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Published in Economic Development
Gov. Gretchen Whitmer speaking during her State of the State address on Jan. 25, 2023. Gov. Gretchen Whitmer speaking during her State of the State address on Jan. 25, 2023. COURTESY PHOTO

7 takeaways from Whitmer’s State of the State proposals

BY David Eggert, Crain’s Detroit Business Wednesday, January 25, 2023 09:13pm

LANSING — In her fifth State of the State address, Democratic Gov. Gretchen Whitmer on Wednesday night laid out several proposals she said are designed to make a difference for workers, young people about to graduate and newborns.

A look at key facets in her 47-minute speech, particularly those related to businesses and the economy:

Universal preschool

Whitmer wants to expand the state’s Great Start Readiness Program so all 4-year-olds can go to preschool without charge by the end of her four-year term. About 58,000 of 110,000 4-year-olds currently are eligible. Pre-K for all would save families $10,000 a year on average, she said.

“Data shows that children who go to preschool are more likely to graduate, earn a certificate or degree and get a good-paying job,” she said, saying it is too hard to find affordable preschool. “Preschool helps employers, too, and that’s why so many business groups support it.”

She is expected to further detail the proposal in her February budget proposal.

“It helps parents, especially moms, go back to work,” she said. “And it will launch hundreds more preschool classrooms across Michigan, supporting thousands of jobs.”

Economic development

Whitmer wants a sustainable funding source for the state’s economic development efforts, which were turbocharged more than a year ago with the creation of the new Strategic Outreach and Attraction Reserve Fund, or SOAR, following Ford Motor Co.’s announcement of new factories in Tennessee and Kentucky. The account has been used to land big projects, including electric vehicle battery plants in Lansing, near Big Rapids and in Wayne County's Van Buren Township.

Some $1.6 billion has been allocated to the fund via two supplemental spending bills. But there is no mechanism to permanently replenish it on an ongoing basis. Whitmer did not elaborate on her plan.

“If we get this done, we can move faster year-round to compete and win cutting-edge manufacturing projects and bring more supply chains home,” she said. “We can create opportunity for you and your family and support local economies and small businesses across our state. Businesses know that we must compete to grow, and when we do, we all win.”

Taxes

Whitmer not surprisingly wants to roll back the “retirement tax,” restoring exemptions on pension income that were eliminated or reduced by her predecessor as part of a tax overhaul nearly a dozen years ago. It would save 500,000 households $1,000 a year.

“That’s money for prescriptions, groceries, gas or gifts for your grandkids. ... Seniors who served, saved and did everything right deserve to keep more of what they earned.”

She also, as expected, wants to expand the Earned Income Tax Credit, which was scaled back as part of those tax changes. It is a refundable credit for which more than 700,000 lower-income workers are eligible. An expansion, which is supported by business organizations, would put up to $600 more into their pockets if the credit is set at 30 percent of the federal credit. It currently is 6 percent.

“Data shows boosting the Working Families Tax Credit also closes health and wealth gaps,” she said. “Children who grow up with this support have better test scores, graduation rates and earnings as adults.”

Democratic-led Senate committees this week began passing bills on both fronts.

Workforce development

Whitmer wants to ensure that funding continues for a new program that provides college scholarships to high school graduates. It makes college tuition-free for 65 percent of graduating seniors, she said.

She also said she wants to “take steps” to lower the age for people without a college degree to qualify for a tuition-free associate’s degree or skills certificate from 25 to 21. The Michigan Reconnect program was launched in 2021 and is supported by the business community. It pays the remaining balance of tuition and mandatory fees after other state and federal financial aid have been applied.

“Let’s unleash opportunity for young people while offering companies the skilled, hardworking talent they need to succeed in Michigan,” she said.

She also wants to create a new tutoring and after-school initiative to get students “back on track” from pandemic-inflicted learning loss. She called on legislators to fund it before they go on spring break.

Abortion, LGBTQ rights

Whitmer wants to make Michigan a more welcoming place to live by wiping from the books an unenforced abortion ban and updating the civil rights law to permanently prohibit discrimination based on sexual orientation and gender identity.

“Protecting these freedoms is the right thing to do and it's just good economics,” she said. “States with extreme laws are losing talent and investment because, you know what, bigotry is bad for business.”

As she has done before, she specifically mentioned going to neighboring Ohio and Indiana, which have abortion bans, to lure companies to expand or locate in Michigan.

Republican response

Republican leaders said all residents should get a tax cut. They also criticized Whitmer for not mentioning an automatic cut in the individual income tax that is likely coming because tax revenues were so high in the last fiscal year and not firmly committing to honoring the trigger.

“We need to provide seniors relief, whether you’re working or whether you're retired,” said Senate Minority Leader Aric Nesbitt. “It’s very important that we stand up and support all working families and all seniors in Michigan instead of picking winners and losers.”

Republicans also noted she did not spend much time on a signature first-term priority — fixing the roads.

“This was her opportunity,” House Minority Leader Matt Hall said.

What wasn't said

Whitmer wants to repeal the state's "right-to-work" laws. But she didn't say that, avoiding a controversial topic and one that is partisan unlike topics like preschool, college tuition and tax cuts.

Nor did she mention her desire to reinstate the prevailing wage law, another priority for unions. She also was silent on the potential to push for tighter environmental regulations.

She committed to finding ways to keep fixing the roads but did not say much about how. Early in her first term, she turned to a bonding program after her unpopular proposal to hike fuel taxes stalled.

From Crain’s Detroit Business.

Read 3654 times Last modified on Thursday, 26 January 2023 06:47
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