Crystal Ball Small Biz NFIB’s Owens: Morning in Michigan Again
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By Charles Owens
State Director
National Federation of Independent Business – Michigan
If there is one word that best sums up the outlook for small business in 2011, it is a word that has not been used for a long time: optimistic.
After almost 10 years of a survival mode mentality, small business is optimistic about the future. There is no economic metric that can be pointed out as the source for this assessment, at least not yet. Rather it comes from the anecdotal conversations and discussions with small business owners all around our state.
For the first time in eight years, small business owners are seeing evidence of strong leadership and direction from the governor’s office. The new leaders in the state House and Senate have made strong statements of support for small business as well, and our legal system is now more predictable and stable with the changes in the state Supreme Court. Expedient follow-through with legislation and policy initiatives will capitalize on the positive sentiment in the business community and economic improvement is sure to follow.
Examples of such initiatives would be those that: balance the budget by reeling in spending by addressing unsustainable government employee pay and benefits, repair our business tax system by scrapping the MBT, throttle over-reaching state agencies by ending forced unionization and rule-making abuse, level the paying field for small businesses trying to compete on state and local contracts by ending Project Labor Agreements and stop the “ready, shoot, aim” inept economic development policies of the MEDC and boutique tax credits.
Businesses and taxpayers in Michigan have heard the tired refrain of “we have cut spending to the bone and there is nothing left!” from policy makers in Lansing for a long time. They have never believed it, nor should they. In “Lansing-speak” this means that only those things that someone has decided are “on the table” become eligible for consideration in a budget cutting exercise.
What business has the luxury of deciding that payroll is not on the table when it comes to budget cutting? What business can declare that it has cut spending to the bone while giving employees a three percent raise?
Structural budget reform requires a hard and painful look at all items of expense. Businesses and families in Michigan have been doing this through 10 years of a struggling economy. Why should we expect less from our state and local governments?
The Snyder administration proposal of a corporate income tax to replace the MBT deserves a serious look. The Michigan Business Tax is a complicated tax that is arbitrary and capricious in how it treats different segments of Michigan’s business community. It taxes many small businesses that already pay once through the personal income tax and for others, notably a number of large businesses in the state, it actually gives money back through refundable credits. For almost every business in between, it is a confiscatory nightmare. A bold move early in the year to scrap the MBT would send a powerful message to all job creators in Michigan.
Michigan’s hostile regulatory climate is in bad need of a makeover. The “gotcha” mentality of many state agencies must end immediately. At a minimum, it would be a bold move for the governor to declare a regulatory moratorium on any new rule or regulation that is not required by federal law. For those rules that are required, agencies should be restricted to adopting the federal rule or regulation by reference so that it would not be any stricter than the required federal standard. Exceptions to this policy should require legislation that is passed by both chambers and signed by the governor.
Economic development is best accomplished by creating a favorable business climate for all businesses in the state and allowing the entrepreneurs and the market to sort out the winners and losers. History has documented that this is a proven formula for success. The “mission creep” over at the Michigan Economic Development Corporation must end. Every business owner knows that it is easier to keep the customers you have than to find new ones. However, this simple-but-true axiom has been all but ignored by the MEDC and the economic central planners of the last administration. The trendy term for this common sense truth is “economic gardening”. Call it what you will, but this needs to be the emphasis for the state in future economic development policy.
There are still many challenges ahead for our state. The uncertainty surrounding the recently passed federal healthcare legislation will continue to be a concern as a new Congress wrestles with the details. The national economy will, in no small way, influence what happens in Michigan. Yet, even with these challenges, if our new leaders in Lansing deliver on the promises made in the last election, Michigan is poised for a comeback. To paraphrase a quote from Ronald Reagan: It is morning in Michigan again.