michigan turnaround plan turning around michigan: the michigan turnaround plan

Michigan Turnaround Plan

Turning Around Michigan:The Michigan Turnaround Plan

Michigan Turnaround Plan 2

Business Leaders for Michigan

75 of Michigan’s most prominent company CEO’s

Over 300,000 jobs throughout Michigan

Statewide representation – Jobs in every county in Michigan

Over $1 Trillion annual revenue


Michigan: A State In Crisis

1 of every 2 jobs lost in US since 2000 have been in Michigan

Only 25% of Michigan job losses from automotive sector

Companies pay a 3-4 percentage point profit penalty to be in Michigan

Declining population growth

Declining per capita income

A state with no holistic, cohesive approach to foster job growth

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Result: Relatively Smaller

-12

-10

-8

-6

-4

-2

0

1980 1990 2000 2008

ANNUAL % POPULATION GROWTH vs. US AVG

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Source: U.S. Census Bureau Population Estimates Program


Result: Relatively Poorer

-14

-12

-10

-8

-6

-4

-2

0

2

4

1970 1980 1990 2000 2008

MI

PER CAPITA INCOME GROWTH vs. US AVERAGE

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Source: U.S. Bureau of Economic Analysis


Result:Declining or Flat Tax Revenue

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Source: Michigan Senate Fiscal Agency, “Major Sources of Tax Revenue”

Billion

s

TAX INCREASES


Result: Right Spending Priorities?

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Source: State of Michigan Executive Budget FY 2009, “Historical Expenditures/Appropriations Gross”& U.S. Inflation Calculator.com


Cause: Uncompetitive Business Climate

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Cause: Uncompetitive Business Climate

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Setting a Goal for Michigan

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Top Ten: Where We Could Be

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2007 (BEFORE CURRENT RECESSION)IF WE HAD BEEN IN TOP TEN (in 2007)

Note: Rankings do not include the District of Columbia; See source notes


Michigan’s Five-Step Turnaround Plan

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Step 1: Changing the Way We Manage Our Finances

WHERE WE ARE Constant revenue & spending

forecast “surprises”

A PATH FORWARD Form an independent council of

respected public and private sector economists to complete quarterly revenue and spending estimates

Conduct a quarterly survey of a cross-section of Michigan businesses to identify sales & hiring trends

Adopt two-year budgets to more accurately project the on-going cost of programs

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Step 2a: Right-Size Spending Now

WHERE WE ARE Most structural reforms have long-term

payoffs

Labor & benefits are the state’s largest cost-driver: Average total compensation for state employees was almost $17,000 more than the private sector average in Michigan in 2007

State employees pay 5%-10% of their health premium costs, compared to 17.8% national average for state workers

A PATH FORWARD Reduce state employee

compensation to the average compensation of state workers in the US or the average of MI private sector workers (Potential savings: $287 - $1,383M as of FY 2007-08)

Reduce the state workforce by 5-10% (Potential savings: $236 - $473M as of FY 2007-08)

Adjust state employee health care premium contributions to the national public sector average (Potential savings: $74M)

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Step 2b: Structural Reforms To Ensure Sustainability

WHERE WE ARE

Michigan has 1,800 units of local government and over 500 local school districts

Michigan’s incarceration rate is 45% higher than the Great Lakes average

A PATH FORWARD Encourage & enable local

government service sharing (Minimum estimated savings: $250M)

Encourage & enable local school district service sharing (Minimum estimated savings: $300M)

Enact corrections management and sentencing reforms (Estimated savings: $400M)

Eliminate optional services that exceed federal standards (e.g. optional Medicaid services)

Eliminate duplicate state programs (e.g. MIOSHA vs. OSHA)

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Step 3a: Getting Michigan Competitive – Short-term

WHERE WE ARE Michigan ranks between 27th and

35th worst in overall business tax burden

Michigan businesses pay on average 3-4% more of their profits in taxes than the average of the “ten best” business tax and many peer states

A PATH FORWARD Make Michigan’s business tax

system competitive• Reduce the MBT to move

Michigan significantly toward becoming a “Top Ten” state in lowest tax burden

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Step 3b: Getting Michigan Competitive –Long-term

A PATH FORWARD Make the overall cost of doing

business in Michigan competitive

• Eliminate the personal property tax

• Require fiscal notes that identify the compliance costs for all new regulations

• Create a regulatory report card that tracks responsiveness

• Prohibit state regulations that exceed federal standards, such as state-based ergonomic standards

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Step 4: Investing In Our Future

WHERE WE ARE When Michigan was a wealthy

state it could afford not to set priorities; in today’s economy it cannot

Other states, like North Carolina, prioritized investments

A PATH FORWARD The state should make investments

that will have the greatest long-term economic impact

Investments should focus on:• Higher education

• Infrastructure

• Great Lakes and cities

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Step 4a: Investing In Our Future –Education

WHERE WE ARE Average K-12 performance must

improve to match per capita spending (Spending: 8th; Performance: 34th)

Higher education investment should increase from current status of 38th to “Top Ten”

A PATH FORWARD Improve K-12 performance:

• Consolidate administration of Michigan’s 500+ school districts by reducing per pupil state funding for districts that fail to share services

Ensure “Top Ten” higher education:• Rationalize the number of colleges &

universities to a number the state can support long-term

• Increase funding to remaining community colleges & universities to achieve “Top Ten” status

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Step 4b: Investing In Our Future -Infrastructure

WHERE WE ARE Michigan scores below average in

the condition of its highways – a critical need for a peninsula state

A PATH FORWARD Adopt new funding formulas to

ensure Michigan has adequate revenues to support a “Top Ten” transportation infrastructure

• Improve to “Top Ten” road condition

• Expand freeway connectivity to adjoining states

• Expand passenger air service throughout Michigan

• Support mass transit in dense population corridors

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Step 4c: Investing In Our Future -Great Lakes & Cities

WHERE WE ARE

The Great Lakes provide Michigan a defining “place” to attract and retain talent in a global marketplace, yet Michigan lacks a holistic strategy to leverage this unique asset

Michigan needs an “urban strategy” - a critical need for retaining and attracting talent and improving Michigan’s image

A PATH FORWARD

Develop a comprehensive Great Lakes strategy

Develop an urban agenda

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Step 5: Accelerating Growth

WHERE WE ARE

Michigan does not operate cohesively

Michigan’s economic development strategy emphasizes:

• Making direct investments in individual companies

• Incentivizing site location

• Targeting narrow business sectors

A PATH FORWARD

Support collaborative regional growth strategies

Accelerate growth by supporting innovation and entrepreneurship across all sectors

Develop strategies to grow broad business sectors that leverage Michigan’s key assets (e.g.: energy, engineering)

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Introduce BLM & Plan to media/stakeholders Endorsements &Support from

75% of state’s major newspapers Several major organizations & associations Democrats & Republicans

Launch Public Information Campaign

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Turnaround Plan Implementation

Track 1: BUILD SUPPORT



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Convene State Leaders

Build a Legislative Coalition

Ten Step Agenda for 2010

Track 2: ADVANCE A LEGISLATIVE AGENDA


Legislative Agenda1. Establish a 2-year budget cycle

2. Form an independent public-private revenue forecasting

3. Remove barriers for local municipalities and school districts to increase efficiency

4. Consolidate school administrative functions

5. Adjust public employee health care contributions to the national public sector average

6. Reduce state employee compensation to the average compensation of state workers

7. Reduce the state workforce by 5%-10%

8. Enact reforms to Michigan’s Corrections system that bring our costs in line with other mid-west states

9. Make Michigan more competitive by reforming the Michigan business tax structure

10. Require all legislation & regulatory change proposals that impact business to include fiscal notes

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Questionnaires Interviews PAC Endorsements

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Track 3: EVALUATE & SUPPORT CANDIDATES



MichiganTurnaroundPlan.com

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michigan turnaround plan turning around michigan: the michigan turnaround plan

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