Michigan businesses to Whitmer: Focus on talent, stay consistent on taxes

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Creating more skilled workers. Developing more housing in rural areas to attract more workers. Staying consistent on business taxes and regulations.

These are among the policy goals that new Gov. Gretchen Whitmer should consider, business groups across Michigan, from chambers of commerce to small business advocates, told Bridge in advance of the new governor’s first budget presentation.

Whitmer, a Democrat, followed her inaugural State of the State address last month by traveling the state. She and Lt. Gov. Garlin Gilchrist II visited community colleges, local businesses and regional chambers to promote administration plans for infrastructure, schools and workforce training — and getting face time with the people who do that work on the ground every day.

“She listened, and she seemed to really value that input,” said Jackie Krawczak, president and CEO of the Alpena Area Chamber of Commerce.

Michiganders will get a clearer sense for how the first-term governor plans to prioritize — and pay for — her top policy goals to fix the state’s deteriorating roads and provide debt-free college when Whitmer unveils her first budget proposal Tuesday. That budget also will offer insight into how she will approach state tax policy, from raising revenue for roads, to whether she’ll fulfill a campaign pledge to repeal a Snyder-era tax on some retirement income, to the share of income tax paid by individuals and businesses.

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Whitmer’s office did not respond to a request for comment about her ideas for small business policies.

But Whitmer, following an appearance last week at a Michigan Works event in Lansing, told reporters that she heard a resounding call to “fix the damn roads,” her signature campaign slogan.

“I hear it from people of all walks, in every part of our state, business owner to working person alike,” she said. “The cost of maintaining our cars is money out of our bottom line, whether it’s money out of your rent or money out of your profit and your business.”

Business leaders say their ideas aren’t partisan, which could bode well in a new era of divided government in Lansing following eight years of complete GOP control. (Republicans still control the state House and Senate.)

“What we talked about was finding areas of commonality that we could work together with her,” said Veronica Horn, president and CEO of the Saginaw County Chamber of Commerce.

“I don’t care what party you are,” Horn said. “If you’re elected, I need to work with you, and my job is to get some stuff done for this region.”

Here’s a look at some of the issues business groups say they want Lansing to tackle.

Talent

Finding enough qualified, skilled workers to fill job openings has emerged as a top issue for employers across the state. The Michigan Chamber of Commerce and other business groups have said the talent gap is linked to a need to improve the K-12 education system to better prepare students for careers.

Whitmer proposed a state-funded scholarship program to fully cover the cost of community college and pay for two years at a four-year university, as well as a separate program to encourage more adults without degrees to go back to school to complete them. She has not yet said how she will pay for the programs.

These initiatives are a central part of her administration’s goal to increase the percentage of Michiganders with a postsecondary credential or degree to 60 percent by 2030.

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“For us, that was interesting, because we always like to talk about how we approach workforce development (from) cradle to career,” said Adrian Walker, director of government affairs and community relations for the Flint & Genesee Chamber of Commerce, which met with the governor on her recent statewide tour.

The Flint & Genesee chamber offers programs for K-12 students after school and in the summer, and aims to reduce barriers that keep people from being employable, Walker said. That’s why Whitmer’s scholarship and retraining programs are “definitely a great start,” he said.

Krawczak, of the Alpena chamber, said questions remain about the scholarship programs, from the cost to ensuring that students who pursue postsecondary education are earning marketable skills.

“Everyone’s supportive of educational attainment, but not just for the sake of educational attainment,” she said. “Are you getting skills in something that is going to be needed, in a field that you’ll be able to be hired in?”

Horn, of the Saginaw County chamber, said she hopes Whitmer will continue former Gov. Rick Snyder’s $100 million “Marshall Plan for Talent” initiative, designed to create partnerships between schools and businesses to increase the number of students who have skills and credentials for in-demand jobs. The first grants were awarded in December.

The talent program is “critically important to us, and we’re confident that she will continue that focus,” Horn said, adding she also hopes the state will partner with local and regional groups on efforts to recruit college graduates who left Michigan to move home.

Consistent policies

Some business leaders said their goals include maintaining policies enacted during the prior Republican administration that coincided with the state’s post-Great Recession economic recovery.

The National Federation of Independent Business in Michigan, which advocates for small businesses, said it will challenge efforts to raise Michigan’s minimum wage or require employers to offer paid sick leave that are more generous than the watered-down versions of citizen ballot initiatives adopted by the Republican Legislature late last year. It also said it will oppose efforts to create a new tax on small businesses. The Michigan Chamber of Commerce, in its 2019-20 legislative priorities, also says it will oppose efforts to expand taxes, saying Michigan needs to remain economically competitive.

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“We kind of landed in a better place than we would have had we let the ballot proposal(s) just be enacted,” said Charlie Owens, state director of NFIB in Michigan, of the minimum wage and sick leave laws, which take effect in stripped-down form in late March. “We don’t question the good intentions of folks that advocate for these. But the challenge is when you mandate that a business pay for something, you don’t mandate the income (to pay for it).”

Businesses need consistency to effectively operate, said Krawczak, of the Alpena chamber. Uncertainty about major policy changes, such as wage and benefits requirements, affects small businesses in particular that don’t have large human resources staffs to study the impact.

“If minimum wage is going to be this, let’s leave it at that for the next decade,” she said. “Let’s all just be on the same page as to what it’s going to do.”

Rural and affordable housing

In rural areas, particularly in northern Michigan, a shortage of affordable housing has become a workforce issue.

Business groups say the lack of affordable housing that isn’t government-subsidized for low-income residents or high-end luxury apartments is hurting companies’ ability to attract new workers, who can’t find a place to live. And it’s difficult to convince developers to build it because of high costs for materials, property and labor.

Chamber leaders in northern Michigan want the Michigan State Housing Development Authority, the state’s housing agency, to work on potential housing solutions that are unique to rural areas, such as easing requirements for walkability and proximity to amenities like transit when it considers development projects applying for programs like Low Income Housing Tax Credits.

Placing housing developments near dense populations and public amenities is a good idea, said Kent Wood, director of government relations for the Traverse City Area Chamber of Commerce. But in rural areas and small towns like Traverse City, it might make sense to have housing outside of downtown that is still close to amenities, even if it’s not as walkable, he said.

Whitmer “did commit to kind of working through an issue like that and seeing if there was a way to find some solution for it,” Wood said.

Urban redevelopment

Some business leaders in Michigan’s cities say they hope to work with the new administration on efforts to spur redevelopment of old commercial and, in some cases, contaminated property.

Flint, which still is recovering from a devastating lead water crisis that started nearly five years ago, is dealing with new contaminants related to PFAS. The group of chemicals found in everything from firefighting foam to waterproofing materials has affected communities in all parts of Michigan and has the attention of state leaders.

PFAS has been found at General Motors’ former Buick City plant, halting redevelopment efforts.

Whitmer and her team have “been spending a lot more time focusing on this area and what could potentially be done in an economic development standpoint,” said Walker, of the Flint & Genesee Chamber of Commerce.

The community will need to be creative in how it repurposes old brownfield sites, Walker said, adding: “This conversation is definitely something that we look to continue to have.”

More opportunities for entrepreneurs

The Small Business Association of Michigan, which represents small businesses across the state, said it has brought an entrepreneurship economic development strategy to Whitmer’s administration and the Legislature.

The group wants to streamline and expand services aimed at second-stage companies — small businesses that have grown beyond being startups and have plans to continue growing, often those with fewer than 100 employees and up to $50 million in sales.

That could include matchmaking services that help connect small businesses with companies that can become mentors, and with consultants who can offer expertise in areas like exporting or e-commerce. SBAM also would like Whitmer to name a cabinet-level small business advocate within her administration.

The rationale for the idea is to complement the state’s economic development services for startup businesses and tax incentives to lure large corporations, said Brian Calley, SBAM’s president and former Republican lieutenant governor during the Snyder administration. The group’s proposal does not include tax incentives or credits.

“We're talking about providing the types of services that help a business to develop know-how in areas, and that's just the gift that keeps on giving. It doesn't run out like a tax credit,” Calley said.

“The reason that I think this is ripe for wide-scale interest among policymakers is that it takes an economic development approach which is not industry-specific,” he added. “It doesn't focus on just one region or another region of the state.”

It’s also an idea that has bipartisan support, at least in its early stages. Senate Minority Leader Jim Ananich, D-Flint, told Bridge he has talked to Calley about the concept and favors it.

Ananich said legislation is being drafted, though he said he doesn’t know when or in which chamber it will be introduced.

“You make this program successful, it’s going to help everywhere across the state,” Ananich said. “It doesn’t come with a big price tag of having to offer the world to get the company to come in, and it’s (available to) existing Michigan companies.”