Governor pushing entrepreneurship for Michigan's economic revival

By Kathy Barks Hoffman

Associated Press Writer

LANSING (AP) -- Gov. Jennifer Granholm is counting on entrepreneurs to bring Michigan's struggling economy back from the brink. So much so that she plans to set aside $200,000 to teach budding entrepreneurs and help provide $43 million for small business loans.

The Democrat governor detailed those and other plans during her hour-long State of the State speech Wednesday.

Granholm said she created an alliance with the Michigan Credit Union League that will make $43 million available for loans to 2,100 small businesses. And she plans to ask the federal government to help fund Project Phoenix to find new uses for abandoned auto factories.

She also said the $200,000 could help teach 1,000 people what they need to know to start a business.

Battered by the shrinking auto industry and a nation-leading unemployment rate of 14.6 percent, Michigan has lost more than 400,000 jobs in the past two years and 1 million during the past decade, including the majority of its auto sector jobs.

"The year that just ended was a dividing line -- the finale of what Time magazine has called the 'Decade from Hell,"' she said. "Michigan has been home to many large employers ... (but) it's time to create a new culture."

To emphasize that fact, Granholm planned to discuss new tools to help small and medium-sized businesses grow and create jobs during a Thursday morning stop at Wayne State University's Tech Town, a business incubator.

The governor also rolled out proposals in her eighth and final State of the State address to restore a popular college scholarship and trim the state work force and public workers' benefits.

Although she started her speech acknowledging the hard times the state has gone through in the past year, Granholm quickly challenged the lawmakers sitting in the audience to compromise on issues ranging from education to job training for the good of the state.

The governor said the state must raise the $30 million annually it needs to fully fund the Pure Michigan tourism ads, as well as the 20 percent match for $2 billion in federal road funds during the next four years.

She said she has a new way to pay for the $4,000-per-student Michigan Promise scholarship and plans to use it as a carrot to keep young people in Michigan once they earn their degrees.

She'll present more details next Thursday when she proposes her spending plan for the budget year that starts Oct. 1. Although she didn't mention raising taxes, it's likely the governor won't be able to close an estimated $1.7 billion shortfall in the next budget year without more revenue.

Motioning to her mother sitting near the podium at the front of the House chamber, Granholm said, "My mom can pinch pennies with the best of them, but she also taught me not to be penny-wise and pound foolish."

Outside the Capitol, nearly 100 people gathered to call for more money for education. They were outnumbered by anti-tax advocates holding signs with slogans such as "Cut the Spending."

That seemed to be Senate Majority Leader Mike Bishop's stance as well. He said in response to Granholm's address that Michigan "cannot afford the government we have."

Where Granholm called in her speech for compromise on "commonsense investments that help create jobs right away," Bishop sounded a more partisan tone, noting that "Republicans have a strategy and stand ready, willing and able to enact it."

Democratic House Speaker Andy Dillon said no lawmakers want to talk about raising revenues until they tackle changes that will save money.

"But I do agree with the governor, the quality of life is part of growing the economy and funding education is part of growing the economy," Dillon said. "We've got to fund Medicaid, we've got to make sure there's a safety net."

The governor said she would block any cuts to public education in the next budget. All school districts saw their state funding cut by the equivalent of $165 per student this year, and 39 districts lost even more.

The governor's message included her plan to save money by offering incentives to 7,000 state workers and 39,000 teachers eligible for retirement to leave. The remaining teachers and state workers would have to start contributing 3 percent toward their pensions and pay 20 percent of their health care costs. One-third of the state workers who retired would not be replaced.

The Michigan Education Association used Twitter to urge its members to call Granholm's office Wednesday afternoon.

"Make sure Gov. Granholm knows your feelings on her latest scheme to balance the budget on your back before she walks to the podium Wednesday night," the state's largest teachers union said on its Web site.

Granholm said Michigan will need time to restore its economy, but the upbeat governor ended her speech by pointing to the new products Michigan companies are producing, from solar shingles to electric cars and wind turbines.

"How about this? Ford is actually bringing jobs back here from Mexico instead of the other way around," she said.

It was a positive note to end on, but Granholm faces a tough time getting lawmakers to finish the budget by July 1 as she suggested or to adopt many of her other proposals.

"We'll see whether she's serious about reform proposals. If she is, the House Republicans are ready to stand with her," House Republican Leader Kevin Elsenheimer said.

Republicans are less likely to go along with any proposals to raise taxes or eliminate tax breaks.

A consensus seems to be building around the state that tax changes are needed if Michigan is to avoid devastating cuts to education and roads, but it's unclear if those changes can get through the Legislature or will have to be put on the ballot through a petition drive.

Even though she's a lame duck, Granholm didn't sound ready to throw in the towel.

"People ask me what it has been like to be governor of Michigan at a time when it has been hit harder than any state in our great nation. Well, to be honest, it has had its moments," she said.

She's sustained, she said, by the hundreds of thousands of Michigan residents who have hit bottom and bounced back by adjusting to the new economy.

"In their strength, their optimism and their contagious courage," she said, "I find nothing but hope for the new Michigan on the other side."

Published: Fri, Feb 5, 2010

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