Detroit Regional Chamber > Detroit Policy Conference > Finley: Rakolta Says Growth Plan Won’t Grow Population

Finley: Rakolta Says Growth Plan Won’t Grow Population

January 12, 2024

The Detroit News
Jan. 11, 2023
Nolan Finley

The co-chair of the Growing Michigan Together Council says the blueprint it created to attract and retain residents won’t grow the state’s population for at least a quarter century.

“It won’t make the population larger, at least not on a time frame anyone today can relate to,” says John Rakolta Jr., chairman of Walbridge Co., who was appointed to help lead the 28-member council by Gov. Gretchen Whitmer. “The date in my mind is 2050 before we see gains, if then. That’s why I didn’t want to call it a population growth council.”

Instead, he says the focus of the work should be on growing productivity with the goal of making the state more prosperous. The new global reality, he says, is that places such as Michigan that have stagnant or falling populations must find ways to improve the quality of life for their citizens without adding more people.

Rakolta will discuss his vision for implementing the council’s plan during a discussion Thursday I’ll moderate at the Detroit Regional Chamber’s Detroit Policy Conference at MotorCity Casino in Detroit.

Critics of the governor’s growth council say implementing its recommendations on infrastructure, business attraction and education will cost billions of dollars and require a massive tax hike. Rakolta insists raising taxes was not discussed, and he’s advised the Whitmer administration to take taxes off the table for now as a source for funding the blueprint.

“I went to everyone and said, ‘Do you really want to raise taxes this year?’” he says. “‘Do you really think the population is ready for a tax increase with all the inflation? It will be your death knell.’”

Instead, he advocates for the state to adopt zero-sum budgeting, in which every current expenditure is evaluated before new dollars are allocated.

“You can’t tell me that in a $50 billion budget — that’s minus the federal portion — you can’t find 10% waste and inefficiency,” he says. “In the education system alone, consolidating some of the more than 800 public and charter school districts will save billions.”

Beyond that, Rakolta says the state should rethink what it taxes and how much to assure the tax code is structured to maximize revenue without slowing growth. He also would tap the philanthropic community to help fund projects to make Michigan more attractive for residents and investments.

“They said, ‘Tell us how can we help you,’” he says. “I don’t know what they can do, but let’s put something in front of them.”

If more revenue is still needed, Rakolta recommends addressing the 30-year-old Headlee Amendment, which limits the ability of state and local governments to raise taxes to keep up with inflation.

“Prior to the Headlee cap, we were the ninth highest tax state,” he says. “We’re now the 39th highest tax state. If Michigan is at the bottom of the barrel in improving its infrastructure — and that includes roads and bridges along with the social and cultural infrastructure today’s population wants but we can’t fund because we don’t have money — we have to have a robust discussion about what kind of state we want to be.”

Impediments to Michigan’s population growth don’t all involve a lack of cool things. Low birth rates play a significant role. The state’s childbearing population has dropped to 44% today from 60% just 25 years ago. Meanwhile, it has 800,000 more residents above age 65.

While the state has an excess of jobs, those jobs don’t pay as well as they once did. Per-capita income in Michigan was 117% of the national average in 1970; that’s dropped to 87%. People are leaving the state for better salaries.

And it’s no longer a preferred destination for immigrants.

“They’ve bused 100,000 people from the southern border to cities all over the country,” Rakolta says. “Not one of those buses has come to Detroit. Send them here. We have jobs and we need workers.”

But again, Michigan can prosper without significant population gains, he says, by sharply improving productivity through innovation, a better educated workforce and stronger collaboration between business and labor.

“The bottom line is that we have a document here that will improve productivity,” Rakolta says. “Follow it and we’ll have a more prosperous state.”

But perhaps not a more populous one.