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Published: Friday, 3/16/2007

Posturing, inconsistent interest mark response to Michigan budget crisis

LANSING - Six weeks ago, Gov. Jennifer Granholm's Emergency Financial Advisory Panel issued a remarkably blunt report on the condition of her state.

"Budgetary woes do not begin to describe the depth of the governmental crisis facing Michigan," it said. "Leaders have only weeks, at most four months, to solve this crisis or face the rightful wrath of Wall Street, students, retirees, workers and employers."

Change or die, in other words - and do it now.

The governor appeared to get it. Days later, delivering her annual State of the State speech, she said, "We will finally put our fiscal house in order. And we will act with urgency, urgency, urgency," she told a combined session of the legislature.

But since then, virtually nothing has happened.

Two days after the speech, the governor's budget director - not the governor herself - asked for a 2 percent sales tax on most services, such as haircuts and car repairs, but not medical or dental services. Republicans, who still control the state Senate, dug in their heels, saying they opposed any tax increase, or at least any tax increase before massive cuts. Democrats countered that they already had made severe cuts (true) and that little more could be cut.

Senate Majority Leader Mike Bishop (R., Rochester) promised a GOP budget plan, but none appeared. Nor has he met with the governor, preferring to write letters and make charges in the media.

Meanwhile, the clock is running. By law, the state must balance its books, but it is now running a deficit for this fiscal year that is approaching $1 billion. This week, news came that the state took in 4.4 percent less than expected in February, adding to the red ink.

Lurking in the shadows is the ticking time bomb of the soon-to-expire Single Business Tax, which raises $1.9 billion a year for the state's general fund. Last fall, the legislature, in a fit of irresponsibility, abolished it, effective this Dec. 31, and said they'd figure out later how to replace it.

Then, after her landslide re-election, Gov. Granholm offered a lame-duck session of the legislature a revenue-neutral replacement. She said business interests would be wise to accept it, since they might not get as sweet a deal when a more Democratic legislature convened in January.

Again, nothing happened. Then, in February, the governor did what she had said the state couldn't afford and offered a tax replacement plan that gave business a nearly $500 million tax cut!

And still nothing happened.

Bill Rustem, the salty, plain-talking president of Public Sector Consultants, said "they are still in the posturing stage, and the state is suffering for it. This isn't the 18th century. They can't just keep writing letters back and forth at each other. They have to meet.

"Every day they put off dealing with the problem, it gets worse. Wall Street has us under a credit watch. They have to get this done," said Mr. Rustem, who was in charge of state environmental policy when Gov. William Milliken was in office.

One key member of the Emergency Financial Advisory panel said he was astonished that the governor didn't make better use of their report. Indeed, for those accustomed to long and dry government reports, this one is stunning in its well-written conciseness - a mere 19 pages - and candor. It was produced by a thoroughly bipartisan, blue-ribbon panel that actually had more Republicans than Democrats. Members included former governors, former legislative leaders, university presidents, and budget directors.

"I would have sent one to every household in the state," one panelist said.

The governor received an attentive hearing from the state's newspapers in the first days after the State of the State speech. But they were non-plussed when she failed to personally unveil and fight for her "two-penny plan" to balance the books.

And in recent weeks, the state's news media have seemingly forgotten about the budget crisis. The media have been filled with the horrific story of a Macomb County man who allegedly cut his wife up and scattered her around a park, while loudly claiming he had no idea where she was.

But the budget crisis hasn't gone away. Nor do the state's leaders seem quite ready to behave like grownups. Bafflingly, the governor took off on a jobs-finding mission to Germany.

On Wednesday, she sent word from Europe that the legislative leaders should clear their calendars to meet next week. A spokesman for the Senate majority leader sniffed that she hadn't been involved in the process.

He said Senator Bishop would show up "so long as it is the governor sitting between the speaker and the majority leader."

So stay tuned, or as the immortal Linda Ellerbee would say, So it goes.

Correction: In last week's column on invasive species in the Great Lakes I said the round goby arrived before the zebra mussel. Tom Henry, who covers the environment for The Blade and knows more about it than I do, informs me it was the other way around.



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