Gov. Granholm: Profile in Budget Courage

In her State of the State address last month, and for the past few weeks at speaking engagements selling her budget plan throughout the state, Gov. Jennifer Granholm has had the political guts to give us “the bad news.”

By explaining to Michigan citizens why and how $1.8 billion must be cut out of the state budget for fiscal 2004, she has scored a subtle but powerful political point that will pay off for her in the long term: She has respected her constituents by treating them like adults. Instead of flattering them with empty promises in order to gain further access to their already stretched pocketbooks, Granholm has told them the truth.

This is what Americans appreciated about Ronald Reagan, arguably the most popular president in modern history. If Granholm keeps going on the course she has set for herself, she could well become the model for the New 21st Century Democrat; one with feet planted firmly enough in fiscal reality to begin taking back the upper hand Republicans have gained on the national political scene, especially in Washington.

But only if she keeps going. After so much talk about “living within our means,” the governor must emerge from the inevitable legislative battle with a budget that is balanced. Below are a few suggestions, among many featured now on the Mackinac Center’s Web site, www.mackinac.org, that may be of help:

Sell the state fairgrounds in Detroit and Escanaba, for one-time savings worth as much as $60 million.

Sell the state-owned motel-lodge in Roscommon known as the Ralph A. MacMullan Conference Center. The property alone is worth about $10 million.

Sell the state-owned, money-losing “Porkies” ski-resort in the Upper Peninsula. Four nearby, privately owned resorts pay more than $60,000 in property taxes alone each year. Porkies’ losses are covered by taxpayers. Does the state really need to be in the ski-resort business?

Pare back or eliminate subsidies to agriculture, including the purchase of giveaway Christmas corsages and the publication of a wine magazine by the Michigan Department of Agriculture. The Mackinac Center has identified $34 million in annual savings in the MDA budget.

Shut down the often unfair and counterproductive corporate welfare subsidy programs of the Michigan Economic Development Corporation, for tens of millions in savings. To attract business from other states, the MEDC throws money at firms that compete with taxpaying, unsubsidized Michigan firms.

Contract out for human resource duties. Every department has its own HR staff. The state should outsource all of that to a private group just as Florida has done, for a minimum savings of $5 million per year.

Outsource more prisons to private management. Doing so already has saved Michigan taxpayers $7 million annually. New Mexico has 44 percent of its prisons under private management, compared to our 1 percent. Such outsourcing could save Michigan more than $300 million per year.

Eliminate state grants to the arts. Art flourished before the state got involved and it will flourish afterwards. Indeed, the arts as a whole are too important to be dependent upon politics. Savings: $24 million per year.

Repeal the 1965 Prevailing Wage Act. As the Mackinac Center for Public Policy has documented in numerous analyses, Michigan public schools are forced to waste $150 million annually because of this law, which basically assigns school construction and renovation projects to organized labor. Ohio repealed a similar law in 1997 and its schools have saved hundreds of millions of dollars in the years since.

Scrutinizing every nook and cranny of state government, raising questions about previously unquestioned spending premises, thinking creatively about how to do things better, or whether to do them at all — these are healthy, positive attributes of forward-looking leadership in a free society. With government at all levels consuming over 40 percent of national income — more than ever before in our nation’s history — now is the time for bold initiatives to reshape what state government does and does not do.

Gov. Granholm put it well on Jan. 16 when she declared, “Any organization has things within it that are wants and not needs, and all of that has to be reviewed.” If this bit of common sense becomes second-nature to Democrats, they will be on their way back to political ascendancy.

(Michael D. LaFaive is director of fiscal policy for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. More information on Michigan’s budget 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.)