There is a lot of discussion in the world today about the debt being racked up by many nations. In most cases, this debt was accumulated after years of not following sound fiscal and accounting practices. America is a good example. For years we’ve failed to balance our budget, based budgets on overly optimistic revenue forecasts and did not take into consideration the long-term costs of our policy actions. Our growing debt obligations has led to a great deal of uncertainty about the future. This has caused job providers to slow investment and consumers to cut back on spending. Michigan experienced much the same situation during the past decade and this has contributed to our “one state, decade long” recession.
This is why Business Leaders for Michigan made the first step of the Michigan Turnaround Plan about responsibly managing finances. The Plan is a holistic, fact-based strategy to make Michigan a Top Ten state for job, economic and personal income growth.
Our original plan called for the state to manage its money the way a responsible household or business would – by balancing the budget without one-time gimmicks, projecting revenues using sound information and projecting spending needs over the long-term. Fortunately, the state has implemented many of these suggestions during the past year and as a result has been able to start paying down debt and generating a small budget surplus. As a result, business confidence is up and Michigan’s economy is turning around.
We must build on the solid foundation laid this past year by memorializing in policy or law the practices outlined above so we don’t slip back into bad habits after this Governor and legislature leave office. We need to continue paying down the billions of debt we racked up the past decade and require that every piece of proposed legislation have a “price tag” attached to it so policy makers understand the consequences of their actions. We also recommend the state adopt a long-term strategic plan that clearly identifies what we should expect from state government to guide annual budgets.
Adopting sound accounting practices and fiscal policies don’t get much attention in the news. But we’ve seen around the world what happens when we ignore these basics.