This story was published in the Gongwer News Service Michigan Report on Tuesday, December 17, 2003.
Governor John Engler's impact on schools is undoubted, his drive to change welfare had national influence, his environmental policies drew praise and furious outrage, but it was in cutting and changing taxes that probably most defined the 12 years that Mr. Engler led Michigan.
The drive to cut taxes played a major role in his stunning upset over former Governor James Blanchard in the 1990 election, and from the very start of his administration, Mr. Engler made cutting Michigan's tax rates his primary focus.
In his inaugural address on January 1, 1991, Mr. Engler said he wanted to restore individual initiative. State government had a stranglehold on initiative, he said, "and the tightest grip of all is taxes. Revitalizing our economy means reducing our tax burden.
"On election day, the people demanded a significant tax cut," he continued. "We will answer their call without compromise and without delay."
His determination to cut taxes remained until the end, with some moderation. Even though the state's fiscal difficulties dominated Mr. Engler's final years in office, he did not act to delay a scheduled decrease in the state's income tax though many people called for a delay to minimize budget cuts.
At the same time, however, Mr. Engler agreed to delay the scheduled phase-out of the single business tax and engineered a massive boost in the state's tobacco tax to help keep revenues from collapsing any more than they were.
As his administration winds down, Mr. Engler proudly points out a total of 31 tax cuts enacted during his administration, beginning with a property tax freeze and ending with a change in the single business tax investment credit.
But there were tax increases during that time, and even new taxes created such as the real estate transfer tax, as Mr. Engler balanced the task of creating low taxes with sufficient revenues.
The end result has been mixed politically. Both supporters and critics of Mr. Engler criticize his tax policy.
"We continue to be a high-tax state," said Richard Studley, vice president of the Michigan Chamber of Commerce, but "we would be even less competitive if had not been for the tax cuts."
And Mike LaFaive, an economist with the Mackinac Center for Public Policy, graded Mr. Engler with a "B" on taxes. Although "no governor has done more to turn a state around," Mr. LaFaive said, overall taxes can still be cut and the state's policy of targeting tax cuts to attract businesses, or by creating no-tax renaissance zones, is counterproductive to lower taxes for all businesses.
From the other perspective, Sharon Parks of the Michigan League for Human Services, said the tax cuts helped mostly the wealthy while not doing enough for low-income families. The strategy of phasing in tax cuts has led to the current deficit that lawmakers and Governor-elect Jennifer Granholm will struggle with, she added.
But Treasurer Doug Roberts said the proof that Mr. Engler's tax policies have worked is measured in another statistic. "By the end of the 1980s, Michigan had experienced three decades in a row where the unemployment rate was above that of the national average. Hello? Doesn't that tell someone there was a problem?"
In contrast, until the recent recession, Michigan had seven consecutive years when the unemployment level was below the national average, and the state was the largest state in the nation with a triple-A credit rating from the major New York City bonding houses, Mr. Roberts said.
Mr. Roberts did not mention, but the Engler administration certainly highlighted how for four consecutive years the state ranked top in business location decisions.
All that is largely attributable to Michigan's changed tax status, Mr. Roberts said.
"The point is when you put it all together, absolutely Michigan has proven the case," he said, that the state is "fundamentally stronger" because it has cut taxes.
Cutting taxes took on such a prominence that the state once advertised itself by urging companies to call an 800 number that included "No Tax" in the number for information about the state.
