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Despite all the good news, Michigan still has a growth problem

Apr 21, 2017

By now you’ve heard about Michigan’s “Comeback.”

Credit Thetoad / Flickr - http://j.mp/1SPGCl0

You can find it in booming auto sales and fat corporate profits. You can feel it in a 5.1% unemployment rate. That’s roughly a third of its high point in the throes of the Great Recession.

You can see the revival all over downtown Detroit. That’s where billions in fresh capital are remaking an urban core into the kind of hip and happening place that a lot of folks thought they’d never see in the city America gave up for dead.

But that’s only part of the story.

Behind all the good news – and there’s a fair bit of it – there lurks another reality: Michigan, once a national leader in per-capita income, has a growth problem and it has for, oh, 15 years.

You won’t hear about it from Governor Rick Snyder or see it in the latest “Pure Michigan” ad. But it’s real.

The state’s $10 billion general fund is roughly the same size as it was in 2000. And educational attainment lags rival states.

Personal income growth between 2000 and 2013 is less than half the national average. Michigan notched a gain of 31.1% over that 13-year period, according to Public Sector Consultants. Nationally, that number totaled 66.1%. Let that sink in, folks, because there’s more.

Like population. Had Michigan tracked the national growth rate since 2000, experts say the Big Mitten would have 14 million residents, not the 9.9 million of today. And it would be collecting roughly $9 billion more each year in tax revenue.

That’s a lot more cash to fix roads and bridges, to fund arts and foreign-language instruction in public schools, and to restrain tuition increases at public universities.

Michigan comebacks aren’t what they used to be. The state needs a big dose of growth, and it needs it sooner rather than later to cope with looming fiscal crises that will not be ignored.

Credit Daniel Howes / Detroit News

Growth in taxpayer obligations to current and former public employees is outstripping growth in personal income and property values.

That means residents face a future of rising obligations and fewer services, especially in cities where heavy unionization drives costs even higher. That’s not partisan politicking. It’s a cold, hard financial fact that will not get better with time.

Michigan is the only state in the nation whose growth in municipal revenue between 2002 and 2012 is negative, down 8.5%. And revenue for cities and towns from state sources is down 56% overall, the sharpest decline in the country.

Wake up, people. Today’s good times do not change the harsh realities of fiscal stress running through Michigan’s public sector.

It’s real. And blame for the predicament is bipartisan.

Blame ideologically rigid Republicans fixated with tax cuts and union bashing. Blame Democrats invested in perpetuating the nanny state shaped with allies in organized labor. And blame voters who demand easy answers to hard problems.

The result is a stalemate of irreconcilable differences that will not get better with time – until the next financial crisis comes and there are no more bailouts to be had.

Daniel Howes is a columnist with The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.