ANN ARBOR – Although the Legislature receives outstanding short-term analysis from its House and Senate Fiscal agencies, it needs a similar nonpartisan arm with a more long-term approach, an economist said Friday.
Timothy Bartik, senior economist for the Kalamazoo-based W.E. Upjohn Institute for Employment Research, said Washington state has had success with this approach and it would work for Michigan, if lawmakers actually listened to what the staff said.
“No one’s invested in creating that,” he said.
Bartik suggested eight ideas that would help Michigan promote long-term economic development, heavily on investing in targeted tax incentives and investment in preschool and worker skills. The ultimate goal of any economic plan should be higher per capita income, he said.
Bartik also suggested that the state foster a new manufacturing extension service, similar to the popular Michigan State University Extension program that assists the agricultural industry.
Bartik said the total cost of his eight ideas would be $865 million, but using his calculations would raise worker earnings by 2.2 percent.
That’s difficult in a time when the state is scrambling for money – and he said the state needs the will to rework its tax system by broadening the sales tax on services, taxing pensions and creating a graduated income tax while also addressing the cost of public employee benefits. But he also dismissed cheap political programs.
“Let’s be real,” he said. “The state economy is too big for a $10 million program to revolutionize it.”
Above all, the state needs to focus on proven methods of lowering business costs, addressing market failure and raising skills.
“I do not think economic development should be focused on planning the industries of the future,” he said.
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