Lt. Gov. Brian Calley argues for a change in economic development strategy

By Dave Alexander | Muskegon Chronicle

ROTHBURY — Lt. Gov. Brian Calley argued the case Friday morning for changing the rules for economic development in Michigan.

Calley laid out the Snyder administration strategy for “economic gardening” to Oceana County business and community leaders at the annual breakfast of the Oceana County Economic Development Corp. at the Double JJ Resort.

Gov. Rick Snyder's turnaround plan for Michigan began with budget and tax reforms now moving through the Legislature, he said. Those reforms support the governor's economic development strategy.

The concept is to stop putting so many of the state's economic development eggs in the basket of relocating big companies here and start tending to the growth of existing Michigan companies.

“I'm ready to embrace the future and believe in what Michigan can become,” Calley told the Oceana County leaders. “I see a future not based on incentives to bring in the big companies but build a system (of economic development) around those already getting the job done here.”

The case for “economic gardening” — supporting existing state businesses to expand and grow — is based upon a study of Michigan job growth during the expansion of the 1990s and the recession of the 2000s, Calley said. The difference between companies relocating to Michigan and those leaving the state resulted in a net job loss in both decades.

Working with start-up companies led to a net job gain in the 1900s but small business start-ups failed and led to a job loss in the 2000s, the lieutenant governor said. It was only in existing businesses that created a net gain in jobs over the two decades, even through the state recession the past 10 years, he said.

The state has spent too much time and money on chasing the big companies, he said. The tax incentives for out-of-state companies to relocate here has left existing businesses to pick up the tab, Calley said.

That is akin to a company charging its best customer more so that it can give a price discount to a new customer in hopes of gaining new business, he said. “It's been a spectacular failure,” Calley concluded.

The best way to help existing businesses expand and grow — along with helping start-ups and attracting relocating businesses — is to improve the overall business climate, he argued. That is what is behind Snyder's business tax reform of eliminating the Michigan Business Tax and imposing a simple, fair 6 percent tax on corporation profits, Calley said.

“It will be the simplest tax code in the nation,” Calley said of a tax program that eliminates future tax credits — a system that has cost state coffers $6.6 billion in potential revenue.

“We are taking the favoritism out of the system and going with the radical idea of treating everyone the same,” he continued. “We are done doing economic central planning. Statistics bear out this is the right strategy.”

But part of the tax reform is for the state to begin putting an income tax on pension income of senior citizens. As the population grows older, this is the fair approach to taking the tax burden off state businesses and young workers, Calley said.

“I'm not here to tell you these changes are easy but that this transformation will be hard,” Calley said of seeing multiple Lansing protests against Snyder's reform agenda.

As the tax and budget issues wind up in the Legislature, Calley said the next push by the Snyder administration will be for legislative approval of a plan to build a second Detroit River bridge between Detroit and Windsor, Ontario. Calley said the controversial second bridge will remove a restriction on Michigan exports to Canada in a deal that will not cost the taxpayers of Michigan a dime.

Email: dalexander@muskegonchronicle.com