LANSING – Long-term budgeting, investing in transportation infrastructure and education and looking at public employee compensation are all areas of reform and investment state policymakers should focus on in the coming year, a series of speakers said during the Business Leaders for Michigan and The Center for Michigan summit on Monday.

More than 500 people showed up to the Radisson banquet room to hear more than a dozen speakers talk about “common sense” solutions intended to transform Michigan’s future after a decade of economic nightmares and state budget deficits. There was also discussion on tax reform.

The public sector can become more efficient and it can also make critical investments for the state given the resources available, panelists said.

Several speakers commented on the need for the state to engage in long-term planning and budgeting. Oakland County Deputy Executive Robert Daddow said the state should start with a two-year budget cycle so that departments start thinking longer term and the changes made to the budget now can accumulate savings over several years.

Single-year budgeting simply has not worked, he said, which is demonstrated by schools being three months into their school year without an idea of their foundation allowance year in and year out.

Looking to the local level, Superintendent of Public Instruction Mike Flanagan said consolidating services, not necessarily school districts, at a regional or state level is important. There are many districts that have consolidated their information technology, transportation or other services at the intermediate school district level, but Flanagan said there are opportunities to do more.

He said the focus should be on student achievement and one area that could help local officials focused on that is to take health care and pay scale issues to the state level.

Wyoming Mayor Jack Poll said local governments are sharing services in some areas, but the Legislature also has to “clear the deck” and help out when it comes to binding arbitration issues under PA 312.

Public employee compensation continues to be a hot topic of debate given the state’s fiscal crisis and Jeff Guilfoyle, president of the Citizens Research Council of Michigan, said the state’s compensation for state and local government employees is generally higher than its neighboring states, but that is also true, to an extent, for its private sector compensation levels.

“Even if we had the lowest compensation we would still have to look at the legacy costs,” he said of health care and pension costs.

Daddow noted Oakland County bonded to pay for retiree health care costs, but that only works in some instances.

Sarah Hubbard of the Lansing consulting firm Acuitas said corrections is also an area of reform policymakers need to address. That includes looking at sentencing guidelines, labor costs, recidivism and expedited paroles for medically fragile prisoners, she said.

She said businesses care about issues like corrections because they endured a $1.5 billion tax increase a few years ago under the MBT to pay for those programs.

In the area of investment, panelists were unanimous in their push for support of the state’s education system.

“Talent just doesn’t fall out of the sky. Talent has to be grown and developed,” said Vernice Davis Anthony, president and CEO of the Greater Detroit Area Health Council.

Investment in early education through higher education at the university and community college level is critical, the group said.

“A high school education isn’t going to cut it in manufacturing anymore,” said Chuck Hadden, president and CEO of the Michigan Manufacturers Association.

Dow, Chrysler, and General Motors are all hiring engineers, while other companies are looking for skilled welders, Hadden said, which require at least a two-year degree if not a four-year degree.

If the state is to be where it was once, a “rich state,” State Board of Education Member John Austin (D-Ann Arbor) said it has to be the best educated. The states that are performing with higher per-capita incomes for residents are the ones where the residents have the most education, Austin, a nonresident senior fellow for the Brookings Institution, said.

When it comes investment, Indiana matches federal research dollars while Ohio has essentially kept universities from budget cuts if they keep up the number of college graduates, Austin said. Meanwhile, Michigan has been last in its higher education investments, he said.

Transportation infrastructure was also a topic that got a lot of attention, although policymakers have struggled to invest in this area and an attempt to raise the gas tax failed in the 95th Legislature.

But William Parfet, chair and CEO of MPI Research, noted what has become the challenge facing policymakers for sometime: the state is in a position right now where every single project is important.

“Everybody’s needs are relevant,” he said.

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