A news service for the people of Michigan from the Mackinac Center for Public Policy

News Story

Brian Calley Talks State Government

‘So I’ve personally handled massive tax cuts, multiple massive tax cuts here in our state’

The original interview was conducted in Lansing on April 10, 2018.

EVAN CARTER: Hi there, my name is Evan Carter, I’m a reporter with Michigan Capitol Confidential. Today I’m joined by Lt. Gov. Brian Calley. He’s running as a Republican candidate for governor. Thank you for being with us today, Lt. Gov. Calley.

BRIAN CALLEY: Pleasure to be on with you.

CARTER: So to jump in today, why do you stay in Michigan and what do you most love about this state?

CALLEY: Well, this is where I’m from; this is my home. You know, as I was growing up – most of my growing up was in rural Ionia County, and I met this girl in high school and I was all in. She’s a farm girl and she wasn’t going anywhere, so you know, in the beginning, that was the thing that was the biggest inspiration to stay.

But this is the best state in so many different ways, from the natural resources to the quality of life, to the opportunity, just good strong hardworking people. You know the storied history, but more important than that, the potential for the future, I mean everything about our state is the best and that’s why I’m gonna live here for the rest of my life.

CARTER: Now transitioning into policy. Recently, the general fund in Michigan has put about a billion dollars per year in select tax credits to specific businesses, and last year there was two more tax credits signed that do similar types of things. Would you say that’s a positive thing, or is that a negative one?

CALLEY: Well, I’ve done a lot of work over the course of the last seven years in eliminating tax credits. A lot of my tax policy work has been to simplify the tax code, particularly the corporate tax code, which is the cleanest tax code in the whole nation. And then also, when we eliminated the industrial personal property tax, that was the most abated tax that we had in Michigan, and so instead of having a system where some people pay it and some don’t, we just get rid of the whole thing, for all taxpayers.

So, a lot of the expenses that we see today in tax credits are leftover tax credits from the previous administration, so those have a period of time where they just run their course. The way that it was done in the past was wrong for a lot of reasons. First of all, you can’t make up for a bad environment with tax credits, and that’s what they tried to do in the first decade of the century. The tax situation was uncompetitive, our labor laws were uncompetitive, our regulatory environment was uncompetitive, and so what they would say to business is “if you put up with all this, we’ll pay you.” Well, that just doesn’t work, at the end of the day, you have to have a better environment for everybody. So rule number one is: Tax credits cannot be used to make up for a bad environment. So most of my time and effort has been, how do you make the environment better for everybody?

And then to the extent that there are going to be either tax credits or grants or anything of that nature, my only request is that you have to treat it like an appropriation, that you have to treat it as a spending decision because ultimately that’s what it is. What you’re saying is here’s a project of some sort, and there’s some benefit to overall society that is so great that we’re going to make an appropriation to accomplish it. I think that’s the standard for it, and it’s not an impossible standard to make, but ultimately it should be the exception as opposed to the rule.

CARTER: OK. And then another issue that you’d have to deal with as governor would be criminal justice issues. What do you think about this field of the governorship and is there an issue there that you think is particularly important for you to tackle?

CALLEY: Well, with criminal justice reform, I think this is one of the biggest untold stories of the successes of recent years, where we have taken a treatment-based approach to dealing with crime. Take addiction for example. Over the course of decades, we have tried to treat addiction by putting people in jail and I think it’s safe to say, after all this time, that that has been a spectacular failure. That when you have to treat the addiction itself, and if you treat the addiction, your long-term outcomes are much better.

The other thing is when – the other thing that we’ve really focused on is job training for people that are in prison. So say they approach their release date – why not teach them how to do something like plumbing or carpentry or CNC machine, something in demand, welding, that is in demand, so that when they get out, connect them with an employer and an opportunity to live a different type of a life. We’ve been doing that now for a couple years and making a big difference. Today, in Michigan, recidivism is at its lowest point ever. It’s 28.1 percent. Twenty years ago, it was 45.7 percent. So, when you consider that type of a dramatic improvement, it’s very clear why the prison population is topped out over 50,000 just fell below 40,000.

So we made a lot of great progress, but we can do even more. And it’s the idea of being smart on crime and easy on taxpayers. That’s the beauty of this, is that it doesn’t work and it’s expensive to do it the old-fashioned way, when you just throw the book at everybody and don’t worry about the root causes of the problems. So, mental health diversion courts and veteran-specific efforts and addiction treatment courts and job training — these are the sorts of things where you break the cycle and make a really big difference. So I will continue to stay focused on it. It’s been a real passion of mine because we’ve experienced a lot of great outcomes when it comes to making changes and yet our system is still – the treatment courts are like the exception to the regular system. I think we’re at a point now to where our courts all need to be problem-solving courts.

CARTER: Another thing that would come up on your desk potentially is tax cuts; it’s a hot issue with the Legislature.

CALLEY: Sure.

CARTER: If a tax cut to lower the personal income tax down to 3.9 percent was on your desk, as governor, would you sign it?

CALLEY: Here’s my conditions. I’ve done, handled, more tax credits than anybody else in this race, by far. So I’ve personally handled massive tax cuts, multiple massive tax cuts here in our state.

You have to keep the budget balanced. So what I would want to see is the way that we did it in 2011. We did a massive tax cut, and we did it with the budget, and we showed that we’re gonna keep it balanced. We’re not gonna push it off onto the next generation and ask them to figure it out. That we did at the same time, we promoted a budget that fit in a tax cut, and so we did both conservative things – reduced taxes and keep the budget balanced.

Beyond that though, we have to continue to reduce the debt. So we have a debt payoff schedule that’s in place right now. We’re recognizing now the size of the debt more so than any other administration in the past. You know, others kinda fudged the numbers to make it look like pension liabilities were smaller than they were. We’re realistic in our estimates on what the liability really is, and we’ve been faithful about reducing it. It’s actually been reduced by 23 billion, and that’s something that we can all be proud of. We have a schedule to pay it off completely over the next 20 years. So I would want to make sure that we keep on that path to paying off the debt. We could have a debt-free Michigan. And that’s an important aspect, so the answer is, yes, we can continue to cut taxes, but you gotta do it the right way. You gotta keep the budget balanced and you gotta pay off the debt.

CARTER: OK. Moving into environmental issues, in 2008 former Gov. Jennifer Granholm signed the renewable energy portfolio standard into law, and then Gov. Snyder extended it in 2016. And essentially what it means for viewers is that about 15 percent of the energy produced by energy producers in the state comes from renewable energy sources. Was that a good move to have the RPS, or was that a bad move?

CALLEY: Well, I think generally speaking that, at least, the major utilities are moving in that direction anyway, so I don’t know that as a practical implication it made that big of a difference either way. But generally speaking, the market should drive these decisions and what the best type – there’s gonna be environmental requirements regarding pollution, particularly considering our natural resources and our special heritage and responsibility here is being the stewards of the largest deposit of freshwater anywhere in the country, or in the world. But ultimately, given that, the way that our electricity is produced – finding the lowest cost, most reliable sources of electricity that meet our environmental standards – that’s what should drive the decisions, not an arbitrary standard.

CARTER: And then another issue in energy is the cost. According to the EIA – it’s the government agency that tracks energy use in the United States – Michigan has, on average, the highest residential electricity rates in the Midwest. As governor, what would you do to address those electricity rates for consumers?

CALLEY: Well one thing I think we need to accommodate more easily is this transition to natural gas. It’s a domestic source. So importing, in the old days, you know, over time, we were always importing our energy, our base energy source, from other places, we’d buy it in other states – coal – and then have to bring it to Michigan. And so there’s just extra expense with that. But now there’s been so many huge natural gas deposits that have found in Michigan, that I think it’s time to really build up the electrical infrastructure around that domestic source.

So I think we have opportunities for additional savings, and the beauty about that is that it burns clean. There’s no emission left over from natural gas. You kinda get the best of both worlds, you get a cleaner environment and you have a domestic source.

CARTER: So are there any issues that you think make life harder in Michigan for the state’s low-income residents?

CALLEY: The way that our social service system works right now, I think too often, it holds people down. It creates disincentives to go out there and take chances and get back to work. Because we have these cliffs, right, there’s – and most of them are federal programs that are just administered by the state — but there’s a cliff where it says well, you know you’ve got an income level, and if you’re below that income level, then you’re in, you get that support, if you’re one dollar above, you’re out.

And so what happens is people tend to manage their lives underneath that line. And that’s not good, it’s not good for them, it’s not good for our society. And yet, you know it creates that disincentive to go out there and try because, you know, it’s perceived as being very high risk so we really have to help people to get back to work and have the confidence to do so. And one thing that we could do is work with the federal government, and kinda just help people to get a glide path off. I think there are people that want to go back to work and kinda feel trapped in our social service system. So I would transform our social service system into – the very application, so somebody needs help, they make an application to get help – transform that very application into making a plan for independence. What we should be expecting is that a person becomes as independent as they possibly can. A person may have a disability or something where they’re always gonna require some help, but even people with disabilities want to be more independent. And this is something that I think our social service system kind of misses, that instead of – it’s not good enough just to sustain or help a person survive at a point of dependence — it’s important that we help them live a life of dependence, and reach their full potential, and go out there and live a more self-determined life.

CARTER: Is there an issue that you think is really, really important that we have not covered so far? What’s the most pressing issue in the state right now?

CALLEY: Well, there are two things that I would point to. First is our public education system. It needs a lot of work. We have to ensure that our kids, there’s lots of early childhood efforts, and yet kids are still coming to school not ready to learn. And then the literacy rates in our state need to be improved. Special education – we cannot set aside or brush aside the needs of kids that have disabilities. We have to teach them, too, and effectively teach them. We need to bring back skilled trades to our high schools; use the trades to teach the academics and not take this one-size-fits-all approach. I mean there’s so many important things or aspects to it, but we’ve got to do better with our primary education system.

And then, the other thing I’d point to is roads. Now we do have a package phasing in right now. This year there’ll be more going to roads in better ways than in the past, than we’ve ever had before, that’ll phase and that’ll get up to about $1.2 billion. Now when you put the 1.2 billion extra, along with the changes and increases in the standards of the roads, which really only make a difference when you’re replacing the road – you know, repairs on a 40-year-old road don’t hold together no matter how hard you try. A lot of our roads just need to flat out need to be replaced. We also need to be more efficient. We have two pilots that are going now on integrated asset management, and what this means is you take everybody who is sharing the right of way in roads, so you have – there’s literally hundreds or even thousands of entities around the state that share the rights of way, so you got roads, townships, and counties, and villages, and the state, along with utilities, and electricity, and communications, infrastructure, water and sewer, you know all these different entities that share that same right of way. They’re all doing independent maintenance and repair and replacement work. So if you were to coordinate all of that action, so that when you tear up the road you only do it once, and while you’re doing that you do whatever water infrastructure work needs to be done, you maybe bury the electric cable at the time or whatever, you do all of that at the same time, then everybody ends up saving. Could be very substantial savings. The pilots we have going right now will prove that out, but taking that concept statewide will help the current dollars go even further.

And then engineering projects better is important as well. We’re on the front end of making these changes, but on M-23, for example, near Ann Arbor, there was a need for an additional lane going both ways. Well, when you add in a lane you gotta widen bridges that are crossing over the freeway – it’s a really really expensive – that’s gonna be $400 million. Well, our transportation fund can’t handle an extra $400 million, so what we did instead was we made modifications to the shoulders and made the road smart roads, so you could temporarily turn the shoulder into a lane during the rush hour traffic times, and then add smart signage up where it showed drivers, told drivers, what to do in those cases where the shoulders being used as a lane, and it turned a $400 million project into a $100 million project. And so those types of changes will help the dollars go further.

So our infrastructure, multiple administrations in a row, have let it fall into disrepair to the point where now you just have so many 40-year-old roads built to 20-year-old specifications. So there’s a ton of work that needs to be done, but that work has begun, and as we ramp up these efforts of accelerating the repairs and replacements themselves, building them to higher and better standards, and engineering them more efficiently, and implementing integrated asset management, we’ll have a better future for our state.

CARTER: Lieutenant Governor, thank you so much for your time.

CALLEY: Great to be with you.

CARTER: Follow us at micapcon.com and on Facebook for more interviews with gubernatorial candidates in the coming months, and if you enjoy our analysis of politics and policy, check us out as well. Thank you so much for watching today.

This is the fourth interview in a series of five interviews with Michigan gubernatorial candidates we will be releasing throughout May and June. In addition to this interview with Lt. Gov. Brian Calley, we also interviewed State Sen. Patrick Colbeck, Dr. Jim Hines, Attorney General Bill Schuette, all Republicans, and Shri Thanedar, a Democrat. Michigan Capitol Confidential reached out to Democrats Dr. Abdul El-Sayed, businessman Bill Cobbs and former State Sen. Gretchen Whitmer but was unable to secure interviews with them.