ANN ARBOR – For the first time since World War II, a disconnect exists between Michigan?s economy and the national economy. For more than five years, Michigan?s economy has lagged behind the national economy; plagued by budget deficits, funding woes and unemployment ? which have all become symptoms of a much larger problem: Michigan is not well positioned to take advantage of the new, high tech economy.

Michigan is the only state that lost net jobs in 2004. Michigan?s August unemployment rate was 6.7 percent, nearly 2 percentage points higher than the national unemployment rate. And while Michigan is among the top 10 states in the nation in developing patents for new products, it is in the bottom five states in bringing those new products to market. Why is this?

To address these problems and attempt to stimulate Michigan?s economy, the state legislature passed a package of bills that helps Michigan expand its economy through long-term investments. With support from the state, entrepreneurs will spur new technologies, create new products, create future high-paying jobs and change the economic culture of the state.

Specifically, the legislature?s plan injects $1 billion into the state’s economic development efforts by securitizing (or selling) a portion of revenue annually received by the state as part of its 1998 legal settlement with tobacco companies. “Securitization” means the state exchanges future revenue streams for a lump sum of money today.

By selling off the rights to this $100-million-a-year revenue stream, Michigan is going to get a bulk $1 billion payment that will be spent on backing up new small business loans, cutting-edge technology investments and other segments of the economy that officials believe could use a shot in the arm. Some of these include life science, advanced automotive manufacturing and related materials technology, as well as alternative energy research and “medical informatics.”

This spells good news for the technology community in Michigan because the securitization plan includes roughly $66 million of agreed-upon set asides, as lawmakers start slicing up where 5 percent of the “21st Job Package” is going to go. The bills make $400 million available to be spent immediately with a $26 million loan going toward the Michigan Forest Finance Authority, $15 million going to promote tourism, $10 million toward a defense contract coordination center, $6 million is going to “automation alley,” $4 million toward helping create “clean manufacturing” in the production of drugs, $2 million toward promoting movie production and $2 million toward a higher education transfer program.

With Michigan?s securitzation plan, emerging technology companies, and other start ups have renewed sources for funding and growth. This plan will help these organizations bring their products and services to the marketplace and allow Michigan to regain its rightful leadership position as an incubator for cutting-edge technology – which in the end will translate into a brighter economic future for all Michigan citizens.

Marc Jordan leads GSP Consulting?s Michigan office. He can be reached at [email protected]

or by phone at (734) 761-3885.