Ballard Snyders plan falls short in reaching its goals

March 12, 2011
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Noted Michigan State University economics professor Charles Ballard said there are aspects of Gov. Rick Snyder’s budget that he likes and those that he doesn’t. He also said there was another way to eradicate the state’s $1.8 billion deficit for 2012 that may have avoided all the budgetary angst that has surfaced since the governor revealed his plan last month.

Ballard said he likes that Snyder’s proposed budget eliminates the MBT — the “Mighty Bad Tax,” as he called it. He also favors the governor’s plan to “hack away” at business tax credits, especially those for the film industry.

“If you cover 42 percent of expenses, you can bring any business to Michigan. We could grow oranges and bananas,” said Ballard to a roomful at the ICSC West Michigan Alliance program last week in DeVos Place.

Ballard, a graduate of Stanford University who has taught at MSU since 1983, said he likes Snyder’s suggestion that retirement income be taxed at the current income-tax rate. He said when retirees receive tax-free retirement income and also qualify for the  Homestead property-tax credit, their personal tax rate can fall below zero.

“The effective tax rate calculated on seniors a few years ago was a negative 3.4 percent,” he said.

Ballard doesn’t like Snyder’s proposed slashes for K-12 and higher education, or his intended cuts in revenue sharing to cities, townships and villages.

He also doesn’t like the idea of eliminating the state’s Earned Income Tax Credit for low-income workers. Ballard referred to former President Ronald Reagan, who called the federal version of the credit the best legislation to ever come out of Congress for families and employment.

There are a few things that Ballard would have liked the governor to recommend in his budget proposal that aren’t there, such as extending the state’s 6 percent sales tax to services and entertainment. He said just doing that would raise enough revenue to cover the massive deficit that Snyder’s plan seeks to cover.

He doesn’t see extending the sales tax as being so regressive that it would hurt low-income wage earners. “Tax my Spartan football tickets. Tax my Lansing Symphony tickets. When I’m at the symphony, I don’t see a lot of poor people.”

Ballard also would like to have seen a proposal for a graduated income tax, or for the current rate of 4.35 percent to be raised. At 5 percent, he said, the state would receive an additional $1 billion in revenue annually.

“That’s the rate they have in Utah. We just imported their budget director, why not their rate?” he said, referring to John Nixon, Snyder’s choice to head the state budget office.

Ballard also would like to see the tax raised on beer and wine sales. Former Gov. Jennifer Granholm failed last year to get state lawmakers to increase the tax on a bottle of beer by 2 cents. Ballard said beer and wine distributers have a strong lobby in Lansing.

But Ballard’s biggest concern about the state’s budgeting process involves education.

“We’ve pursued a policy of disinvestment,” he said of funding higher education. Ballard said that 10.5 of the state’s 13 public university and college budgets would have to be zeroed out today to match the funding level of a decade ago. To do that, only MSU, University of Michigan and half of Central Michigan University would be operating today. The rest, including Grand Valley State and Western Michigan, would be out of the education business.

Ballard acknowledged that the state’s economy hasn’t grown as fast as the nation’s. He said the average per-capita personal income of Michigan workers is 85 percent of the national average, which places the state 37th in a field of 50. If the economy doesn’t pick up in the state, personal income in Michigan will match that of Mississippi in 2017. Mississippi has long been considered to be the poorest of the 50 states. A recent Gallup poll showed Mississippi had the highest percentage of residents that claimed to be politically conservative at 50.1 percent. The same poll showed Michigan conservatives making up 36.8 percent of the electorate.

“I like to keep reminding people in Michigan that this is not a poor place,” said Ballard. “We’ve got a lot of things going for us. The resources are there if we want to do things. It’s easy to get discouraged when you’ve had a lousy decade. I want to get Michigan to sing.”

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The top business owners named at the Business Journal’s Top Women Owned Businesses event last week are shown with keynote speaker Bena Burda, founder of Maggie’s Functional Organics. Pictured, from left, are Karen Scarpino, Dina McKnight, Burda, Denise Kolesar and Mary Nienhuis.

Business owners saluted

Grand Rapids Business Journal last week honored companies in four revenue categories at the Top Women Owned Businesses event.

All 35 finalists were recognized at Frederik Meijer Gardens & Sculpture Park as part of Top Women Owned Businesses: A Celebration of Women Entrepreneurs. Guest speaker was Bena Burda of Maggie’s Organics.

The top companies were chosen by a committee consisting of Kim Lavine, president, Mommy Millionaire Media; Michelle Richards, president, Michigan Women’s Business Council; and Eric Larson, CPA/ABV, Beene Garter.

The winners were Denise Kolesar, president/owner, Kohler Expos Inc., Grand Rapids, in the $0-1.49 million category; Karen Scarpino, president/owner, Promotional Impact Inc. and Green Giftz, Grand Rapids, $1.5-million-$3.99 million; Mary A. Nienhuis, president, North Coast Components Inc., Hudsonville, $4 million-$6.99 million; and Dina McKnight, CEO/owner, Zip Xpress Inc., Holland, $7 million plus.

Cashing in at ArtPrize

Researchers at Grand Valley State University announced last week that ArtPrize 2.0 added roughly $7.5 million to the local economy. That is a pretty good take for a 19-day event and puts the return on investment in the rarified air of the Kobe Bryant revenue class.

Paul Sicilian, an associate professor of economics at GVSU, and Seohee Chang, an assistant professor of hospitality and tourism management, directed students from their respective programs, in cooperation with Experience Grand Rapids, to conduct interviews with attendees and compile the data. The results revealed that more than $2.8 million was spent on food, $720,000 on lodging, $589,000 on transportation, $684,000 on retail purchases, and $168,000 on touristy-type things.

More than half of ArtPrize attendees were out-of-towners, with 94 percent coming from somewhere in the great state of Michigan. Sixty-seven percent didn’t stay overnight, while 44 percent hadn’t attended the first ArtPrize in 2009.

But the one statistic that should make Experience GR President Doug Small and ArtPrize founder Rick DeVos very, very happy is that 87.5 percent of the people who came to the city said their primary reason for coming then was because of ArtPrize and not the city’s fabulous weather.

All for the cause

We’re not sure whether Dwelling Place of Grand Rapids CEO Denny Sturtevant told her to go jump in a lake in frigid February, but the firm’s COO Kim Cross did just that. Cross jumped into her hometown’s Muskegon Lake, and for doing so she raised more than $500 for Special Olympics. And, get this, it was the third consecutive year she has collected icy goose bumps on behalf of a charity. “Hopefully, people know that I wouldn’t just do it,” she said.

Cross said she was supposed to take the dip Feb. 26 with five others who had signed on, but only her brother was brave enough to actually make the dive with her. “Could have been my brother saying to me, ‘If we don’t do it, we’ll regret that we didn’t’ or something like that,” she said.

We can’t blame Cross for not remembering what was said minutes before the two put themselves into near cardiac arrest; we can only admire their concern for others.

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