Rick Snyder’s Michigan Data: Reversing Engler Mistakes by Reviving Them (Slash, Burn, Repeat…)

On the eve of Michigan Republican Governor Rick Snyder’s second year 2012 Michigan State Budget announcements, this ANALYSIS, in simple pictures, looks back at what historical data says. Facts found in this fountain of tables, graphs and charts reveals much, and in many cases, might surprise many Michiganders. It gives a unique view not only into where we are, and where Snyder Policy is trying to take us, but also where we have been and how we got there.

Facing Wisconsin style protests across the state through most of his first year 2011, some of the largest marches in Michigan’s history continuing into early 2012, Snyder’s consultants published several reports and benchmarking metrics early in 2011 that include over 200 measurements of Michigan Government performance metrics and trends.

Missing in this pile of PowerPoints is any trace of the Republican Holy Grail, proof that massive business tax break ($1.6 billion) and education budget cuts (nearly $1 billion from public education) and policies focused on plans prefabricated in 2009 and released in 2010 and updated in January of 2012 by business leaders in Michigan that will, as their stacks of slides state, create “500,000” new Michigan jobs.

The Nerd and his small army of outside consultants did us all a great favor in the early months of his tenure by publishing Michigan’s data, learn to embrace it.

But, before going into what Snyder’s Data tells us about 2011, his turbulent first year as “CEO”, let’s take a look back and see what historical truths are included in those facts and figures going back to 1998-2008.

This first installment will focus on data from the terms of former Governor Jennifer Granholm (D) and Republican Governor John Engler (R).

Much more after the jump.

The core documents used for this ANALYSIS come from supporting documents for Snyder’s Dashboard or “MiDashboard” and budget related metrics, tons of benchmarking rankings and data points from Snyder’s Citizen’s Guide to Michigan Financial Health or “Dollars and Sense: How State and Local Governments in Michigan Spend Your Money.”

Michigan’s Myth of the ‘Lost Decade’
From Michigan economist Lou Glazer on December 2, 2010:

“That’s right, the state’s lost decade started years before the election of Governor Granholm. And how the state organized and delivered its economic development programming in the Granholm years had almost nothing to do with the decline.”

In their current campaign to support the big business and ‘profitization’ policies in which Michigan public assets and taxpayer monies will be redirected in privatization projects across Michigan, the Mackinac Center for Public Policy continues day in and day out ‘mything’ what we call “Mackinac Math”, or the myth of Michigan’s ‘lost decade.

Using Rick Snyder own data sets, let’s explore the myth we have been hearing for years. And let’s look at the policies of former Republican Governor John Engler at the beginning of this supposed “Lost Decade” going as far back as the Snyder data will let us.

Michigan’s “Lost Decade” in Pictures:

Republican Governor John Engler DEPLETES Michigan Rainy Day Fund…to the tune of $1.2 BILLION

UPDATE: New Snyder Data says $1.38 Billion

Snyder’s latest goals, first announced in his first State of the State presentation included increased revenues to rebuild the “Rainy Day Fund” and improving Michigan’s bond ratings, both destroyed by current Snyder staffers and advisers under the last years Republican Gov John Engler.

Engler Taxes Cuts kick in reducing State Revenues… Cuts $4.2 BILLION as he is going out the door…

It is surprising that Revenue remains relatively stable under Granholm until Global Financial Crisis of 2008 hits following unregulated greed of Wall Street speculation.

Snyder’s $1.6 billion cut in 2011 to bailout Michigan business is just the start. Because Michigan has a balance budget amendment, one of the tricks used to justify even greater future cuts will be the health of the Rainy Day Fund, not just at the state level, but now as policy at the City, Village, Township (CVT) and County and school district levels. Same tactic, different pitch.

Engler Cuts to Tax Base and Revenues CREATE DEFICIT at the end of his administration…

Leaving the budget situation for Granholm, and a REPUBLICAN BLOCKING MAJORITY in the Michigan State Senate (since 1985), to deal with it.

One footnote, according to the Detroit Free Press on December 11, 2010:

Granholm said that unlike three previous governors, she will leave her successor with a balanced budget and a $400-million surplus.”

Everyone is now talking about Michigan’s new surplus and what Snyder plans to do with it. Where did it come from? One person’s surplus is another’s justified revenue, but some of these funds were already there, despite the cries of ‘we are broke’ from capitol chambers and the Michigan conservative media noise machine, and used to cut taxes for rich and tax the poor.

Engler Tax Cuts and Revenue cuts continue to impact into the next administration making it next to impossible to balance the budget…

An event better look at these trends is in the charts on State Revenue Sharing over this time period that show where cities and municipalities took the most of the budget hits, particularly in the daily stalemate stories of Bishop vs. Dillon (now Snyder’s State Treasurer) and the two government shutdown brinkmanship overnighters in 2007 and 2009 (More on Revenue Sharing and How Michigan Funds Municipalities and Snyder Economic Vitality Incentive Program (EVIP) when the revisions are announced).

Only Republicans can make Government more efficient…?

Another key ‘myth’ is that Granholm and ‘the Democrat Party’ grew, or would grow in the future if they ever had total control, the size of Michigan’s State Government, when in fact the total number of State Employees decreased by over 8,000 FTE’s or Full-Time Equivalents or Total State Employees under Granholm, who was forced to make deals with the GOP Majority in the State Senate. A decrease of over 13%…

In fact, Michigan Government won numerous awards nationally for ‘efficient government’ policy and services, like having one of the highest levels of ‘on-line’ services in the country for example (also a stated Snyder goal), under Granholm even during a very politically and economically turbulent second term.

Michigan’s Bond Ratings began falling under Engler, not Granholm…

In his 2012 State of the State PowerPoint ‘presentation’, Snyder touted stabilization in Michigan’s bond ratings. The accompanying myth is that the Granholm administration was responsible for the fall of bond ratings, and his actions are correcting Granholm’s mess, not quite right.

There are a number of sources, but we will use this Michigan Senate Fiscal Agency report “Michigan’s Bond Rating and Related Information” dated February 20, 2007:

December 19, 2001 (Last year under Gov John Engler)
Moody’s revises outlook for the State of Michigan from “Stable” to “Negative”

March 27, 2003 (Less than 90 days after Granholm takes office)
S&P also revises outlook for the State of Michigan from “Stable” to “Negative”

July 18, 2003 (Slight bump 1/2 through Granholm’s first year)
Moody’s revised outlook to “Negative” from “WatchList Negative”

November 14, 2003 (Two months before end of Granhom’s first year)
Moody’s downgraded to “Aa1” from “Aaa” the first actual drop in the rating.

Engler created Michigan’s Debt/Rating debacle by slashing state revenues and starving municipalities going into a tough economy. Bond ratings drops were well on the way down during the Engler administration, and further drops resulted directly to his fiscal and tax policies in Granholm first years in office.

So if all that the Engler administration did for twelve years was to ‘fix’ Michigan why did Michigan’s Bond Ratings drop, the first fall in Michigan’s Bond Ratings for generations? Directly following these 12 years of the “slash and burn” policies of the Engler Revolution, Michigan wasn’t a paradise, it was a starved, scorched state of affairs.

If tax cuts and massive budget cuts alone were the answer, Michigan should have been the Promised Land by the time Granholm took office.

Snyder’s team, comprised largely of Engler retreads, call their new strategy ‘reinvention’. If it didn’t work for us leading into the downturn of 2001, why will these same tactics work now following the global financial crash of 2008 at the end of the Bush years? We call it for what it is, “Slash, Burn and Repeat”.

People that know this history and economic development theory and practice, know that no business will be attracted to a State that can’t fund their infrastructure and improvement of its own ‘civilization’ (assets in our cities, villages, towns and counties) and adequately educate its youth and talent in a new, innovation driven economy. Starved, low wage states might be just great for processing chicken, but they are not the sort of states that build out high wage innovation economies.

Snyder’s Business Tax cuts may prop up struggling business who can’t manage their own books (2/3 will now pay no taxes at all), and make the rich richer, but it will never create a State people are attracted to and want to live and work by in creating a MARKET in assets, core capabilities, talent and consumer DEMAND necessary for Michigan’s real recovery.

Facts are stubborn things, and those are the FACTS, period.


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Hector Solon
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