Economic Development

State economy becoming more competitive, report says

Even though Michigan is now top 10, lawmakers still have work to do.

May 25, 2018
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The Michigan economy has taken leaps forward in the last six years, according to a new report released to the House and Senate Competitiveness committees.

The study by Timothy Nash of Northwood University’s McNair Center for the Advancement of Free Enterprise and Entrepreneurship in Midland uses a variety of analysis points to determine how Michigan’s economy has grown in comparison to other states in the Great Lakes region and the rest of the country.

From 2000-10, the study found Michigan ranked 47th in state competitiveness. Over the last six years, Michigan has moved to ninth place.

“Improvements in income growth, the regulatory environment, tax and debt. I think these are all things we can be proud of, but I also think the report showed areas to improve,” said Rep Jim Lilly, R-Park Township, the vice chairman of the House committee.

The report indicates Michigan is the highest-cost state for automobile insurance, an average of $2,394 per year.

That’s a cost Rep. Jason Sheppard, R-Temperance, said he hopes can be addressed by a package of bills that would repeal Michigan’s no-fault auto insurance system.

Auto insurance premiums decreased by 35 percent in Colorado after that state switched from no-fault auto insurance to a tort system that would work through the courts, Sheppard said.

Nash also cited Michigan’s competitive business and corporate tax rates as an important factor in attracting new businesses and retaining the state’s workforce.

“Yes, we’ve cut taxes drastically, yet we aren’t the most competitive,” said Rep. Abdullah Hammoud, D-Dearborn, a member of the House committee. “These tax incentive packages are constantly being brought up, and I think it was basically highlighted by the Amazon situation that this isn’t the end-all, be-all,” he said.

Hammoud critiqued the absence of value placed on public transit and infrastructure in the report. A lack of public transportation was a primary reason Amazon gave late last year for not selecting Detroit as a potential location for its new headquarters. Transportation, along with education, also knocked Grand Rapids out of the running for its HQ2, according to Amazon. The retail and distribution giant has since announced plans for a $150-million fulfillment center in a Grand Rapids suburb.

Nash told lawmakers that Michigan has one of the highest growth rates for per capita income in the nation.

But Rep. Erika Geiss, D-Taylor, said it’s important to differentiate the growth rate among Michigan’s economic classes, “especially when we have a lot of members in our communities in both our rural and urban settings whose income is at or below the poverty level.

“When we start talking about those numbers, we can start talking about improving our economic outlook for residents,” said Geiss, another committee member.

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