Howes: Old Michigan ways pose big obstacle to 'new'one

Daniel Howes
The Detroit News

Lansing — Break out the champagne: Michigan's unemployment rate is the lowest it's been since 2001, powered by an auto comeback that helped to create 400,000 jobs.

Business tax reform? Done. Balanced budgets here in Lansing? Done. A financial restructuring of Detroit? Done, and in record time, accompanied by a flood of private-sector investment in Midtown and downtown.

Then why is the state's leading CEO roundtable, Business Leaders for Michigan, only guardedly optimistic about the mid-term prospects for the state? Simple: The competition isn't standing still, and it isn't likely to cede whatever advantages it can muster.

"We still have a heckuva long way to go," Business Leaders CEO Doug Rothwell told a leadership summit here at the Lansing Center Thursday. "We've created 400,000 jobs, but we're still 600,000 away from our peak. Do we want to be just in the tournament, or do we want to win the blasted thing?

"You build on your assets," he continued, detailing the six areas — engineering, Midwest logistics hub, higher education, natural resources, center of mobility and life sciences — that already exist in Michigan as foundations for future job and income growth. "You do what you do best. To use a basketball analogy, you build on your stars."

Theoretically, anyway. Doing it is another question altogether, here in a state whose resilience amid trying economic times is exceeded only by its recurring penchant for self-destruction when times get better.

Case in point: This week, a Republican-controlled subcommittee of the state House moved to cut the Michigan Economic Development Corp.'s $127.8 million business attraction budget 13 percent, or $16.7 million. It cited liabilities associated with a tax-credit program designed to encourage automotive reinvestment, which it did.

The House Appropriations General Government Subcommittee also voted to eliminate all film production incentives for the 2016 fiscal year, despite Gov. Rick Snyder's request to retain $50 million for the Granholm-era program.

Now, there are all sorts of ways to debate the merits of both programs. The tax-credits, issued most heavily in the late Granholm years amid the Great Recession and near-collapse of the Detroit-based auto industry, secured billions in new investment, creating thousands of jobs. But the bills, totaling more than $9 billion over the next 17 years, are beginning to come due.

The film incentive program aimed to build "an industry" by using state money to reimburse expenses associated with movie projects. It worked until a new governor — from the other party — closed the taxpayer-funded spigot ... and then slightly opened it again.

Democrats do it, too, as Mike Jandernoa can attest. In the final years of the Engler administration, the former Perrigo Co. chairman worked with his Stryker Corp. counterpart and the then-presidents of Michigan State, the University of Michigan and Wayne State to form a "Life Sciences Corridor."

Funded with $50 million in tobacco-settlement money, the corridor staff would help identify early-stage companies deemed eligible for public-private support. The Granholm administration had other ideas. It first lumped homeland security and advanced manufacturing into the program, then cut its financing to $15 million before eliminating it entirely.

"We do need a long-term path of funding that supports innovation and entrepreneurship over the long term," Jandernoa said. "Investing in the future is critical. Innovation has been key to the United States' success. We can't compete on a low wage rate. We need to compete on innovation."

And to be consistent. That's a word seldom used to describe the political pendulum swings in Lansing, how they effect state economic development efforts and how clearly the competition is understood. Or not.

In that, my native state of Ohio — red and blue, urban and rural, industrial and educated — has a leg up. Power is spread more evenly across the state; a consensus to invest in infrastructure and to support cost-effective economic development binds Republicans and Democrats.

Roads? They spend roughly $1 billion more per year than Michigan, home of the U.S. auto industry. All it takes is a simple crossing of the border in I-75 in Toledo to prove it and remind Michiganians just how elusive any kind of Buckeye consensus in Lansing really is.

Development? Their "Third Frontier" program, begun by a Republican governor, supported by his Democratic successor and leveraged again by Gov. John Kasich, turned a $250 million commitment over 10 years into $5 billion in tax revenue and 12,000 jobs.

"We've had a good track record of leadership where people make sure cities, the suburbs, the rural areas are not left out," said Brian Hicks, CEO of Hicks Partners and one-time chief of staff to former Ohio Gov. Bob Taft. "There's always money in states. Always. It depends on where you want to put it."

Exactly. And keep it there beyond the tenure of whoever sits in the governor's chair.

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Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at