In just my first few weeks in office as a state senator, I have already absorbed a mountain of information detailing how state government operates and how the budget process works. I have combed through hundreds of charts, graphs, analyses and documents in order to have a broader understanding of how our state provides its citizens with services and pays the bills.
As a management consultant, I look at state government from a different perspective. What I see is an organization that desperately needs the application of sound business principles if we are serious about restructuring our government. We can create a more efficient, effective system that serves the needs of the people without robbing them blind in the process.
Simply shifting dollars from one pot of money to another, as has been the practice in the past, will not keep the doors of the Capitol open, let alone encourage new job creation and economic development. It’s time for a new way of thinking about how government operates, how it serves people and how it pays for itself in the process.
The Senate took the first step toward redefining the way government operates by introducing SB 1, a bill to eliminate the Michigan Business Tax (MBT). This legislation, which I co-sponsored, would scrap a business tax that has hurt businesses already here in Michigan and kept others from locating in the state. Elimination of this tax would provide an opportunity to lower the costs on job providers and open the door to restructuring state government spending in order to bring it in line with revenues.
According to the Mackinac Center for Public Policy, elimination of the MBT without any replacement tax would generate as many as 57,000 new jobs in the first full year of repeal, and 120,900 jobs by 2016.
Currently, the MBT and its attached 22 percent surcharge account for about $2.2 billion in revenue to the state annually, making up about 15 percent of the General Fund revenues. With the state facing a $1.8 billion budget gap between spending and expected revenue next year, the state would be looking at an almost $4 billion shortfall if no replacement tax was put in place. While a seemingly large hurdle, it would be possible to eliminate the MBT and balance the budget through spending cuts and reforms without replacing the tax on job providers.
One suggestion is to adjust the benefits paid to all state, local, school and university government employees to bring them in line with private sector employees. This move alone could save the state up to $5.7 billion a year.
Clearly, the bill highlights the need to focus on government spending in addition to reforming our tax structure. We can reign in state spending by evaluating the services that government provides and determining areas where we are getting value for our dollars and areas where we can make improvements. Through prioritization and evaluation of services we can construct a tighter, fiscally responsible budget and lower the costs to taxpayers and businesses.
Part of my role as a management consultant has been to work with troubled organizations to reorganize and restructure their operations and put in place systems and procedures that streamline operations and increase desired outcomes. I believe the same types of business practices can be used to realign Michigan’s government.
For example, the Michigan Dashboard (www.Michigan.gov/MIDashboard) that Governor Snyder has created will measure our state’s progress toward reaching key results and will help guide policy decisions. The data provided is a valuable tool in determining effectiveness of services and the true cost of government operations.
Each of these factors – changes in how we raise revenue, evaluation and prioritization of services and business management tools that can help reorganize operations – will all contribute to a revitalized economy and streamlined state government operation. It will require a lot of cooperation between the branches of government in order to enact real change but the end result will be a better Michigan for all of its citizens. This is a job I look forward to tackling as both a management consultant and a state senator.