Michigan’s budget deficit dominated politics in Lansing this past year. Gov. Jennifer Granholm put much of her budget-balancing emphasis on cutting excessive spending and avoiding dramatic, broad-based increases in the most economically destructive taxes. It is primarily for her handling of this difficult situation that we at the Mackinac Center for Public Policy believe she has earned a letter grade of “B-minus” for her first year performance — above average as governors go, but with plenty of room for improvement.
The Granholm administration’s restraint on taxes and spending stands in stark contrast to what others are doing elsewhere. In neighboring Ohio, Republican Gov. Bob Taft, after ballooning state spending in his first term, is busy jacking up taxes in his second. At the federal level, President George Bush has vetoed nothing and pushed for massive hikes in domestic, non-defense spending at more than double the rate the Clinton administration delivered.
When Gov. Granholm refused funding in her 2004 budget for a program that gave away fruit and vegetables to visitors at the state’s roadside welcome centers in southwest Michigan, the Legislature tried to keep the program alive. The governor had to line-item veto it. She also wisely counseled against a costly program to provide laptop computers to sixth graders, an ill-conceived boondoggle originating in the House.
While the budget was the big issue in 2003, it was not the only issue. Nor is it the only factor in our overall evaluation of Gov. Granholm’s first year. There are two sides to that ledger.
On the Plus Side:
1. With few exceptions, the governor has chosen competent people to head departments. To date, from all appearances, they have run a clean and open administration. She personally projects a positive, energetic image for Michigan.
2. Gov. Granholm has questioned the sacred cow of public education funding by proposing modest reductions for K-12. Real, after-inflation spending on education has soared in Michigan since passage of Proposal A nearly a decade ago, and schools shouldn’t expect automatic funding increases irrespective of the ability of Michigan citizens to pay the bill.
3. The governor set a personal example when she sliced more than $4 million in executive branch spending. She reduced the state’s motor fleet, cut employees’ cell phone usage, eliminated color copying, powered down state buildings, ordered a hiring freeze for most unfilled positions in state government, and paused management bonuses and travel payments.
4. The governor tackled state employee unions and successfully secured more than $200 million in wage and benefit concessions, a necessary move in light of generous state compensation and a recession economy.
On the Minus Side:
1. Gov. Granholm’s spending reductions have not reinvented government as promised because, for the most part, they have simply pared some programs back and not eliminated or redesigned very many. Michigan’s Prevailing Wage Act, for example, forces schools annually to spend upwards of $150 million more than is necessary for construction and renovation. It makes little sense to bemoan cuts in school spending and ignore this mammoth waste.
2. The governor wanted to close tax “loopholes” but some of her proposals upon closer inspection would actually have constituted new taxes. The Legislature wisely blocked these ill-advised tax hikes.
3. Education reform, desperately needed by the tens of thousands of Michigan children who are victims of failing public schools, represents easily the greatest disappointment of the governor’s first year. The administration’s performance in this critical area has been marked by incompetence, indecision and a singular lack of initiatives.
4. The governor’s handling of a $200 million proposal by Plymouth philanthropist Robert Thompson to build 15 charter schools in Detroit was her biggest leadership failure of the year. The children of Detroit are the losers because she did not stand up to the mayor and the school unions. It was a shameful spectacle of a political regime bungling a generous private offer to help where help is needed most.
5. Gov. Granholm set the stage for dubious new land-use regulation by convening a panel to recommend state action to curb urban sprawl. Its agenda was tightly controlled by advocates of expanded land-use regulation who sometimes exhibit disdain for private property rights. The governor should show more interest in non-emotional, market-friendly perspectives on land-use issues.
Gov. Jennifer Granholm could easily fix these shortcomings and build on the successes of her first year. Hopefully, at mid-term, we can assign her an “A.”
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(Lawrence W. Reed is president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. More information is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provided the author and his affiliation are cited.)
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