Engler's angle: how tax relief became school reform in Michigan - Michigan Gov. John Engler

Reason, August-Sept, 1994 by Derek Green

"I'll never forget it," says Dick Posthumus, Senate majority leader and a close ally of Engler's. "It's probably the hardest work I've ever done in my life. For about two weeks everyone had been getting by on three or four hours' sleep, and for the last two days we went something like 48 hours straight to work out the most complex issue we'd ever faced. It was difficult but very, very successful."

Deputy Treasurer Khouri agrees. "It was a long all-nighter," he says. "The culmination of a lot of long nights. But that's probably how it should be. We knew we were doing something historic. We didn't know whether history would think it was smart or dumb, but we knew it was history. That makes it worthwhile."

Some recall the evening less warmly. "In many ways it was a joke," says Democratic whip Lynn Rivers. "We had no staff, there was no analysis of the bills--people were voting in some cases on legislation they hadn't had time to read. After 26 hours, all people were talking about were their plane tickets home."

Rivers, who is running for Congress, believes that a last-minute vote should have been avoided. "The main reason it came to this," she says, "is because the governor understands that the tighter the time line, the more leverage he has. Unfortunately, good public policy might have been lost in the shuffle." Rivers worries that legislators did not have adequate time to fully read the legislation they passed, much less consider its long-term implications.

Engler signed the legislation that came out of the marathon session on the last day in December. The compromise that had been reached offered two different plans, both of which reinstated a small portion of the property taxes eliminated in the summer. The first plan, introduced by the Republicans, sought to increase the state sales tax from 4 percent to 6 percent. Under the Democratic-supported alternative, the state income tax would go from 4.6 percent to 6 percent. Although not as ambitious as Engler's original proposals, both bills included nearly identical school reform measures, such as charter schools and a standardized core curriculum for all publicly funded schools.

Since Michigan law requires a constitutional amendment to raise the sales tax, there was one final dramatic gesture to be made: a state-wide vote to decide the matter. If voters turned down the Republican-backed sales-tax increase ("Proposal A" on the special ballot), the Democratic income-tax proposal, which was a statutory amendment, would automatically go into effect. In the words of one Michigan representative, the voters got to choose between being shot or being hanged.

Still, many observers credit Englet with perceiving that the only way to pass a piece of legislation this sweeping was to force voters to choose between a sales tax and an income tax. He believed all along they'd opt for the sales tax. "I felt that for 20 years, people in this state have proposed higher income taxes and higher property taxes," says Engler. "People always said they would consider trading [lower] property taxes for higher sales tax. I thought it was a good bet."