The state we’re in

Budgetary woes do not begin to describe the depth of the governmental crisis facing Michigan. Leaders have only weeks — at most four months — to solve this crisis or face the rightful wrath of Wall Street, students, retirees and workers and employers thinking about staying in . . . Michigan.

— Emergency Financial Advisory Panel report, Feb. 2, 2007

The state faces a fiscal train wreck.

— Tom Clay, Citizens Research Council of Michigan

Those words are not exaggerations. This state is in more trouble than you probably know, and we have to try and save ourselves, fast.               The special panel that pronounced the verdict at the top of this column was made up of more Republicans than Democrats. It included former Michigan Senate Majority Leader Dan DeGrow, former Speaker of the House Paul Hillegonds and Doug Roberts, state treasurer under John Engler.

Tuesday night, after my deadline, Gov. Jennifer Granholm was to have given her annual state of the state address in which she outlined the nature of this crisis and offered a program for how to fix it. Make that, save our state.

That's not too dramatic a way of putting it. Wrap all the economic indicators together, and Michigan, our Michigan, ranks dead last among all the states, including even hurricane-ravaged Louisiana, in economic momentum.

We need a responsive and vigorous government in order to have the faintest hope of competing economically in the future. The state needs to support higher education. The state needs to maintain and repair and build infrastructure.

Anyone who thinks a modern economy can do without the essential services only government can provide is the kind of a guy who'd buy a brand-new Corvette and try to drive it forever without changing the oil.

For years, politicians of both parties have told us a pack of lies, ducked responsibility, given out tax cuts we could ill afford, and covered up the mess to get themselves through the next election. Most of the harm has been done by Republicans, some of whom are ideological whackos, but there have been few heroes among the Democrats, either. They — including our current governor for most of her first term — mostly timidly went along.

Now, she gets it. Cynics may say that's because she has been re-elected and doesn't have to worry about any more elections. But that doesn't matter. What matters is that she gets it. Several weeks ago, she appointed a thoroughly bipartisan Emergency Financial Advisory Panel to look into the deeper nature of our problems.

The usual pundits and other so-called analysts immediately said that she was just doing this to give herself cover for doing what she wanted and raising taxes. That may be true, but only in the sense that was behind my calling a bunch of plumbers when my sewer line stopped working a few years ago.

Yes, I knew the water wasn't flowing, and I wanted someone to fix it. I didn't want to pay for it ($8,000, in the end) but I knew I would have to. I did not want to consult any "experts" who might have advised me to save money by pooping in a box in the garage for the rest of my life. Indeed, I wanted to tax myself for the convenience of having modern plumbing, and I am glad I did.

But when the Emergency Financial Advisory Panel's report on our state's plumbing came out, the talking heads, most of whom clearly had never read it, said, "I told you so! They want to raise taxes." In fact, the emergency financial panel never does call directly for raising taxes, though anyone who reads their report and has the reasoning power of my pet guinea pig will conclude it would be nuts not to do so. Yes, the state desperately needs more revenue.

However, the report also calls for spending cuts and a lot of things liberals won't much like, including less state money devoted to teacher pensions and an end to binding arbitration in public employee cases.

Yet anyone who gets caught up in niggling over these details misses the overall picture, which this report admirably lays out there for us: We need to completely reinvent and restructure the way state government works, just as we need to completely reinvent our economy if we are to survive.

Here's a few facts which may have you hitchhiking to Florida by the end of the day: Our state per capita income, long one of the highest in the country, is now 5 percent below the national average.

We haven't been that bad since 1933 and the depths of the Great Depression. Michigan has lost jobs for six years in a row, again for the first time since the Great Depression. We have lost 246,000 manufacturing jobs — a quarter of all the ones we had — just since President Clinton left office.

And many more job losses are coming, as more auto plants are closed.

What about the charge that we are overtaxed? That we are losing all these jobs and failing to attract new ones because we are such a high-tax state?

Again, complete hooey. Looked at one way, we are exactly in the middle of the pack, when you consider the share of personal income we pay for state and local taxes. That's what the U.S. Census Bureau said three years ago.

Based on what's happened here and elsewhere, we have probably declined a couple notches since then when it comes to personal taxes.

But when it comes to business taxes — we are a bargain. The Council on State Taxation says Michigan is 36th lowest. We would actually be lowest in the nation if the Legislature doesn't replace the Single Business Tax soon.

We've cut the hell out of taxes. State revenue has been cut by $3.2 billion a year since 1994. So why aren't high-tech businesses flocking here?

What the wingnuts don't get is that it is not just about taxes; it is about quality of life. As in, say, education. We have far fewer college graduates in our work force than other states. We have far fewer knowledge workers.

Yet we have many more prisoners than most other states. Not because we have more crime; we don't. We are paying heavily — $30,000 per prisoner per year — for tough "three strikes" laws for small-time hoodlums.

We need to put that money in higher ed and put a lot of idiots on a tether, not in a cell. We need, in short, to figure out how the world works and will work.

Unless we act rationally and quickly, shortsighted, small-minded greedheads will move to make Michigan some sort of third-world country, with grinding poverty for many and wealth for a very few.

"Many states tax residents at higher levels than Michigan and have enjoyed greater job growth and personal income gains," the report concludes.

And these other places "have high percentages of college graduates, vibrant cultural offerings, excellent roads and more venture capital."

Well, you get what you pay for. Naturally, you may find a certain amount of charm in living in an undertaxed slum, and that's your right.

Guatemala will welcome you.