Gov. Gretchen Whitmer put forward her case for reelection in her fourth State of the State address Wednesday, saying the state has made great strides under her leadership, despite a global pandemic and a host of other unexpected challenges.
She cited Tuesday's announcement of $7 billion in GM investments in electric vehicle manufacturing in Michigan — which was attracted in part by $824 million in state incentives, but is expected to create or retain 5,000 jobs — as evidence Michigan's economy is evolving toward a secured future.
"While 2021 wasn’t as miraculous as any of us wanted, we have made progress," Whitmer said. "We’re stronger in large part thanks to science and lifesaving vaccines. We have come a long way, and I am encouraged about the path ahead."
Whitmer delivered the election-year speech from Detroit Diesel Corp. in Redford Township, a subsidiary of Daimler Truck AG that is retooling to adapt to an electric vehicle future. Only a few staff members were in attendance, according to her press secretary, Bobby Leddy.
Normally, the speech is delivered in the House chamber in front of huge crowd of lawmakers, dignitaries and invited guests. Whitmer said she chose to deliver the speech remotely, for the second straight year, to ensure safety amid near-record numbers of COVID-19 cases.
Whitmer, a Democrat, pledged continued major funding for Michigan schools and promised the state will do all it can to get all children safely back into classrooms as quickly as possible. "Remote learning is not as fulfilling or conducive to a child’s growth. In-person learning is critical to social development and mental health," she said.
She said she would introduce a School Aid Budget for 2023 that "will mark the biggest state education funding increase in more than 20 years—without raising taxes." She noted her last budget closed the funding gap between school districts by equalizing the state per-pupil foundation grant and investing $8,700 in each student, in all districts.
During the 25-minute speech, Whitmer also pledged to:
Return Michigan retirement taxes to what they were before 2012, when then-Gov. Rick Snyder and the GOP-controlled Legislature eliminated certain tax exemptions for public and private pension income. The restored exemptions would mean about an extra $1,000 on average for 500,000 Michiganders, once fully phased in for the 2025 tax year, officials said. "When I was in the Legislature, I fought the retirement tax because it was wrong," said Whitmer, a former Senate minority leader. "Let’s make it right."
More than triple the Earned Income Tax Credit for low-income earners, to 20% of the federal tax credit, up from 6%. That move, too, would restore Michigan law to what it was prior to 2012, when both personal income taxes received a major shake-up under Snyder. The change, which would require approval of the Legislature, would mean about an extra $350 on average in the state portion of the EITC for the more than 730,000 families who qualify, the administration said. Under Snyder, "taxes on working families went up to pay for a tax giveaway for big corporations they didn’t need," Whitmer said. "That’s not right."
Support legislation that would cap the cost of insulin — which Whitmer said costs some diabetics $3,600 a year — at $50 per month. Too many Michiganders are forced to forgo insulin or ration it—putting their lives at risk," she said.
Introduce a $2,500 electric vehicle rebate for families, with $2,000 for the car and $500 for in-home charging equipment. That would be on top of a $7,500 federal electric vehicle credit. "If we get this done, we can lower the cost of electric vehicles by nearly $10,000," Whitmer said. "We can make it easier for Michiganders to go electric."
Enhance access to mental health care by expanding the Michigan Loan Repayment Program for mental health professionals.
The state has about $5.8 billion in anticipated surplus state revenues that it can spend now and about $15 billion in still-unspent federal stimulus and infrastructure funds that it can spend over the next several years, officials determined at a recent revenue estimating conference. The vast majority is "one-time" money, best suited for one-time expenditures such as capital projects, but Budget Director Christopher Harkins said the state has an extra $600 million or more a year from economic growth that could be used to fund new programs or reduce taxes.
Until 2012, public pensions were exempt from income tax while private pensions were exempt up to $41,200 for single filers and $90,240 for joint filers. Snyder said it was a fairness issue to treat all pension income equally, since some retirees have large public pensions and other have small private ones. The exception is Social Security income, which is not taxed.
Senate Majority Leader Mike Shirkey, R-Clarklake, said Wednesday that treating taxpayers fairly with respect to pension income remains a priority and there would be little interest in returning Michigan to the pension tax policies of 2011.
"However, if what she's proposing would affect all pensioners and all citizens, then I think it would be something that we'd be very, very interested to look at," Shirkey said.
He said he expects the administration and Senate Republicans may find common ground on changes to the Earned Income Tax Credit, and he hopes Whitmer will "entertain some notions and some ideas regarding income tax."
The comments came hours after the Senate Finance Committee approved a plan to reduce the state's income tax rate, a proposal that would cost the state $2 billion. Shirkey would not commit to the full Senate voting on the measure, but said lawmakers must be cognizant of not implementing cuts that were financially unsustainable.
About a dozen Republican candidates say they want to take on Whitmer in the November election. The GOP candidate is to be selected in an August primary. They've attacked her on her handling of the pandemic, saying 2020 business shutdowns needlessly hurt the economy while school closures hurt parents and students. They say she has not fulfilled her signature 2018 pledge to "fix the damn roads."
"Gretchen Whitmer made countless promises to voters on the campaign trail in 2018, but after three years in office, Michigan is left with nothing but broken roads and broken promises," said Chris Gustafson, a spokesman for the Republican Governors Association.
Whitmer disputed that in her speech. "The pandemic slowed us down a bit, but since I took office, Michigan has repaired, rebuilt, or rehabilitated over 13,000 lane miles of road and over 900 bridges in every region of our state," she said.
Whitmer at the start of her speech recognized the 30,000 Michiganders who have died from COVID-19 and touted the efficacy of vaccines, but did not provide any new plans to more effectively end the pandemic in Michigan. She said that since taking office in 2019, she has also contended with a "polar vortex ... national recession, multiple 500-year flooding events, (and) a kidnapping and murder plot."
Among the accomplishments she cited: More than $420 million in aid to businesses hurt by the pandemic, expanded access to child care, and criminal justice reforms that have included the ability for some Michiganders to expunge their criminal records and resume life with a clean slate.
Still, polls have shown Whitmer slightly under water on her job approval ratings and facing close contests in potential Republican matchups. Just as many Republicans were outraged by her aggressive actions to restrict business and other activities early in the pandemic, significant numbers of Democrats have been unhappy with her refusal to extend mask mandates and other pandemic measures over the last several months.
Whitmer reiterated a pledge to veto any legislation that seeks to restriction access to abortion, as national expectations grow that the U.S. Supreme Court could be poised to overturn the landmark Roe v. Wade decision.
Robert McCann, head of the K-12 Alliance, an organization representing school superintendents in Genesee, Macomb, Oakland, St. Clair and Wayne counties, thanked Whitmer for her commitment to in-person learning.
"We know students learn best when they are in the classroom and, thankfully today, nearly every Michigan school has their students learning in-person and receiving the best academic, social and emotional services possible," McCann said.
Whitmer's comments on in-person learning were something of a departure. In 2020, she teamed up with GOP legislative leaders to pass bills that empowered local leaders to make decisions on whether classes should be virtual or in person. But in recent months, especially after federal health officials said it was generally safe for students to return to school buildings if precautions are followed, critics have blasted the Whitmer administration for not forcing districts to nix remote learning.
Monique Stanton, president of the Michigan League for Public Policy advocacy organization, said the governor's proposed expansion of the Earned Income Tax Credit would provide welcome relief to a broad array of Michiganders.
"The Michigan EITC is a win-win investment that resonates in all counties and political districts, benefits rural and urban residents, and supports families while getting spent at our small businesses and in our local communities," Stanton said in a statement Tuesday.
"We are grateful to the governor and Senator Wayne Schmidt (R-Traverse City) for making this a priority, and we hope the Legislature will do the same.”
Jim Holcomb, president and CEO of the Michigan Chamber, said the state's largest business group appreciates Whitmer's focus on reinvigorating the economy and growing jobs.
"We urge the governor to work collaboratively across the aisle with legislative leaders and lawmakers to find the bipartisan, pragmatic solutions our members and businesses need and count on," Holcomb said.
House Speaker Jason Wentworth, R-Farwell, was blunt in his criticism of Whitmer's address.
He said she focused on "other people's accomplishments" and highlighted plans already proposed or in the works by the Legislature.
“We’re happy to have her support, and we will definitely take her up on her offer to work together. But I think we were all hoping for a little more from this speech," Wentworth said in a statement.
"The responsibility to lead on the state’s most pressing issues — government ethics, healthcare reform, economic development and others — will once again lie with the Legislature in 2022.”
House Tax Policy Committee Chairman Matt Hall, R-Emmett Township, came out against the proposed rebate for electric vehicles, suggesting it was unnecessary given recent massive demand.
“Inflation, workforce shortages and supply chain disruptions have hit the pocketbooks of many people extremely hard and are forcing them into tough financial decisions. Sensible tax reductions can alleviate this while getting more money into our state and local economies," Hall said.
But Ford, Stellantis and some business groups applauded the EV tax credit.
The plan "will help more Michiganders get behind the wheel of EVs, combat climate change, and ensure our home state continues to drive the world into the zero-emissions transportation future," said Steven Croley, Ford's chief policy officer and general counsel.
This article originally appeared on Detroit Free Press: Whitmer says Michigan has made great strides despite pandemic