The ‘09 budget: Let them eat cake

Nobody can feel your pain like Jennifer Granholm and she was in fine form Tuesday night.

After last year’s rancor and recriminations over the budget crisis, the governor reemerged at the State of the State as the great healer, a pro-business prophet looking to lure development and lead us back to the promised land of no new taxes.

“People are angry,” Granholm said at the start of her speech. “…Let’s be honest, that anger is aimed at us.”

Though Michigan continues to careen down the road of recession, Granholm offered up her can-do oratory, promising tax breaks for businesses in fast-growing industries, help for those trapped in foreclosure agony and a slew of new programs.

Using her honeyed tone – part cheerleader, part Mother Earth – to full effect, the governor swayed some of her conservative critics (though not state Rep. Jack Hoogendyk, R-Kalamazoo, who in a flash of class, scrawled snarky blog posts during her speech).

Granholm imbibed the new designer drug of bipartisanship – something just about everyone in Lansing says they’re on, but they don’t get an hour to testify about it on tee-vee. You can’t beat that kind of PR.

But the real stroke of genius was that the governor cannily cut the legs from under the GOP’ election strategy – with a smile.

She beat the anti-tax drum hard – something a beaming Senate Majority Leader Mike Bishop called “borrowing the Republican playbook.”

But that effectively stole the thunder from House Minority Leader Craig DeRoche, who’s vowed to take back the majority by (what else?) hitting the Dems on taxes. He looked particularly sour Tuesday, but denied the guv had outfoxed him.

“It’s not an election line (for us),” the former Speaker sniffed. “It’s what we believe in.”

Granholm’s strategy started with a carefully placed Associated Press interview in December that grabbed headlines across the state.

“The most important thing I learned is I’m not ever going to raise taxes again. It’s too hard. It’s too impossible,” she declared.

She could say that with supreme confidence because budget estimates show Michigan will stay in the black this year (thanks to those evil tax hikes).

So it’s time to roll out the feel-good programs – high schools that work, alternative energy Centers of Excellence and more early childhood education.

You can have your cake and eat it, too. No higher taxes this year, just “creative financing.” (Something Republicans also found irresistible when they ran the show during the last two decades – beats cutting spending).

Granholm plans to scrounge up $550 million by refinancing debt, selling bonds and reinvesting part of the state pension fund.

Her economic stimulus plan – especially creating jobs through much-needed infrastructure projects – shows promise. But don’t expect a big boost to higher ed, the best long-range economic development tool Michigan has in its arsenal.

And there were key pieces missing from the puzzle, ostensibly to come in the far less glamorous budget unveiling next week.

Where are the cuts? Where are the reforms? You don’t need to be a rabid right-winger to know much more needs to be done.

Just take another read of the blue-ribbon, bipartisan Emergency Financial Panel report penned a year ago by 12 leaders with hundreds of years’ combined experience in budgets, business and government.

Or in the case of some esteemed lawmakers, try skimming over the scant 19 pages for the first time.

“I honestly don’t know how many people read it,” a glum former Gov. Jim Blanchard told me last week.

Well, it’s never too late to get religion or give a few of the 12 Apostles a jingle. I have it on good authority they’d love to hear from you.

The fact is, Michigan’s government is still engineered for the 1960s. We have a bloated Corrections budget growing far faster than revenues, as we incarcerate 50,000 people – and counting.

Health care costs for state employees and retirees are spiraling out of control. We have 1,242 townships, 553 school districts and millions of dollars in needlessly duplicated administrative costs.

That’s just a start. With the limited cash Michigan has, we need to spend it wisely.

Now the bad news. Don’t look now, but the Mitten State hasn’t licked its structural budget deficit.

We don’t tax services, the growing sector of our economy, thanks to a bizarre last-minute plan last fall that enraged the hypersensitive business community and poisoned the well. It remains to be seen what effect the Michigan Business Tax surcharge will have on attracting new capital. And our income tax is outmoded – a graduated rate with more exemptions is a better fit.

The good news is, we probably could restructure without hiking taxes and stave off future $2 billion budget shortfalls.

But that would mean bringing up the dreaded t-word again. And with that bodacious bipartisan vibe we’ve got going, who wants to be a major buzzkill?