On July 20, the Mackinac Center hosted an event titled “Can Michigan buy its way to growth?” in Wyandotte, Michigan. James Hohman, director of fiscal policy at the Mackinac Center, and Vance Ginn founder and president of Ginn Economic Consulting, spoke on efficiency and the state budget.
Hohman said that the state budget is on an unsustainable path. Legislators are planning for the 2024 budget on the assumption there will be an income tax hike next year, but that this is a misreading of state law, he said.
Lawmakers have paid attention to their own districts when they should have looked at ways to improve the state, Hohman said. “Our legislators, instead of making this a better business climate for everyone, would rather bring home the money to their own districts.”
He recalled a quote from Michigan Supreme Court Justice Thomas Cooley on how the government spends money: “The state can have no favorites. Its business is to protect the industry of all, and to give all the benefit of equal law.” But, Hohman observed, “That's not what you get with these district projects.”
Gov. Gretchen Whitmer has dedicated large portions of the state’s budget to subsidies for select companies. “We shouldn’t be giving big checks to big companies, and we shouldn’t be picking winners and losers,” Hohman said.
Hohman noted that the governor has not put any more money toward fixing the state’s roads, a centerpiece of her reelection campaign. There have been small increases in what may look like transportation funding, he said, but that money is put toward debt payments and pork spending.
Ginn followed Hohman, focusing on how the state of Michigan has implemented various policies. Even though public schools are taking in more money, test scores are falling. “Should you be spending this much on education when the outcomes aren't there and men’s test scores are continuing to fall and things of that nature? That's not a good rate of return.”
Ginn presented the Fraser Institute’s Economic Freedom Index, which ranked Michigan 32 out of the 50 states for economic freedom. “Tax and fiscal policies matter,” he said. “The index,” he said, “gives us a guide of what we should do and should not do.”
Ginn continued by offering an alternative prescription for the state budget. Over the last decade, if the state limited its budget to its current funding and adjusted it for population growth and inflation, the average family of four would have an average of $2,000 more per year.
Mackinac has future events like this that can be found here.
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