No State Help Needed

February 16, 2004
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Gov. Jennifer Granholm delivered a glimpse of her Michigan budget wish list last week to an overflow Economic Club of Grand Rapids crowd at DeVos Place. Yes, this is West Michigan, generally thought to be at odds with Democrats, but no business in any corner of Michigan would welcome her proposals to “save” Michigan businesses. One must ask: What part of “get out of the way” is so difficult to understand?

In this space on Feb. 2, the Business Journal lamented Granholm’s “fix” for employer-afforded health benefits. Granholm, with what ultimately is a backhanded compliment, wants to recreate the Muskegon health-care plan, and maybe elements of Kent’s health plan, for small businesses across the state. Those are not government plans. What Granholm does not calculate is that if a government-endorsed plan becomes preferred, it continues to aggravate the calculations of the insurance businesses, which attempt to balance the “pool” of costs for covered employees. If the average age of employees in the smallest businesses tends to be younger, the state plan furthers “cherry picking” of younger, presumably healthier, employees. The effects of such measures were adequately demonstrated by Blue Cross Blue Shield, which last year won state regulatory remedy.

Then comes Granholm’s remedy for job loss: In the face of astute recommendations by Michigan manufacturers — including those in the Grand Rapids metro area — that have proposed employer-based re-training programs, Granholm instead insists that the state provide such re-training. The insult is that such a program provides additional public sector rather than private sector jobs, and the added injury is that Granholm even thinks government could suppose to know — let alone train — employees for private sector jobs.

Granholm told the audience, “We also need to consider how we train workers that have lost jobs, jobs for the 21st century.” If the state understood the advancements of the 21st century, it would have resolved broadband and tech issues long ago.

Another legislative initiative — or rather state attack on small business — is reported this week in the Business Journal. While state government makes impassioned speeches about helping small businesses, Democrats in the legislature are proposing to attach Michigan’s high 6 percent sales tax to all Internet sales. Such is a direct attack on especially small businesses, the “young” businesses Granholm seeks to attract. While states across the country are motivated by a weakened economy to collect state revenues, this, too, will become a matter of what makes one state over another competitive or attractive to business owners.

Just two weeks ago a crowd of more than 500 attended the Grand Rapids Area Chamber of Commerce annual meeting and heard Monica Mitidieri, owner of Monica’s Gourmet Cookies, tell her success story of cookie sales around the world via the Internet. What makes her competitive is her product and purchase price. Mitidieri wants to hire additional bakers. She wants to create more recipes, not burn more midnight oil to fill out more state forms and calculate to what state is owed what amount of her small business earnings. The proffered state legislation leaves Internet sales to big business and bulk orders, further eroding new-economy and Main-Street companies. After all, businesses are still paying the Single Business Tax in Michigan, and apparently will continue to do so. That’s the tax that was to be rolled back under former Gov. John Engler’s pro-business package. Granholm said she sees the SBT as “lousy” and vowed to “reform” it.

The egotistical “help” proposed by the state will further erode an economy that is finally improving, and ultimately prolong government’s pain.    

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