I read in the Detroit News this morning that you have been appointed to the new panel that will make recommendations to the Governor on how to address the budget deficit. Are "congratulations" or "sympathy" in order?

I have listened to many discussions and read many opinion pieces about what to do with Michigan's structural deficit and the deficiencies with our tax structure and the need to "transform" it to reflect the 21str Century. I have read or heard very little discussion about "transforming" the Michigan government structure. We have an awful lot of layers of municipal government (with townships, villages, cities, counties and special purpose service districts) and school government (with K-12 school districts, county school districts, charter school districts, community colleges, 4-year colleges and universities and a myriad of specials training entities). All of these levels require revenue and there is really only one source for that (other than federal programs) and that is the taxpayers of the state, both individual and businesses.

So I would urge your panel to not only look at how to better fund government, but also how to better structure government and perhaps recommend ways that the levels and number of tax supported entities can be reorganized and streamlined to better serve our public needs. Perhaps your panel should consider a sort of "pay as you go" approach - for every dollar of new revenue that is raised, a dollar of cost should be removed, not necessarily by cutting programs or reducing services, but by funding better (and perhaps fewer) delivery structures.

Good Luck!

Make the legislators part-time

Eliminate the townships

Reduce the Intermediate school districts by 50%

Reduce the school districts by 50%

Come on!

Government spending is the other end of the equation. If you pay unemployment, which sounds good, you end with more unemployed because you remove the incentive to work until the "rocking chair money" runs out.

Michigan has had the luxury of having a large oligopoly, the auto industry, paying large sums into the state coffers. Now the auto industry is sick and the state has not come to terms with the lack of income. They are frantically shifting tax payments forward; recently they directed that number of dependents for Michigan income tax be reset automatically to zero for 2007. Made property taxes payable sooner.

Michigan government doesn't quite get it. The party is over and now it is time to go on a diet. Even it Michigan goes on a diet, which it must, this will not bring back the halcyon days of manufacturing. The US government is at a disadvantage to our trading partners since they have Value Added Taxes which are basically Chemo Therapy towards imports.

We have both a state problem of living in the past and a national problem that the states cannot fix no matter how they fight amongst themselves for the shrinking manufacturing base.

That's my take

Overall, the Center's policy memo outlined some significant ideas that need to be seriously considered for Michigan to have a sound budget structure. I have three quick comments on ways that the Center's policy package could be improved. I have focused my comments on areas in which I have some research background.

1. The Center's package mentions measuring the performance of public schools, among other public entities. Measuring the performance of public organizations is a great idea that can do a lot of good, but only if we can accurately measure true performance. Purported "performance measures" that in fact do not measure true performance can do more harm them good, as we may end up punishing the truly good performers and rewarding the bad performers. In the case of public schools, good performance measures will have to squarely face up to the thorny issue of how to adjust for the characteristics of students that affect such educationally relevant factors as how much students know when they enter school and how much learning they lose during the summer. Michigan has been unwilling to face this issue as of yet in evaluating the performance of public schools.

2. The Center's package mentions broadening the business tax base and lowering the rate. A more efficient business tax reform, rather than lowering the overall rate, would focus lower business tax rates on businesses that make new investments in Michigan and create new jobs in Michigan. This can be done through careful design of investment tax credits and job creation tax credits. Such a business tax reform focuses business tax relief on maximizing new business investment and job creation in Michigan.

3. The Center's package only briefly mentions developing proposals to improve the economic future of Michigan citizens. It seems to me this must be a central focus of any budget reform package. If Michigan citizens are going to go through the sacrifices implied by a budget package that significantly increases some taxes and significantly reduces some services, this package should be designed so that it is sufficient to provide significant financing for a redevelopment of the state's economy. How can we improve Michigan's future economic development? A budget package that lowered tax rates on new business investment and job creation, while investing in the long-run job skills of the state's citizens (human capital investments) and the quality of the state's infrastructure would help improve the long-run health of the state's economy. I already mentioned above how we could keep the current level of state business tax revenues, yet lower tax rates on new investment, by closing various tax loopholes and broadening the business tax base. There also are a variety of alternative policies that might significantly improve the state's human capital, include some statewide variant of the Kalamazoo Promise, statewide high school pull-out programs for math and science, universal high-quality preschool education, and customized job training.

Generating more revenue: Go after the tourist dollar, esp. from places like Florida, Southern States this summer. When are we going to start getting serious about attracting people from Toronto, Chicago, New York, Atlanta, D.C, and yes, from Japan, to "give Detroit and Michigan a try"? Virtually nothing is being done to package Detroit's music (gospel, jazz, Motown, Blues, techno, etc.) Yes, we have a couple of big events each year, but where's the effort to package tours all the time?

A six-pack of ideas:

Stop pretending. Michigan's leaders have to level with residents. The only way to honestly balance a budget is to cut expenses, raise revenue, or a combination of both.

Our "fiscal crisis" exists because Michigan's leaders have not made the structural changes necessary to align income and expenditures. You cannot cut taxes while maintaining and increasing funding and services simultaneously. Pretending is not a solution.

Ask yourself -- if you found this great peninsula, with 10 million people and 1.7 million K-12 school age students confronting this disruptive, technologically driven, transformational global economy, would you create 83 counties, establish 500 cities, constitute more than 1,200 townships, spawn nearly 800 traditional and charter school districts, spend more to lock up people in jails and prisons than to educate them, have school funding increases go toward pension and health care insurance for current and retired school personnel?
If your answers to the above are "no," you may wonder how we change. Lansing must stop funding a system of governance that is outmoded, expensive, ineffective and inefficient. Schools and local units of governments cannot and will not reform themselves without the push from Lansing.

Let the sunshine in. Peel back the cost of government, make it immediately available to the public and let them see where the money is spent. Ask the residents ofMichigan,"Is this what we are willing to pay for?" For example -- should school districts provide pensions to part-time substitute teachers?
Should school districts provide lifetime health benefits for employees who work for a distinct for only five years?

Could we reduce overhead costs through consolidation and joint operating agreements, redirecting the savings to the classroom?

(See www.michigan.gov/documents/michiganschoolfunding_110803_7.pdf for a report I wrote while state superintendent 󞪁-05]that provides additional examples).

Scrutinize the entire tax structure. Provide the same level of scrutiny and exposure for the special tax breaks and loopholes provided to various businesses over the years.
Are these "exceptions to the rules" good public policy or simply good for the lobbyist securing them for businesses? Tighten or eliminate existing and future loopholes that rob the state treasury of necessary resources.

Appropriately define the problem. If the problem is a nail, the solution is a hammer. However, a hammer can be used to drive the nail in or pull it out. Michigan's leaders must stop defining the problem solely as a "funding/revenue crisis." If the governor's appointed emergency financial advisers view the problem as solely a funding problem, we all are likely to get hammered by new taxes.

Invest in our future. Be willing to invest as well as cut. We must help the most vulnerable, educate our children and assure we are safe and secure. Our elected leaders must take on the special interests and cut not only services, but also unaffordable tax breaks as noted above. Our goal must be to become the brain bank of the world, where knowledge, creativity, innovation and education are valued investments, where people the world over come for deposits and withdrawals.
We must:

Cut costs and then invest. Michigan should borrow or tax to provide necessary and immediate resources for our children's education. Continuing to cut money from our schools and universitiesis the equivalent of a farmer eating his seed corn. These funds should be provided only after the Legislature takes action to cut administrative (including retirement and health care) costs and redirect the resources to the classroom.

Create a state fund that will provide a 40-percent match to a local community's efforts to mirror a Kalamazoo Promise (www.kalamazoopublicschools.com) or guaranteed college funding to a two- or four-year state college or university.

Catch up with other states and nations by investing in high-quality preschool programs. Research has documented that investment in our youngest children (birth to age 5) has tremendous payoff to society in terms of reduced delinquency and higher achievement rates, building the foundation for success later in life.

The state that invests in its people will be the state that thrives in the 21st century knowledge economy. This is not a short-term investment. We must plant a tree, knowing that future generations of Michigan citizens will enjoy the shade.
The governor must force change. She must set clear goals, objectives and measurements for operating a government that provides transparency about how money is being spent and invested. She must provide the vision and hope for the "next Michigan" and show how these sacrifices will make a better Michigan.

Maintaining the status quo or dabbling around the edgeswill not get our heads out of the sand or take us where we need to go.

The time is now for bold and courageous leadership to get Michigan out of the rut.

Tom Watkins is a business and education consultant. He served as state superintendent of schools from 2001-05 and state mental health director from 1986-90. Read his internationally recognized report, The New Education (R)evolution, at www.nacol.org. He can be reached at tdwatkins@aol.com.

The Observer and Eccentric Newspapers 2/8/07

Establishing a statewide "scorecard" will only add more costs and more bureaucracy for teachers and administrators to suffer along with that created by the federal No Child Left Behind law which is supposed to require schools to meet certain minimum quality standards. These standards have resulted in odd findings such as schools in Birmingham's excellent system, found to be deficient not because of low test scores but because not enough students opt to take the MEAP. I do not live in the Birmingham district but see other schools also suffer from the odd set of measurements which NCLB seeks to enforce. State standards will require more state administrators, paperwork, and other duplicative efforts. Let teachers teach and let school administrators focus on their schools. Since Chicago divided up its school disrict and put it under local community control, there has been a vast improvement in a system which William Bennet once called the "worst in the nation". These changes were not without controversy but the quality of most of Chicago's schools has risen significantly. When local communities are allowed to control the oversight and funding of their schools, there will be improvements.

As we see in Pfizer's move from Michigan, our economic future is less tied to our tax structure (we've been cutting for years to what effect?) and more tied to how much we are willing to invest (in education, in research and development, in cutting edge sciences and technologies) and how well we do with those investments. But for one drug that looked so promising and ended up being unsafe and unmarketable, Pfizer's entire future changed.

We need to invest both private and public monies and energies into "knowledge entrepreneurs" with the education and background to successfully develop commercially viable products that will form the basis for a new economy. Let's leverage our universities to the fullest and infuse them with money to fund thousands of incubators. Let's be sure we are educating our K-12 students for the fast-changing world they will be living in, where change will come at an even faster pace than today (check out http://www.mi-life.org/MEMSPA/Did%20You%20Knowwith%20logo.ppt).

And let's not make our government and school employees scapegoats. They've taken it on the chin economically just like every one else. They're paying more in co-payments, higher out-of-pocket costs and getting fewer health benefits too.

Thanks for the opportunity to join the dialogue.

In a recent survey of Michigan Parents 71% indicated that there children did not need any higher education for a quality of life,,,this trails all but one state Mississippi

Our leaders fight over giving the incentives to educators to begin continue and stay with the career they chose in Michigan

After 12 years of Republican " no new taxes" as the simple solution to getting elected by dividing all of us,,, now we now have a mess we could have forecasted had we had the political leadership to bring us together,,

We now have the choice''''' we will have to raise taxes'''' we have to get serious about education and this will include more not less money for education''''''''and yes anyone who proposes the 'no new taxes',,,,,,approach to solving our many problems should be ignored

people first,,,,politics second