Granholm calls 2009 ‘difficult year’

LANSING — After a year that included a battle over the state’s budget that lead to a temporary government shut-down, coupled with an economy in freefall, Michigan Gov. Jennifer Granholm said it was a “difficult year.”

“Things have utterly changed,” she said. “The old way of being is gone and it’s not coming back.”

That old way of being, she said, was a state economy focused entirely on auto manufacturing and no economic diversification. That, she said, is changing with the state’s investment in battery technology manufacturing and solar energy production.

“There’s no question that 2009 was a critical year for our state,” the governor said. “It was a year in which we had some of the toughest challenges we’ve faced, from the General Motors (GM) and Chrysler bankruptcies, to state revenues falling to a 45-year low when adjusted for inflation. Those challenges were painful, but they underscored that we have the right plan to give citizens new opportunities for a secure way of life.”

But even in light of the spiraling economy with the highest unemployment rate in the country, Granholm said she was hopeful the state was poised to recover.

Among the economic advancements she touted were the luring of battery technology manufacturers and the development of a solar panel industry in the state. She also touted the fact the state received the most federal cash to stimulate battery manufacturing of any state that sought such cash.

In reference to the state’s funding, through tax breaks for manufacturers for solar panels, she highlighted the state’s development of the Saginaw valley area.

“The Saginaw Valley is posed to become the next Silicon Valley,” Granholm said.

The governor said she was disappointed in the final outcome of the year’s budget crisis, and placed the blame on term limits.

“The worst vote I ever cast was for term limits,” Granholm said. “That’s why I support repealing them and I want to see a part-time legislature.”

She also said she stands with the freshman class of the state House in driving for financial punishment for lawmakers failing to put a budget in place by July 1. Such a proposal was floated by House members following the budget crisis, and State Sen. Hansen Clarke, a Democrat from Detroit, demanded such a move in the early hours of Oct. 1, while the state was shut down.

Some of the budget crisis was driven by term limits and political hopes, she said.

“The potential future political positions for some had an impact on certain people’s decisions not to fund education, not to fund revenue sharing,” Granholm said. With term limits hitting full impact this year, many state legislature leaders are jockeying themselves into positions to run for other offices.

She was also clear on the problem facing the state in the coming budget battle.

“Absent some great intervention by the federal government, 2010 will be a very difficult year,” she said. “The stimulus money will go away and we’ll be facing a cliff.”

She said she expects to introduce a budget next year which will not plan for federal cash.

“I don’t want to leave office without having education on a stabler foundation,” Granholm said. “But I can’t wave a magic wand.”

To address the tax structure, which she said was created for an “old economy,” rather than a “a new economy,” she said she is willing “to enter into a grand bargain.” She said she has had an extended invitation for such a bargain, which she described meant “everyone gives up something. Everyone gets something. Everyone feels some pain.”

“The possibility for a grand bargain is here. I have encouraged all the players to sign up, but I have not heard that willingness from the other side,” Granholm said.

Granholm said one way to shore up the lagging revenues would be extending the sales tax to services.

In addition to discussing politics and the state’s economy, Granholm told reporters that she had been vetted for the U.S. Supreme Court. She said she will not be accepting any posts in the Obama administration in the next year.

“I told them I wanted to finish this out,” Granholm said, although she said if another post on the Supreme Court were to open up, she would consider that, calling it “a different animal.”

She also talked about the coming Democratic primary for the nomination to succeed her, acknowledging she was supporting Lt. Gov. John Cherry.

Granholm also praised the legislature for passing Race to the Top education reforms over the weekend. She called the reforms important, and said even if Michigan doesn’t win the up to $400 million in federal cash for education innovation, those reforms were needed.