LANSING, MI — Gov. Gretchen Whitmer laid a out a vision for the sixth year of her governorship much like the years that preceded it, challenging lawmakers to further expand the issues she’s championed, from the state paying for pre-K and community college to funding a raft of new economic development incentives.
Whitmer delivered the annual State of the State address from inside the Capitol Building’s House chambers in Lansing. The speech represented something of a victory lap for Democrats’ first control of state government in forty years, where they enacted long-held policy goals like doing away with the state’s pension tax and funding free school lunches for all K-12 students.
But it was as much of a look back as it was a look forward on continuing issues like affordable education, economic development and a lack of available housing in the state.
Though details of these plans not yet been publicly detailed, Whitmer said the changes were meant to “build a Michigan where if you get knocked down, you have the support you need to get back up,” according to a transcript of her remarks.
“Lowering costs on the biggest items in your budget, improving education so your kids can thrive, ensuring you can ‘make it’ no matter who you are or what you’ve been through,” she said. “We will deliver real change for people right now and for Michiganders generations from now.”
Four new economic incentives
Whitmer touched on four different economic development initiatives throughout her speech, one of which involved reviving the work of her predecessor, former Gov. Rick Snyder.
The HIRE Michigan, or High-Wage Incentive for Regional Employment, program would effectively revive and rename the spirit of Snyder’s Good Jobs for Michigan program which ended in 2019. The effort is supported by the Michigan legislature, both chambers of which are under Democratic control, and seeks to lower payroll taxes for small businesses.
“The value here is simple: the more you hire in Michigan, the more you should save in Michigan,” Whitmer said.
Bills enacting the program passed out of the Senate Economic and Community Development Committee in October. Under the legislation, eligible businesses could keep up to 100% of income tax withholdings from new jobs, provided they keep a certain number of jobs at a specified median wage. Businesses would also be able to capture $100 million annually, rather than the $200 million limit under the previous program.
Whitmer also called for establishing a research-and-development tax credit; establishing an Innovation Fund “to invest in high-growth startups that will create the future, right here in Michigan,” and; simplifying the concept of a Renaissance Zone into a “single, flexible category to incentivize growth.”
The House and Senate minority leaders, Rep. Matt Hall and Sen. Aric Nesbitt, respectively, preemptively critiqued Whitmer’s proposals in a press conference Wednesday.
They accused the governor of having no coherent strategy to grow the state’s economy, and criticized the administration’s emphasis on landing major manufacturing projects for electric vehicles.
“We need to develop a bold, coordinated economic growth plan,” Hall said. “That is not happening after five years of Whitmer.”
Boosting housing supply
Nearly $1.4 billion will be set aside in the coming months to fund the building or rehabilitation of affordable housing throughout the state. The funding, a mix of federal funding and previously earmarked state dollars, will be enough to make nearly 10,000 housing units available.
“Housing is a serious challenge, so we are making a serious investment,” Whitmer said. “It’s about so much more than just a roof over your head. Housing builds generational wealth and forms the foundation for success in school, work, and life. Let’s work together to build more housing so every Michigander has an affordable place to call home.
Michigan’s housing shortage has been a growing issue in recent years, made even more pressing as the state hopes to grow its population. In 2022, Michigan released a statewide housing plan which set the goal of making 75,000 additional units available over the next five years. This month the Michigan State Housing Development Authority estimated the state is short about 190,000 units, underscoring the scale of the problem.
In northern Michigan the issue has been particularly acute, where a lack of housing has led some Michigan employers to buy real estate to house their employees so they can remain staffed.
Whitmer mentioned similar issues in her remarks, saying there could only be one response to the issue: “Build, baby, build.”
Cost-free was the theme when it came to education Wednesday night.
As part of her address, Whitmer called for money to be set aside in the upcoming state budget to fund two years of free community college for all Michigan high school graduates. This would immediately impact 2024 high school graduates, covering tuition after things like federal Pell Grants and other financial assistance is applied, Whitmer said.
The move builds upon the state’s Sixty by 30 goal to have 60% of adults earn a post-secondary degree or undergo training for a skilled trade by 2030.
Whitmer previously teased the policy in a social media post on Tuesday, Jan. 23, saying that Michiganders would save “an average of $4,000 as they earn their associates degree, setting them up to earn a bachelors or start working and earn a bigger paycheck.”
As part of education spending, another earmark would fund free preschool for all 4-year-olds in the state. The move builds off a proposal from last year, in which Whitmer said it was the state’s goal to offer “pre-K for all” by the end of 2026.
“We need to better prepare students for success after they graduate, whether they enter the workforce, community college, trade school or a four-year university,” she said. “There is no ‘correct’ path. It all depends on the person. What we can do is get them ready. A big part of that is starting education earlier and continuing later.”
What the final dollar amount comes to for either education push was not offered by the governor’s office Wednesday. Whitmer is scheduled to present her recommendation for the state budget Feb. 7.
The cost of Whitmer’s ambitions will be a key point contention in the coming weeks. The first year Democrats held trifecta control of Lansing, they enjoyed at $9.2 billion surplus thanks to lingering federal pandemic relief. It enabled Democrats to fund a long list of one-time projects 2023. This year state government is projected have ample revenue, but not nearly as much surplus.
Continuing on the theme of tax credits, Whitmer announced Wednesday a state income tax credit worth up to $5,000 for caregivers spending an average of $7,000 a year on their charge. This would apply to individuals caring for elderly relatives as well as children with long-term health needs.
Under the credit, coined as the “Caring for MI Family Tax Credit,” eligible expenses would include things like nursing or respite services, transportation and counseling.
Like the free preschool and community college plan, however, the size of the impact on the state budget for the plan has yet to be released.
“By allowing people to write off caregiving expenses … we can help more seniors age-in-place at home instead of a costlier long-term care facility. We can support parents of children with long-term care needs by saving them money,” Whitmer said.
“We know the burden of caregiving falls disproportionately on women and especially women of color. While the caregiving work they do is often invisible, it is invaluable.”
Senior political reporter Simon Schuster contributed to this report.