Governor John Engler
1995 State of the State Address - Tuesday evening, January 17,
1995
Thank you, Mr. Speaker. Senate Majority Leader Posthumus, Speaker Hillegonds, Chief
Justice Brickley and members of the judiciary, colleagues in government, Michigan families
and citizens:
Thank you, once again, for this opportunity to review the state of our state and to
chart a bold course for our future.
Mr. Speaker, watching you wield the gavel reminds me that there's been almost as much
change in this House as in my house!
Tonight, Michelle and I want to thank members of the Legislature and people across
Michigan for the outpouring of cards, congratulations, and best wishes for the birth of
our three daughters. Just last night, we were looking at Margaret, Hannah, and Madeleine
and thinking what a joy they are -- especially when all three are asleep at the same time!
Tonight, in addition to congratulating the new speaker, Paul Hillegonds, I'd like to
extend my congratulations to the 19 new members of the House, and to the 12 new members of
the Senate. You are replacing men and women with hundreds of years of experience. You have
big shoes to fill -- and with term limits and our agenda, they'd better be running shoes!
One colleague who is not in this chamber tonight, and whose shoes cannot be filled, is
our Lieutenant Governor, Connie Binsfeld. Earlier today, Connie sent me a note, and I'd
like to read part of it to you:
"Please convey to the caring people of Michigan my heartfelt gratitude and that of
my family for the love and prayers that have carried us through this past week. . . . I am
looking forward to being back soon to continue my work on behalf of Michigan's
children."
Well, Connie, we look forward to having you back. I know you're home today and watching
us on TV, and I speak for everyone here in wishing you Godspeed in your recovery. You are
in our prayers.
Ladies and gentlemen, this evening marks the fifth time I have appeared before you to
review the state of our state. Much has changed since 1991, when I first spoke to you as
Governor.
First and foremost, Michigan's economy is back. Last year, more men and women were
working than ever before. Our unemployment rate is at an all-time low of 4.5 percent --
well below the national average. The last time our annual unemployment rate was lower than
the national average was 1966.
How long ago was that? So long ago that not one of you here tonight -- either in the
House or the Senate -- was serving then. And our youngest state representative was in
diapers! (I won't tell them who you are, Michelle.) And it was probably just a coincidence
that 1966 was the last time Republicans won the House, Senate, and Governor's office!
In addition to last year's outstanding economic news, there have been other historic
changes. With Proposal A, we finally cut property taxes. We broke two decades of gridlock
to fund our schools fairly. And with our nationally recognized welfare reforms, we are not
only saving money; we are saving families.
My friends: The state of our state is better than it has been in a very long time. The
"Michigan Renaissance" is real. But does this mean that our work is essentially
finished, and that we will be content with tinkering around the edges over the next four
years? Not at all. The competition out there is fierce. Other states and nations want our
jobs, our workers, our very future. Well, I have a message for them: We will fight for
every job. We will fight for every worker. And if we have courage and continue the bold
course we've begun, the future is ours -- right here in Michigan!
Let us not underestimate the task before us. The "Michigan Renaissance" has
just begun. For some, things aren't good. For others, things aren't good enough. More of
our workers want to get ahead. More of our families want to be stronger. More of our
children want their schools to be the best. More of our citizens want to be given the
chance to take charge of their lives.
Tonight, I'd like to tell you about my blueprint to build on Michigan's Renaissance. As
I see it, there are four pillars -- four values -- on which it is founded. The first is
the pillar of opportunity, which enables people to work and develop their talents
in a growing economy. The second is the pillar of liberty, which among other things
secures a family's right to be in charge of their children's education. The third is the
pillar of accountability, which demands that government serve taxpayers -- and not
the other way around -- and give them the most value for their dollar. And the fourth is
the pillar of personal responsibility, which requires all of us to take charge of
our lives and become self-reliant.
Building on Economic Opportunity
To strengthen Michigan's renaissance and build up the pillar of opportunity, this is
what I propose to do. Our strategy during the first term was to reinvigorate the private
sector and make government smaller. The direction of our policies was important -- and
will continue to be. When we are lowering taxes, when we are cutting red tape, when we are
downsizing government, when we are reining in bureaucracy . . . we are sending a very
powerful signal to job creators. We must never lose sight of the fact that government
affects everyone's bottom line. Tonight I am calling on the 88th Legislature to join me in
bringing down government barriers to opportunity.
One barrier is the sheer size of state government. I believe government is still too
big. It's not just too big in size. It intrudes where it shouldn't. It interferes with
your lives. To paraphrase Lady Thatcher: Government is taking too much from you to do too
much to you.
We need to keep shedding from government those functions it shouldn't do or doesn't do
well. Already we sold the Accident Fund -- the largest privatization by any state in
America. We will get out of the liquor business. (Chairman Arthurhultz will see to that.)
Soon we will begin to privatize the vaccine manufacturing business. There's even more we
can turn over to the private sector -- and I'm determined to get on with it!
Recently the Secchia Commission reported to me on ways to make state government more
effective and customer-friendly. They submitted ideas that range from cutting down on
paperwork to making pay performance driven. There are many more recommendations, and we
will implement them. Ambassador Peter Secchia, other commissioners, and task force
members: You did a terrific job! Thank you!
If one barrier to opportunity is the sheer size of government, another is red tape.
We've already cut yards of red tape. And I intend to cut more by establishing the Office
of Regulatory Reform. Its mission: not more rules, regulations and red tape -- but reform,
results, and relief.
Another way to put people back in charge is to let them keep more of their hard-earned
paychecks -- and I propose that we continue to do just that. In the last four years, we've
cut taxes 11 times. It has been central to our strategy to make government smaller, and a
major factor in Michigan having the best economic recovery among the industrial states.
Because of our tax cuts and economic recovery, our state has generated a large surplus.
The surplus presents us with two options: Either give taxpayers a one-time rebate, or
enact permanent tax cuts that will benefit our citizens year after year after year. I opt
for permanent tax cuts.
Tonight I propose that we once again cut the income tax. Cut the income tax by
immediately raising the personal exemption from $2,100 to $2,400, and index it to
inflation in future years. This tax cut builds on our income tax cut of last year, and
will save our families $588 million over the next five years.
That's not all. I further propose that we immediately cut, and then phase out, a tax on
savings -- an unfair tax known as the "intangibles tax." Believe me, it's not
intangible to the men and women who have to pay it. The intangibles tax should have been
called the "inequitable tax" because it penalizes savings and investment. And
frankly we need more savings and investment to bring additional jobs to Michigan. This tax
cut is the next logical step after the tax cut on private pensions that we enacted last
year. Cutting the intangibles tax will save our taxpayers $434 million over the next five
years.
That's not all. I further propose that we again cut the Single Business Tax. Eliminate
double taxation on the costs associated with hiring new workers. Get rid of what amounts
to a "tax on a tax" by eliminating from the SBT base three factors:
workers' compensation, unemployment insurance, and FICA payments. This tax cut will
create jobs by saving our job creators $532 million over the next five years.
Altogether, these three tax cuts will save Michigan taxpayers $1.5 billion over a
five-year period. Prompt action will keep our economy strong and put money back in your
pocket. Ladies and gentlemen, I want these three taxes cut within the next 30 days. Just
do it!
There is no tougher competition among states than the fight for jobs and investment. It
is a fight that a few short years ago Michigan was losing. Some didn't even think we were
in the arena. Today, we are more competitive because we've cut taxes, because we've
lowered the cost of doing business, and because we're ready to cut taxes again. But I'm
not satisfied that we have done enough -- and you shouldn't be either.
Every day, Michigan-based companies are being romanced by other states. That's why the
Michigan Jobs Team has called on over 2,000 of our job providers.
These visits are critical because over 90 percent of the new jobs in Michigan are
created by Michigan-based companies. 90 percent! Our message to these companies must be
unambiguous: We want you to grow and create jobs in Michigan.
We've made progress -- great progress -- but we're not alone. The competition has
gotten stiffer, and we must keep pace. Tonight I propose we keep pace by enacting the
Michigan Economic Growth Authority Act to give us a state-of-the-art tool to help generate
new jobs here in the Great Lakes State. MEGA is targeted at Michigan job creators so that
when they are ready to add jobs, we are ready to work with them. Recent actions by states
like Kentucky, Indiana, and Ohio have created a playing field that's tilted south toward
those states. I cannot stand by and do nothing. I refuse to let Wildcats, Hoosiers, and
Buckeyes take jobs away from Spartans and Wolverines!
Just as Michigan must compete with other states and nations, communities must compete
with each other. Some Michigan communities have fallen behind and are not competitive. One
reason is environmental contamination. Mayors across Michigan have joined together in an
unprecedented show of unity to develop a new approach to cleaning up pollution and reusing
old industrial sites in cities and townships. They've come together, and so should we.
Let's act now!
With its new empowerment zone designation, Detroit has an historic opportunity to break
with the failed policies of the past. Mayor Archer, we were proud to be your partner in
that successful application, and now we look forward to successful implementation. Let me
also add congratulations to Flint, Lake County, and Muskegon-Muskegon Heights for their
well-deserved designations.
But let's not kid ourselves: These designations alone won't solve all our problems. For
communities across Michigan to prosper and share in our renaissance, we must attack all
barriers to economic opportunity: the barrier of contaminated industrial sites, the
barrier of bad schools, the barrier of a crumbling infrastructure, the barrier of
oppressive taxes and regulations, the barrier of violent crime, ultimately, the barrier of
hopelessness.
We welcome all of you as partners. Let's tackle these problems head on, and make 1995 a
year of historic progress. Together we can triumph!
I am inspired by recent conversations I've had with religious leaders from Detroit.
They've offered to come together to bring the full moral authority of the religious
community to bear on the challenges our families and neighborhoods face. I have agreed to
convene a meeting of clergy to search for solutions. This partnership is so promising
because many churches, synagogues, and mosques anchor our neighborhoods at risk. Their
leaders have the trust that's so desperately needed. One need look no further for an
inspiring example than the man who delivered this evening's invocation, the Reverend Eddie
Edwards.
There's a familiar line from Psalm 127: "Unless the Lord builds the house, its
builders labor in vain." I believe we can use the power of the House of the Lord to
help rebuild the house of Michigan. For we are united by a common mission: It is nothing
less than the revival of our cities -- neighborhood by neighborhood, block by block,
family by family.
Not only must we confront social decline head on; we must confront the physical decay
of our communities. The Great Lakes State is naturally one of the most beautiful in the
nation, and it's time to clean it up. Tonight, I am proposing the "Partnership for
Michigan Renaissance" -- to clean up, pick up, and fix up our state. It's time to get
rid of the blight, the trash, the eyesores . . . to raze the abandoned homes and factories
. . . to restore the dignity of our neighborhoods and communities . . . to take pride in
our state once again -- everywhere from our downtowns to our townships.
Whether it's Detroit, Marquette, or Grand Rapids -- today, tomorrow, or a hundred years
from now -- our citizens deserve to live in a clean, beautiful Michigan. Let's put the
polish on the pillar of opportunity!
Building on Education Liberty
Another pillar of the Michigan Renaissance is liberty. Every child begins life with
great potential. A fundamental American principle is that every child should have the
opportunity and freedom to develop that potential.
Unfortunately, for many children there are big barriers to reaching their potential --
parents who abandon them, alcohol and drug abuse, violence in the family or community.
We've made progress, but make no mistake: These barriers must be swept away.
For some children there is another kind of barrier -- where it is least expected -- and
that is school. Michigan has some of the best schools in the world. Regrettably, our state
also has its share of substandard schools, including too many dangerous schools. This is
not acceptable. We can -- and must -- do better.
Michigan has made historic progress in the funding of our schools. We constitutionally
guarantee that there will be sufficient resources to provide a quality education for every
child. Now the real challenge begins: to deliver on the promise of a quality education for
every child.
Tonight, I'd like to congratulate Clark Durant and Sharon Wise on being elected to the
State Board of Education. I welcome them and their fellow board members to the critically
important education debate in which we are engaged. Let me challenge the Board to think
boldly about the changes needed to make Michigan schools the very best in the world. Think
not in terms of what's best for the system, but what's best for the children.
We must reconceive our education system in terms of liberty, excellence, and
accountability: liberty for parents to send their children to schools they deem the best;
excellence in the curricula, in the teaching, in the classroom; accountability to the
taxpayers, to the employers of our graduates, and ultimately to the students -- for it is
their future that is at stake.
Throughout this speech I have spoken of the unfair barriers that government has erected
before our citizens. I invite the Board to work with me and identify all those barriers in
the system that keep Michigan public schools from being the very best in the world. We
should aim at nothing less.
Tonight I propose that our new State Board immediately tackle another challenge, and
examine the Department of Education from top to bottom. Focus every effort of that
department on strengthening the rights and choices of parents. I want the department
redesigned so that it is not a Lansing taskmaster, but a helpful partner to local schools.
The core mission must be to serve and to support parents who want to choose what's best
for their kids. The State Board should terminate all department functions that do not
assist local schools, and that do not strengthen the educational opportunities of our
children. Anything that is not part of its core mission should go.
Tomorrow, I will help by issuing an Executive Order that transfers all financial aid
for college students to the Department of Treasury.
Also this year I will seek to repeal the state School Code. Its replacement? A local
Education Code that maintains accountability, but puts parents back in charge. That's one
"outcome" we should all agree upon. It's time to stop controlling education from
Lansing or Washington; it's time to start transferring full authority to parents and the
schools they pay for!
In the courts, we will vigorously pursue our challenge to a judge's decision last year
that struck down our charter school law. We are right. The circuit court is wrong. It's time to give Michigan parents more choices.
For reform to succeed, parents must not only have more choices among existing schools;
they must have more types of schools from which to choose. I intend to use the charter
school law to open at least three skilled trade academies by next fall. And this is just
the beginning. My goal is at least ten trade academies within the next four years. I want
these schools to be accessible to any student in Michigan. They will offer a much-needed
alternative for our young people.
If that sounds radical, go back and read your Michigan history. In the 1920s, Henry
Ford helped design the curricula of several high schools that trained a skilled workforce
for the emerging auto industry. The demands today are even greater.
University of Michigan professor David Cole estimates that some 100,000 new workers --
skilled workers -- will be needed in Michigan's auto industry by the end of the decade.
Our choice is stark: We either train young people in Michigan today . . . or we lose jobs
in Michigan tomorrow. It is that simple.
Building on Government Accountability
Just as we seek to hold public schools accountable, we are obligated to hold all of
government accountable. Government accountability -- that's the third pillar of the
Michigan Renaissance.
Those who work for the public must be accountable to the public they serve.
Accountability begins with your tax dollars and how we budget them. In early February, I
will present a budget to you that indicates my administration's priorities for next year.
The fiscal '96 budget will be tight. It will implement the reductions the Legislature
committed to when we passed school finance reform. The budget will also include the price
tag of two expensive problems: rising prison populations and falling federal support for
Medicaid.
Despite that, the budget will protect education, as we always have. Our children's
education remains my top priority.
The debate about taxing and spending has already begun, and I invite all legislators to
be as aggressive in recommending budget cuts as in recommending tax cuts. Just remember:
When we're done, our budget will be balanced.
Since Michigan is a national leader in balancing its budget, let's help Washington
balance theirs. Let's be the first state to ratify the balanced budget amendment to the
United States Constitution.
A final point while I'm on this topic. You cannot talk about government accountability
without talking about the men and women who work for Michigan taxpayers. Michigan
government today has fewer employees than four years ago. The Secchia Commission
highlighted the need for an on-going re-evaluation of how state government is organized,
how we do our work for you, and how we hold employees accountable for their performance.
I know we have many good people working in state government. But I hear time and again
that our managers' hands are tied, that hard-working men and women are frustrated, that
excellence is neither required nor rewarded. The system has evolved to protect the system,
not to serve the people. I believe there is an urgent need to reform civil service. Civil
service was meant to be a merit system, not a seniority system. I'm calling on the Civil
Service Commission to act now and lower the barriers right here in Lansing.
Building on Personal Responsibility
So far tonight, I've talked about three of the pillars that support Michigan's
Renaissance -- opportunity, liberty, and accountability. Now I'd like to talk about the
fourth pillar, personal responsibility.
Too many of our citizens cannot take their rightful place in our self-governing
republic for one reason: They are not self-supporting. Instead, they are dependent on
government for their livelihood. That dependence robs them of experiencing the full
blessings of liberty.
Today, we have a situation in which employers are desperate for workers. You've seen
the stories in the newspapers. And yet there are almost 200,000 families who remain
dependent on public assistance. I find myself asking: What's wrong with this picture?
My friends, what's wrong is the system. "Welfare as we know it" has become a
tangle of perverse incentives -- with armies of bureaucrats, stacks of federal forms, and
volumes of regulations at cross-purposes with each other. That's what you get when
Washington creates over 330 federal programs to deal with poverty -- and then tries to
micro-manage every state.
Over the past four years, Michigan has been leading the charge against the Welfare
State. Through federal waivers, we've been able to inject that core value, personal
responsibility, back into the system. We've done it with a simple goal: Work first. We
believe that all can -- and must -- carry their fair share.
I am energetically pursuing further welfare reform -- far-reaching reform -- because
when given the freedom, we've been successful in putting people to work. More freedom from
Washington means more success for Michigan. The bottom line: More of our people will be
working, enjoying the blessings of liberty, and taking charge of their lives!
As a society, we need to make sure our young people are learning what it means to be
responsible. Unfortunately, through no fault of their own, some of Michigan's children are
having a tough time of it. A tireless defender of our youngest citizens has been our
Lieutenant Governor, Connie Binsfeld. Her work on adoption has gained national acclaim.
Now I'm asking Connie to chair a commission that will carefully review how state and local
agencies -- whether public or private -- work with children who are at risk even at home.
Unfortunately, there are other young people who put the rest of us at risk. They have
no concept of personal responsibility, and no compunction about preying on others. Our
message to these thugs and punks must be unambiguous. They not only forfeit their
childhood; they forfeit their right to privacy and special treatment.
No longer will acts of "youthful indiscretion" be erased from their records,
while leaving permanent scars on their victims. The public is demanding -- and I concur --
that young punks be treated as adults.
My friends, a get-tough approach is imperative. If we don't stem the tide of youth
violence today, our adult prison population will continue to swell, with no end in sight.
My administration and the Legislature have made it clear that public safety is a top
priority, and we will do what is necessary to preserve law and order.
But this commitment is not without cost. Soon I will submit to you a special
appropriations bill that comes with a price tag of over $200 million -- money for the
conversion of the old Newberry Hospital into a new prison, for the expansion of several
other prison facilities around the state, and for a "punk prison." That's $200
million not available for our children's education, or for tax cuts, or for other
priorities -- because it will go to locking up criminals.
In addition, we will seek to use every existing prison to its fullest, whether by
double bunking convicts or by removing the interference of federal judges. Government has
no business coddling convicts. They are not on vacation, and don't deserve the comforts of
home. We will continue our policy of zero tolerance. We will make prison an experience one
does not want to repeat.
I, like you, have zero tolerance for crime. But you, like me, must understand the cost
of crime. In some cases, there are alternatives to prison, and we must take a hard look at
them. But for hardened criminals, we must be firm.
To put the scourge of violence in perspective, let me leave you with one final fact.
Today, one in four state employees works in the Department of Corrections. We can foresee
a time -- and it is not too far distant -- when it will be one in three.
My friends, this trend -- this tragedy -- cannot continue. We take no joy in locking
people up. We'd rather unlock their potential, especially when they are children, and have
hope, and a promising future.
A Call for Moral Leadership
Tonight, I've presented my administration's blueprint for Michigan's future. My goal is
to build on our accomplishments of the first four years. And make no mistake: These are our
accomplishments. We did it together. And we must continue to build together if we are to
make Michigan's Renaissance real for more of our workers, families, and communities.
We must recognize that the stakes in this quest are extraordinarily high. The literal
costs of failure -- in dollars and cents -- are dramatically reflected in our corrections
budget. But no budget can reckon the human costs of failure. Broken homes, violent
streets, a corrupting welfare system, government barriers to liberty and opportunity --
these exact a toll on our society that is infinitely greater than any dollar amount can
measure.
Of all the things I've addressed tonight, the most significant is the need for moral
leadership. So much of what is failing, so much of what puts us at risk, so much of what
afflicts us . . . reflects what is broken deep inside our souls. As a Legislature, as a
Governor, we are unable to heal that brokenness. It is rather in our families, among
friends, and through our faith that we must seek true healing.
For our part, the direction we chart must be consistent with the core values that have
made Michigan great. At the very least, what you and I can do is insist that government do
no harm to our families, neighborhoods, and communities. At our very best, we can come
together -- regardless of party or region -- and do great good.
I call out to all Michigan citizens to do their duty by caring for themselves and those
around them. If each of us takes up the challenge close to home, then Michigan's
Renaissance is assured.
Thank you. God bless Michigan. And God bless each and every one of you.
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