Remember the near government shutdown in Michigan last year, which came after several years of budget cuts and strong calls to rewrite the state's business tax code?

So many other state's now know our pain, as the National Council of State Legislatures reports:

Previous NCSL reports indicate states closed a $40 billion budget gap in 31 states during legislative sessions earlier this year. Arizona, California and Nevada faced the biggest gaps. Preliminary figures now suggest a new fiscal year 2009 budget gap of $30 billion. "We think it's only going to get worse," NCSL fiscal affairs director Corina Eckl said. A December NCSL report will identify the full amount as it stands before state legislatures go into session in 2009.

NCSL Executive Director William Pound noted some states already have implemented hiring freezes, fund transfers and project delays. Several states, Eckl said, already are looking at budget reductions, with Nevada considering a 14 percent budget cut for the 2010 fiscal period. Many states already are tapping into their "rainy day" funds to help balance budgets.

Michigan Gov. Jennifer Granholm also warns of shortfalls just around the corner.

But the real whiplash this week came in a head-spinning revenue report from the House Fiscal Agency. Despite Michigan's economic doldrums, state budget revenues are up 8.2 percent this year.

Income tax revenues are up 12.7 percent thanks to the hike approved by legislators last fall.

Oddly, sales taxes (a measure of consumer consumption) are up 2.2 percent despite the economy.

But the real quake is business taxes. Total business tax collections are up 42.1 percent this year, thanks to the rewrite from the old SBT to the new MBT and a hefty surcharge passed by the legislature to balance last year's budget. Altogether, businesses are paying $834.5 million more in taxes this year than last.

And if you think business groups are going to take that sitting down, I have some bundled mortgages I'd like to sell you.

It might be time for the Granholm Administration and the legislature to dust off the many cost saving and structural reforms recommended almost two years ago by a bipartisan panel of state budget experts. To date, those reforms have been pretty much ignored in Lansing.

One of the nation's leading business strategists, Harvard guru Micheal Porter, just called for a greater business strategy in Washington. Perhaps his ideas are worth thinking about in Lansing, too. A snippet of Porter's thoughts...

We need a strategy supported by the majority to secure America's economic future. Yet Americans hear the same old divisive arguments. Republicans keep repeating simplistic free-market thinking, even though the absence of all regulation makes no sense. Self-reliance is preached as if no transitional safety net is needed. Some Republicans even argue passionately that the country should have no strategy because that would be "industrial policy." Yet the real issue is not picking industry winners and losers but improving the business environment for all American companies, something we cannot do without identifying our top priorities. Overall, Republicans seem to think business can thrive without healthy social conditions.

Democrats, meanwhile, keep talking as if they want to penalize investment and economic success. They defend unions obstructing change in areas like education, cling to cumbersome regulatory approaches, and resist ways to get litigation costs for business in line with other countries. Democrats equivocate on trade in an irreversibly global economy. They seem to think social progress can be achieved only at the expense of business.

To make America competitive, we have to get beyond this thinking. Political leaders, business leaders, and civil society must begin a respectful, fact-based dialogue about our challenges. We need to focus on competitive reality, not defending past policies.