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Dick & Jen: The State of the State

By Curt Wozniak
Photography by Johnny Quirin

Michigan’s 2006 gubernatorial election promises to be close — but in terms of style, personality and plans, the two major party candidates are miles apart.

Michigan’s Democratic governor Jennifer Granholm and her Republican challenger, West Michigan businessman Dick DeVos, both spoke with Grand Rapids Magazine by phone earlier this summer.

The candidates’ responses to a series of questions touching on the major themes of the campaign reveal two different leaders with two different visions for the future of the state. What they have in common is a shared appreciation for the important role West Michigan will play in that future.

The DeVos interview was conducted the evening of June 28, as the retired Alticor president campaigned through Livingston County, just outside the city of Detroit. The Granholm interview was conducted the afternoon of July 12, just after the governor had toured Konica Minolta’s American Litho plant in Kentwood.

The Economy
GRANHOLM: Clearly, Michigan is going through an economic transition as our economy has been challenged by globalization, by trade agreements that make it easy to pay $1 or $1.50 an hour (to workers) in Mexico or China. And our concentration is in the automotive manufacturing sector. So when GM is troubled or when Ford is challenged, Delphi and Visteon — the suppliers — or the suppliers to the suppliers, that means we are challenged. The question is: What are we going to do about it? And that’s why it’s crucial to have set in motion an economic plan that is second to none. … This is why we have aggressively focused on investing in creating jobs today, investing in diversifying our economy to create jobs tomorrow, and investing in all of our citizens so that they can be competitive in the 21st century.

We just announced that Google has chosen Michigan for its new 1,000-job expansion. We’ve got huge positive strides in the research and development aspects of our state. For example, last year, research and development in the country grew by 3 percent, but in Michigan, it grew by 51 percent. We’ve got a tremendously skilled work force, we’ve got the best quality of life in the country, we’re affordable, we’ve got a university system that is second to none, we have a huge automotive endowment, but that endowment is something we can embrace — the manufacturing endowment. We know that we are probably not going to be making fan belts anymore, but you better believe the high-end aspect of manufacturing, the technology that layers into the manufacturing process, keeping the jobs that we’ve got, all of that is huge and a huge opportunity for us.

And one of the other things that I think is a great opportunity for us, too — a natural niche — is our agricultural sector. We’ve got all of this farmland, this wonderful agricultural heritage, and now it’s poised to move into creating opportunities in alternative energy: ethanol, soy- and bio-diesel, etc.

When you combine the automotive legacy as well as our agricultural state with being the Great Lakes State and our love for the environment, we could position ourselves and we are positioning ourselves to be the alternative energy capital of the United States. …

I proposed, pushed through the legislature and signed into law this 21st Century Jobs Fund. It is a $2 billion investment in diversifying our economy in four areas: homeland security and defense, alternative energy, advanced manufacturing and life sciences. Grand Rapids obviously has a natural niche in the life sciences area, and we want to continue to promote that. But in that first round of funding, 500 companies applied to come to Michigan, to grow in Michigan in those four areas, and to hire people in Michigan. That is a significant step toward diversifying, and the first round of funds will be awarded this summer. So that’s going to be another huge step toward diversifying our economy.

DEVOS: I’ve traveled to all 83 counties now over this past year, and … it’s very clear that the people of Michigan are looking for someone who understands how to turn an economy around, who understands how to create jobs, and who understands how to get people working together. And that’s what I would bring to the governor’s office. … The problem for us right now is that we don’t have enough “lift” happening in the rest of the economy within other sectors to offset the downturn we’re seeing in the automobile sector. … We have got to unshackle the rest of our economy to get growing. …

The governor identified one area four years ago — getting rid of the SBT (Single Business Tax) — but unfortunately has not accomplished that. … We have got to step forward and we have got to deal with some of these issues that result in Michigan businesses not investing with confidence in their future, and other job providers choosing not to come to Michigan, most recently Honda electing Indiana and virtually not even considering Michigan. That was very unfortunate news once again for Michigan, showing how important it is that we need to get the policy right, and that we also have leadership that understands the reality of business and understands the international marketplace that has both challenges and opportunities. …

I think that there are some good things that have been happening in West Michigan, and some encouraging signs. We went through a lot of our downturn previously with the furniture industry, which is now beginning to experience some recovery. But once again, the fact that Michigan is struggling overall — the governor’s responsibility is to create a climate for the entire state. How much better could West Michigan be if we had a governor in office who really understood what it was going to take to create jobs in a way that somebody who’s been in the private sector and has run a business understands?

The Single Business Tax (SBT)
DEVOS: The DeVos administration’s primary focus and initial focus will be an across-the-board improvement in the business environment in Michigan. By eliminating the SBT and moving to a better, fairer, simpler tax methodology for business, we positively impact all business sectors without trying to choose between insurance companies and manufacturers. We need both in Michigan. We need more of both in Michigan.

And we’re going to do what we can to improve the fundamental climate. Where there are opportunities for us and where we need to step in to offer incentives to make sure that we are competitive with other states, we will do that where we have to. But right now, we find ourselves in a situation where we have to virtually offer incentives for everything because we don’t have the fundamental environment that is naturally attracting not only business to Michigan, but attracting growth from our existing Michigan businesses, from our small and medium-sized businesses who are so important to our economic future and to job creation. Between 65 and 75 percent of jobs will be created in small to medium-sized businesses. They’re not the ones that get the special grants and consideration. They need a positive environment that they’re willing to invest into.

Our small companies today, if we nurture them and give them a great, fertile environment, can grow to become our great companies of tomorrow.

The SBT is one example, a very tangible step that can be taken. But … it is a combination of factors that we have to get right. We have to get our tax climate right. We have to get our regulatory climate right. We have to get our education and job preparation/job training climate right. Those are all going to be elements to business attraction and to business retention.

There isn’t a single silver bullet and we’re not going to be able to exclusively deal with this issue on the tax side, but to be sure: The tax side must be dealt with.

GRANHOLM: We need to restructure the Single Business Tax, and I have a specific proposal to do just that. I’ve had it since last year. I put it on the table. It would lower the rate by 37 percent. It would lower the rate for small businesses who pay the single business tax by 40 percent. It would remove the loopholes, it would simplify it, and it would make it more profit-sensitive. It’s called the Michigan Jobs and Investment Act.

Now, the Single Business Tax needs to be changed, but it is not the reason that Michigan’s economy is challenged. Michigan’s economy is challenged because we have a concentration of automotive and manufacturing jobs that are struggling in a global economy where people can pay $1 an hour in China. That’s what is challenging our economy.

But does (the SBT) need to be changed? Yes. Do I have a specific proposal to do this? Yes. Are we going to get this done? Yes, we will. But it is not the reason. The way we are going to evolve going forward is by investing in our intellectual capital, by investing in a skilled work force, by investing in education.

These technology companies will tell you universally that they appreciate the tax breaks, but the decision-making factor for them will be the states that have the most well-educated work forces. Bill Gates came to the National Council on State Legislatures recently and said the same thing. … That’s why the Google announcement, locating in Ann Arbor where we’ve got this tremendous cluster of young people who are coming out of school and who we want to keep in Michigan, it’s the example of how we’ve got to move in this century.

West Michigan’s Role
GRANHOLM: West Michigan has been doing well, at least certainly faring better than other parts of the state, because West Michigan has diversified. The emerging life sciences/medical device area that Grand Rapids has taken on and carved out as a niche is a wonderful example of a community coming together and deciding that it is going to diversify. That whole Medical Mile and the Van Andel Institute and all of the activity that’s going on there around health care is very exciting for West Michigan, for Grand Rapids, but also for the state to attract other companies that want to hire people in that area. It’s a growth area for the country, and West Michigan and Grand Rapids are setting the pace.

DEVOS: I think West Michigan has grown in importance in the state over my lifetime of over 50 years in Michigan. Where Grand Rapids used to be considered sort of an economic oversight, now Grand Rapids is a huge contributor. And I’m pleased to say that as I speak to the leaders in Southeast Michigan, that they really are looking to the lessons we’ve learned in Grand Rapids that have helped build our community, to translate some of those lessons to Southeast Michigan. So Grand Rapids is really contributing not only economic growth, but also, given what we have been able to do within the city and in the community, as a contributor of ideas and innovation in community growth and expansion.

Campaign Spending
DEVOS: My goal in this race from a fundraising standpoint is just to keep even. My opponent has set new spending records in every election she has run in. … And I will not be at all surprised if we are outspent in this race by my opponent. So, it is an extraordinary amount of money that is spent; but from my standpoint, my wife, Betsy, and I view it as our way of investing in Michigan’s future. We care desperately about this state. We think leadership matters, and we’d like to see leadership in Lansing, and we are prepared to step up and not only offer our financial support and financial investment in Michigan, but our time and our talent, as well. We want to put that all on the table to do what we can to make a difference in a state that we care so much about and, frankly, a state that has blessed us and been such a wonderful place to live and raise a family. We’d like that tradition to continue for our children, and our children’s children.

GRANHOLM: My opponent has been on the air since February. I haven’t run any ads of my own at this point (July 12). And it’s an unprecedented level of spending — $10 million so far, at least on the air.

But the message that needs to be sent to voters is that they will have a choice in this election. This is not going to be about two candidates who sound alike. There’s going to be a very different point of view, a very different perspective on how Michigan needs to come out of this economic slump, and very different perspectives on the role that investment in citizens plays in our economic growth.

So I’m excited about the contrast, and I’m excited about offering people a choice. Do people want to go back to the policies, and the people who supported the policies, that got us into this challenge in the first place? Or do we want to think differently about how we get out of this challenge? And my economic plan is a plan to invest in getting out of this challenge. And it is a plan to invest not by raising taxes, but by creatively partnering, drawing down tobacco settlement money, bonding, taking advantage of our low per-capita debt, drawing down federal dollars to invest $6 billion dollars in our state to pull us out. It is a different philosophy, and I’m excited about the opportunity to present those contrasts. Budget Priorities:

What Is on Your “Cut List”?
GRANHOLM: When I arrived here, I inherited, cumulatively, a $4 billion budget deficit. I’ve had to resolve the largest budget deficits of any governor in the history of Michigan. I’ve had to cut more out of state government than any governor in the history of Michigan. And we’ve done it by partnering. We’ve done it by looking at government top-to-bottom totally differently. … We have found entirely creative ways of making sure that people’s priorities are protected, and yet, broken down the silos of government in order to serve people better — leveraging technology, streamlining the bureaucracy.

One quick example: When I got here, it took 18 months to get an air quality permit if somebody wanted to site a factory in Michigan. And that is ridiculous. So we had a whole program of bureaucracy-busting set into place, leveraging technology, putting all permits online. I challenged our (Department of Environmental Quality) to be the fastest permitting state in the nation. Our permitting time has since been reduced by 66 percent, with some permits now given in 24 hours or less. Every permit is online. And as a result of leveraging technology like that, we were voted by the Center for Digital Government, which analyzes all government use of technology, to be the most digitally-friendly state in the nation. …

I am a very good manager, and good at identifying the opportunities for streamlining. We are in the process of continual improvement, and so I know that in the second term, we will continually identify places where we can streamline, where we can cut waste, and where we can leverage technology.

DEVOS: I’ve suggested a few programs. One, the auditor general came back with $55 million in fraud just from the Medicaid program alone — we have to get rid of that. Second, we have a policy that is limiting our ability to seek competitive purchasing for health insurance for teachers. Just by acquiring insurance differently — not changing insurance, but acquiring it differently — some suggest we could save $100 million to $200 million per year. We cannot continue to let that sort of savings go unresolved. Our kids need that money in the classroom, not in wasteful spending. Third, we have duplication. An example is that you have a director of the Department of Health, and you also have a surgeon general in this state, the surgeon general position being largely ceremonial with no direct line of responsibility. One must ask: In a time of fiscal restraint, is that duplication necessary? I would say no.

Obviously, another area — and I say it with a smile on my face — in a DeVos administration, there is no need for an office of the first gentleman. That’s a $250,000 budget item. It’s wonderful to have, but in a time of fiscal restraint, is it truly essential? I would say no.

Budget Priorities: What Is on Your Preserve List?
DEVOS: Number one is safety and security. Nothing happens right in a society that is not safe and secure. The fact of the matter is the current administration has allowed the number of uniformed police officers to go down by some 1,500. That’s 1,500 less uniformed officers today in Michigan than there were on 9/11. This is a serious problem.

Second is our education system — higher education and K-12. Not only do we need to spend our money more wisely, but education remains a critical priority. Money is not, however, the answer. But money is going to be necessary for us to recapture educational leadership in this country, because our challenge for intellectual capital is not going to be just from Ohio and Indiana; it’s going to be from China and India. And we need to make sure our kids are prepared.

GRANHOLM: Public education — critical for our future.

Health care — I’ve been a stalwart supporter of keeping health care, particularly Medicaid for seniors, pregnant women, children and people with disabilities.

I really want to protect funding for higher education. They’ve seen enough cuts. And I want to restore funding for public safety in the form of revenue sharing. We have to have a good quality of life and make sure that our citizens are safe. And frankly, I would like to see creative ways to partner among communities to increase investment in quality of life issues apart from public safety, like parks, bike paths, rail trails and spaces that make cool cities — those kinds of things that really attract a young work force and make communities dynamic.

Education Priorities
GRANHOLM: I am committed to doubling the number of college graduates in Michigan. It is the way we are going to become the most robust economy in the nation. And it is also very clear that it was the policies of my predecessor to slash taxes, slash funding, that caused this huge deficit to arrive at my doorstep when I got here. When you slash the Single Business Tax and don’t offer a replacement for it, it is higher education that gets hurt.

Those proposing — like my opponent — elimination of the Single Business Tax without full replacement are going to cut the programs like higher education that we need to succeed in the 21st century.

One of the things that I proposed to the legislature is to expand our Michigan Merit scholarship to provide a $4,000 scholarship for every single child in the state of Michigan, regardless of whether they pass a standardized test. We want every child to see themselves as college material, and we want to help every working family, middle-class family, with the tuition to help get them there. Unfortunately, the Republican majority in the legislature has not done that. I’ve called for this for two years now, and they have still not done it, even though we’ve got a way to pay for it. We’ve got a way to finance it using tobacco settlement money. In the same way that we’ve seen the Kalamazoo Promise have a tremendous impact on that community, forming our own Michigan Promise to be a partner with families to say that we are going to essentially pay for K-14, which means $4,000 gets you the equivalent of two years of community college tuition. That would be a huge statement about our commitment to higher education.

DEVOS: We would move more resources to the classroom and set up a clear objective to moving resources to the classroom and … finding ways to save money that’s being wasted and reallocate it into the classroom where we serve our kids. If we move from where we are today — where 57 percent of our state funding to schools, K-12, goes to the classroom … — if we moved to 65 percent, which would put us amongst the top 10 best in the country in that one dimension, that would move $1 billion into the classroom. It’s not just putting money into the top; it’s where we spend the money that really counts. And money needs to be spent on our kids and in the classroom.

The second thing is that I would expand choices and options for parents. I have been a longstanding supporter of charter schools. The governor has refused to allow for expansion of charter schools despite the fact that there are parents standing in line for choices and options that they think will serve them and their children better. The governor has not allowed it. In the city of Detroit in particular, the governor (said no to) a very generous gentleman who wanted to give $200 million to the city to build schools for the kids of Detroit without requiring anyone to go to any schools — it would have been free choice. He said he would build schools, with the only requirement being high graduation rates and continuation to college, and the governor said no.

This is just unacceptable to take away that kind of opportunity for kids in the city of Detroit. … Charter schools and traditional schools are both public schools; the question is how they’re operated and focused. And charter schools are making a great contribution. And if they’re working well, we should be looking to have more.

The governor talks about wanting every child to have access to a college education, but this governor has cut funding for universities three out of four years. This year, spending is up for universities. … I guess one could cynically suggest that’s because it’s an election year, but the point is, for the three years prior, this governor cut funding for higher education, despite saying that we need to be doing a better job of educating our kids. I think that’s sending all the wrong signals.

DEVOS: I am not interested in seeing any further expansion of casino gaming in Michigan. I do believe 23 is enough, that the current number of casinos is quite sufficient for those who would like to take advantage and use them as a recreation alternative. And so I would work actively with Washington to deal with this issue, because it isn’t just a Michigan issue. It is a national issue. … The governor advocated expanding casinos, expanding gaming in Michigan. I was on the other side of that debate. …

GRANHOLM: The Gun Lake situation is in court, and once their land is put in trust — if it is put in trust — it’s a different question, but currently it’s somewhat on hold. If the federal government puts the land in trust, the state must — in my opinion — negotiate a compact. Otherwise, if you don’t get the benefit of the tribe’s contribution to the state, then you will have gotten nothing for it. If the federal government puts the land into trust and grants the tribe the ability to have a casino without the state’s input, then there’s no means for the state to be able to get any kind of contribution from the tribe at all.

So, I don’t think gambling is going to be the way of our future, but I do know that once that land gets put into trust, we’re going to get the best deal we possibly can for the state of Michigan.

West Michigan Voters
GRANHOLM: You know, I’ve been to West Michigan so many times as attorney general and as governor, I feel very grateful to West Michigan. I think the voters of West Michigan were very significant in my being able to be governor. Clearly, the opponent’s family is from West Michigan and therefore he may have some residual benefit from that, but I also think that the people of West Michigan are open-minded and fair and certainly will understand the need to support the candidate who has the best specific plans for Michigan’s future.

There has been sort of a historic legacy of pitting east against west. I think that’s very unfortunate. We are one Michigan, and we ought to behave as though we are one Michigan. When Grand Rapids is successful, the whole state is successful. When Detroit is successful, the whole state is successful. We ought to be cheering one another on and glorying in, basking in each other’s successes.

DEVOS: West Michigan, they do know us. … I think that represents a strong benefit to my candidacy: the strength of support, the depth of support in West Michigan. My challenge, of course, is to spend time and communicate my message in Southeast Michigan, and that’s what I’m intending to do — without ignoring the west. GR

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