make an impassioned pitch for her economic recovery and job development program of business tax restructuring.
At a "town hall meeting" by legislative Democrats, Granholm told a packed lecture hall at Muskegon Community College that Michigan needs to "broaden" its general business tax and "level the playing field" in an attempt to revive Michigan's sinking economy.
For this Democratic governor, that means giving a helping hand to Michigan's manufacturing sector, which has lost 170,000 jobs in the past four years.
"As long as I am governor, I will not apologize for helping out manufacturing in Michigan," Granholm said in a 20-minute plea to basically a friendly and receptive Muskegon audience. "We will not abandon the industry that made us great. We are going to fight for these jobs."
Granholm was backed Wednesday by a panel that included state Rep. Doug Bennett, D-Muskegon Township, Sappi Fine Paper Muskegon Manager Gavin Travers and Muskegon City Commissioner Clara Shepherd, a trustee for the Michigan Municipal League.
Granholm's proposed restructuring of the state's Single Business Tax is designed to give a general cut to all businesses but especially help manufacturers by giving a 35 percent SBT tax credit for personal property taxes. Those are local taxes mainly paid by large businesses with expensive equipment and technology like the manufacturing sector.
At the same time, the governor said the state's business tax has to remain "revenue neutral" -- meaning it must continue to collect the same amount of taxes overall.
If it were just tax cuts that make an economy go, Michigan's should be strong, the governor said of the state's reduction specifically in the income tax that has hurt the state budget and trickled down to threaten local counties, cities, townships and school districts. After eight years of tax cuts under former GOP Gov. John Engler, the state cannot afford more, she said.
A state budget already trimmed by deficits cannot absorb more tax cuts as Michigan must pay for quality education, health care and transportation to support economic activity, she said. In the Granholm plan, that means ending industry-specific advantages for business sectors such as insurance, telecommunications and banking. The governor said the economic engine of industrial jobs must be given a break from historic disadvantages in the state tax code while others will be asked to pay a "fairer" share.
The Granholm position has been endorsed by the Michigan Manufacturers Association and the United Auto Workers Region 1D CAP Council in West Michigan. Opposition has come from the Michigan Chamber of Commerce, Michigan Bankers Association and those representing the insurance industry in the state.
"This approach is the wrong solution for Michigan's struggling economy, and it will only add to the problems," said Richard Edgar, president and CEO of Valley Ridge Bank in Kent City in a prepared statement on behalf of the state bankers' group. "The financial services industry offers the kind of good-paying jobs and investment that our state should be working to attract, and instead we are considering a tax shift that makes it more difficult for businesses to operate."
But industrialists who are facing severe challenges from the global market have rallied to Granholm's defense. The business tax debate is happening amid monumental struggles of two of the Big Three automakers, Michigan-based General Motors Corp. and Ford Motor Co.
"The governor's proposal will provide much-needed relief to manufacturers who are facing brutal competition in the global marketplace … and are paying a disproportionate share of the tax burden in our state," said Sappi's Travers, who heads a paper mill in Muskegon that has 580 highly paid industrial workers receiving an annual payroll and benefit package valued at more than $53 million a year.
"Unfortunately, Michigan's Single Business Tax and personal property tax structure make it one of the most burdensome states for manufacturers to do business," Travers told those at the meeting. "People in Muskegon -- and around the state -- need to support (the governor's plan) so companies like Sappi can continue to exist and grow in Muskegon."
Under questioning from Bishop Nathaniel Wells of Muskegon, Travers said the SBT restructuring would not be the sole factor determining whether Sappi continues operating its huge paper mill in Muskegon, but it is a key part of the puzzle to make the local plant competitive.
"The governor's plan will certainly help keep the Muskegon mill in Muskegon," he said.
In an interview with The Chronicle, Granholm also pushed her "jobs today, jobs tomorrow" initiative outlined in her State of the State address earlier this year. It calls for a $2 billion, 10-year bond issue to support intensive research and development in key industrial sectors. Granholm wants the state to bolster "high-end jobs" in alternative energy, life sciences and advanced manufacturing -- all strengths of the Michigan economy, she said.
Michigan Republicans have been lukewarm on Granholm's job-creation agenda. Muskegon's Bennett told his 92nd State House District audience that it is time for the Republican-controlled state House and Senate to "lead, follow or get out of the way." He challenged his GOP colleagues to come up with alternatives if they oppose the governor's plans.
"We can't be waiting two years because there is going to be an election (in 2006)," Bennett said of the upcoming gubernatorial election. "This is about going out and changing the way we do business in this state now. She (Granholm) is leading. It's time for the House and Senate to get behind these proposals."
Granholm, who also spent some of the day Wednesday at the Tulip Festival parade in Holland, downplayed her potential struggle to get her program through the GOP-controlled Legislature.
"This is not a partisan issue," she concluded in her remarks at MCC. "This is something we need to link arms with and make a bold statement for the future of Michigan."