Small Businesses vs. Big Governments
Before beginning a presentation that criticized the Michigan state government for its excessive spending, Charlie Owens first had to take a jab at the federal government.
Owens, the Michigan director of the National Federation of Independent Businesses, said he had just read a story about President Barack Obama’s plan to give businesses tax credits if they started hiring.
“We don’t really hire employees because you give us a tax credit,” Owens said Thursday at a luncheon in Jackson. “We hire employees because we have a reason to hire them. … You might want to work on the reasons we aren’t hiring.”
Owens said government officials’ claims that they have “cut to the bone” were false.
“They don’t even know where the bone is, folks,” Owens said.
He gave several examples.
Owens said the state claims as cuts that it reduced its “current services” appropriations from 2.5 percent to 1 percent to universities and community colleges. All it did, he said, was reduce the amount of the increase.
“That is not a cut,” Owens said.
He talked about a hiring freeze Gov. Jennifer Granholm enacted in 2007. He said that freeze’s only exemptions were for jobs that would protect the health, safety and welfare of Michigan residents.
But Michigan has made 2,373 hires, including a $96,642 “communications specialist” for the Michigan Economic Development Corp., three jobs to test racehorses for drug use and a $70,000 job for the Michigan Film Office.
“That’s what passes for a cut to the bone in Lansing,” Owens said. “We are rapidly getting to the point in this state where the tax spenders will outnumber the taxpayers.”
Owens said no reform can be done without dealing with the public sector unions.
The average state employee’s salary has increased from $43,893 in 2001 to $53,369 in 2010. Owens said these salaries and benefits are no longer sustainable.
According to Owens, the state is in a cycle where its gets a budget deficit, raises taxes, gives more money to public sector unions and then the economy takes another downturn, leading to another deficit.
“Is there a model for that?” Owens asked. “Yeah. It’s called the city of Detroit.”
He went on to say Michigan's government must end its practice of offering tax incentives to certain types of businesses.
“Today it is batteries. Tomorrow it is windmills. Then it is bioscience,” Owens said.
The tax incentives, he said, are nothing more than “little bubbles” protecting targeted businesses from an “abysmal business climate” the other businesses have to live in.
The tipping point
Mr. Owens is quite right that the tax spenders/users will outnumber the taxpayers soon if it hasn't happened already. Government jobs are being created by taking those jobs from the private sector. Example: Fire departments fearing they will lose jobs begin transporting EMS patients and billing insurance companies. This drives the local EMS / ambulance service out of business and it stops paying taxes. (All EMS entities in Michigan are licensed under the same rules. Fire EMS is not better than private EMS.) Example: School districts use part, in some cases all, of a school building to run daycare and preschool centers. The local privately owned state licensed daycare / preschool pays it's property taxes that are used by the public school to compete against them. Until they are driven out of business and stop paying taxes altogether.