LANSING – It began as a decade of exciting firsts for Michigan: setting an all-time record low unemployment rate of 3.2 percent, electing the first Michigan women to be governor and U.S. senator, breaking the 10 million barrier in population, seeing the first African-American to lead a legislative caucus and achieving the highest possible credit rating from two of the three major ratings agencies.

But it ended as a decade of depressing worsts: years of having the highest unemployment in the nation, 15.3 percent in September; the slaughter of Michigan’s once-prized manufacturing sector; two government shutdowns because of paralysis between the legislative and executive branches; record foreclosures; and one of the most significant government scandals in Michigan history that laid bare the corruption in the state’s largest city.

No one’s come up with a pithy nickname for the ’00s, but for Michigan, the decade was synonymous with loss.

The loss of jobs. The loss of homes to foreclosure. The loss of revenue for government services. The near unthinkable loss of the state’s industrial titans when General Motors and Chrysler filed for bankruptcy. The loss of population as residents fled the economic hurricane. The loss of confidence.

With this story, Gongwer News Service begins a three-part series reviewing the few highs, many lows, memorable moments and key points of possibly the most trying decade in Michigan’s 172 years of statehood. It will culminate with Gongwer’s final “Newsmaker” feature of the year, our choice for “Newsmaker 2009” in the December 30 edition.

When the year 2000 opened in Michigan, times were almost absurdly good.

Unemployment was so low the monthly announcement of the state’s unemployment rate was barely news. The biannual Revenue Estimating Conferences to determine how much money the state had to spend were wonderfully boring as revenues rose with seemingly no limit. Governor John Engler and the Republican-controlled Legislature cut taxes again and again and again.

The apex of those flush days came as the Legislature wrapped up the 2000-01 fiscal year budget in June 2000, allowing lawmakers to recess almost the entire summer. They passed a massive $614 million supplemental spending bill for projects lauded as critical and derided as wasteful pork. They passed a K-12 budget that would increase per pupil spending by $1,000 over a three-year period. And they increased spending to the state’s public universities by 6.7 percent.

But the warning signs began appearing in late 2000 as the then-DaimlerChrysler laid off employees. And there’s been no let-up since in an almost unimaginable nine-year recession.

Gov. Jennifer Granholm, who took office in 2003 with big plans and big ideas, has seen virtually her entire focus directed to becoming a chief economic development officer for the state. And while those efforts have led to businesses locating here and job creation, those numbers are dwarfed by the manufacturing losses.

Asked this week if she had lost sleep about the economy, Granholm, invoking the names of the men she defeated in 2002 and 2006, said she had lost sleep, but, “Nobody sitting in this chair, whether it be Dick Posthumus or Dick DeVos, nobody else would have been able to prevent the financial meltdown that occurred in September 2008 which precipitated the cascade of events that occurred here in Michigan.”

INNOCENT BEGINNINGS: The downturn began ominously with the auto layoffs, but unemployment had been so historically low that the uptick toward 5 percent seemed not that bad.

In late 2000, Doug Rothwell, then the head of the Michigan Economic Development Corporation, said, “We’re concerned, but nobody is pushing panic buttons.”

Still, there was something notably absent in Engler’s 2001 State of the State speech a month later. In recent years, he had included a line that said, “The state of the state is…” and would use descriptors like “better than ever.” He made no such declaration about the State of the State in that address.

In his triumphant 2000 address, Engler said, “Let us ensure Michigan remains the leader in this new century.”

But by late 2002, the impact of the 2001 recession had hit Michigan in earnest and the state began cutting spending in the hundreds of millions. A round of cuts in late 2002 nearly wiped out its health prevention programs. Meanwhile, Engler and the Legislature employed a series of one-time funding mechanisms and a cigarette tax increase in hopes the state could weather the recession and then revenue would recover to allow the programs to survive – a strategy that would run through the Granholm administration.

Another recurrent theme would emerge. Once the Legislature completed a round of cuts, it became common to proclaim next year would be the year of the reckoning.

Said then-Sen. Joe Schwarz in December 2002: “We pricked our fingers today for a little draw of blood. Next year is going to be an evisceration; it’s going to be a blood-letting.”

In 2001, the Citizens Research Council of Michigan said Michigan’s budget situation heading into the 2001-02 fiscal year appeared to be the most dire since the payless paydays of the 1950s.

Engler administration officials objected, but Budget Director Don Gilmer also said that if an economic turnaround did not begin by June 2002, the CRC analysis could be proven right.

The nation’s economy began recovering, but Michigan never seemed to follow. A series of budget-cutting and revenue deals took place in 2003 and 2004, including a delay in the implementation of an income tax cut passed in 1999. In 2004, Michigan was one of only three states with a budget shortfall.

Sen. Patricia Birkholz (R-Saugatuck) said she realized the economy and hiring would not bounce back like it always did sometime in 2003 when she toured the gleaming new GM plant in Delta Township.

“It’s almost like a hit in the face, when I visited that Delta plant,” she said. “It was almost shocking at the number of people that weren’t on the factory floor. There were a lot of robots and a lot of very high-tech equipment that was moving the product through, but there were very, very few people.”

CHANCES FOR TURNAROUND DASHED: But there was a moment when economists thought things could have turned around for the state. In 2004-05 there was a real potential the state could have seen a recovery. Job losses were slowing dramatically from the precipitous drops of the earlier years of the decade.

From 2002 to 2003, the state lost 71,000 jobs. From 2003 to 2004, it lost 17,000 jobs. From 2004 to 2005, it lost 10,000 jobs.

Along with slowing jobs losses, state revenues began to pick up. The state saw general fund revenues drop by 3.5 percent in 2002-03, a total of $294.1 million to $8.073 billion. But in 2003-04 revenues jumped by 3 percent, $243.3 million to $8.317 billion.

And they jumped even further for the 2004-05 fiscal year, by 5.7 percent, $478.2 million to a total of $8.795 billion.

Even at that, the state was down $1 billion in general fund revenues from the 1999-2000 fiscal year. Revenues grew without tax increases for two more years, but at very slow rates: 0.2 percent, or $14.3 million, in 2005-06, and by 0.8 percent, or $71.6 million, in 2006-07.

Even during this period of promise, though, the state suffered big losses, like the Electrolux plant closure in Greenville as the company moved that work to Mexico, infuriating Granholm. She called the decision “heart wrenching” and blasted the company for choosing “cheap, foreign wages over a highly-skilled American workforce with fair wages and quality health care.”

Still, the overall economic numbers lent hope that things might be changing. Economists, rarely a jolly bunch, began to feel optimistic.

At her year-end news conference in 2004, Granholm voiced optimism, too.

“While I can’t person