Editorial

By Alan J. Kilar

Running the State like a business?

Many policy makers in Lansing boast that they run the State like a business. Unfortunately, for
the majority of Michiganders this has not worked.
In the business world, entities exist to make profit for the owner or stockholders. Each action or
decision must answer the question how does it affect the profit margin. Very few, if any,
corporate decisions are made for the common good.
Running the state like a business legislators seek to provide services (products) in the most
cost efficient manner. Their belief is that efficiency means the spending of tax dollars, and thus
less tax.
One reason for the establishment of government is to promote the common good. The American
Constitution itself says that government should promote the general welfare. But today it
appears that many law makers have forgotten this purpose of government and replaced it with the
mantra of cut taxes and thus grow business.
So how has this worked in Michigan? Has it promoted the common good? Michigan has
privatized many services with the claim of same service at lower cost. Most privatization
schemes in Michigan have turned out to be much like the cereal box that remains the same size
but contains less cereal and really cost more. Local communities have privatized school
transportation and custodian duties. Workers were paid less and the contract holder, usually from
outside of the community made a profit. Property and individual taxes did not decrease but tax
dollars were sent out of the community and local employees due to smaller wages had less to
spend in their community. Are our communities better off paying lower wages?
Taxes over the common good
Perhaps the two best examples of the failure of the approach of running the state like a business
are the Detroit Public Schools and the City of Flint. Both entities suffered major collapses of
their tax base due, in part, to businesses moving out of the state looking for cheaper labor
business that were more interested in the profit margin than the common good of the
communities. These are the very same businesses that profited from the wide range of tax cuts
Michigans business community has seen over the last decade.
Running the state like a business legislators came to the rescue by appointing Emergency
Managers for Flint and the Detroit Schools. These managers first mandate was to balance the
budget. So with a diminishing tax base they cut services, wages and growth with limited regard
for the common good.

And that was the beginning of the debacles in Flint and the Detroit Public Schools. The
appointed Emergency Manager of the DPS recently announced his task was to balance the
budget by making tough and necessary cuts. He has eliminated the district's structural budget
deficit and now rodent and mold infestations, leaky roofs, hazardous floors, cold temperatures,
understaffing and supply shortages are the norm of a once proud school system.
The Flint water crisis can be traced back to the Emergency Manager switching from the Detroit
Water system to water from the Flint River--all in an effort to save 20 million dollars with little
regard for the quality of the product.
There is little doubt that if the Governor and Legislature did not give businesses a generous $1.6
million tax cut and instead funded services for communities, Flint would have clean water. In
order to fund the short fall in the state budget caused by the business tax cut, Legislators used
some $6.2 billion in sales tax collections to fill state budget holes rather than fulfill a statutory
revenue sharing promise to local communities. Flint lost out on $54.9 million in revenue.
Cutting business taxes has not been shown to be an effective way to grow jobs. What are needed
are investments in education, and our communities.
Running the State like a business does not work for most Michiganders.
Common good, that which benefits society as a whole, in contrast to the private good of
individuals and sections of society.