LANSING ? Sponsors of a Michigan House alternative to Gov. Jennifer Granholm’s proposal to invest $2 billion from bond sales to lure technology and life sciences businesses to Michigan hope to introduce their plan next week.
Rep. Andy Dillon (D-Redford) and Rep. Bill Huizenga (R-Zeeland) continue to craft their proposal, which would securitize 25 percent of the state’s share of the national tobacco settlement – selling the rights to a quarter of the settlement revenue to investors in exchange for an up-front payment. Supporters of securitization say it can assist a government in managing a troubled budget and provides guaranteed money in case tobacco settlement revenues cease.
But critics say it results in governments (other states have securitized) giving up considerably more revenue over the long-term and making themselves vulnerable to a credit-rating downgrade.
The two legislators say the advantage of their plan would be to avoid adding to the state’s debt burden and get money invested sooner. Granholm’s plan, a constitutional amendment (HJR I), would go before voters in November. So would the Senate alternative for a $1 billion bond plan (SJR C).
“It would be the next year before we’re doing anything,” Dillon said.
Dillon said his proposal also would front-end job creation with a large amount of money invested all at once. The governor’s plan, which would spread $2 billion out over 10 years, emphasizes research and development, which Dillon said would not mean new jobs for another five to 10 years.
Probably the single-biggest question looming over the Dillon-Huizenga proposal is whether their bipartisan effort can achieve buy-in from their respective parties. While Huizenga is the chair of the committee managing the issue and Mr. Dillon is respected for his knowledge of investments, there are no guarantees given the political delicacy involved.
Huizenga likened the process of constructing the proposal to a “kind of dance with a porcupine – how do you get around the policy and the political stuff and get to the heart of it?” He said he senses cautious optimism from his fellow Republicans, and he keeps in constant touch with House GOP leaders.
“We’ve been trying to do it as smart as we can, taking baby steps, getting some green lights,” he said. “Andy and I have built up quite a bit of trust between us.”
Major questions, such as what would happen to the myriad of state programs that rely on funding from the tobacco settlement, have not yet been answered, Huizenga said.
Dillon said there is support among House Democrats for a proposal that invests money into the state’s economy, whether it is Granholm’s or his.
“I think there will be support from my side with either program,” he said.
Granholm press secretary Liz Boyd said the administration is interested in seeing the details of the Dillon-Huizenga plan, but could not comment further.
Rep. Steve Tobocman (D-Detroit), one of the House sponsors of Granholm’s plan, said he finds the proposal encouraging because it embraces the philosophy of the governor’s proposal to put state money into the economy. The questions with it are its size and the securitization mechanism, he said.
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