Tuesday, December 21, 2010

Michigan the only state of the union to see a decrease in population

according to CNBC, reporting a few minutes ago on the Census Bureau's population report.

Tony Trupiano says:
Michigan will discover that as a result of a depressed economy and a manufacturing industry that has been dealt a death blow over the last ten years a large percentage of Michigan’s population has relocated to other parts of the country. Michigan is most certainly to lose one Congressional seat, if not two. It also means that Michigan is also apt to lose Federal funding.

About a year ago, Scott Sumner talked about his birth state's struggles, writing:
At the other extreme is Detroit, with 15.4% unemployment. Detroit has two problems. First, heavy industry is unusually cyclical, and thus steel, autos, machinery, etc, will suffer more job losses when AD falls, even if there is no recalculation. Of course the auto industry is the main problem in Detroit. It is not true that the US auto industry is in a long term state of decline, but the Big 3/UAW auto industry is in a long term state of decline. So Detroit’s unusually high unemployment rate is due to both cyclical factors and structural (recalculation) factors.

More than two years ago, the WSJ Editorial Board observed that Michigan's tax policy was an issue:
Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending and new businesses and lead to a Michigan renaissance.

Not quite. Six months later one-third of the expected revenues have vanished as the state's economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state's transaction tax on home sales.

Michigan is now in the 18th month of a state-wide recession, and the unemployment rate of 6.9% remains far above the national rate of 5%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better.

Leon Drolet, the head of the Michigan Taxpayers Alliance, complains that "we are witnessing the Detroit-ification of Michigan." By that he means that the same high tax and spend policies that have hollowed out the Motor City are now infecting many other areas of the state.

The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren't blazing a path out of the state is they can't sell their homes.
UPDATE: Looking at the states map of percentage changes, it looks like people are fleeing higher tax domiciles for lower ones, with the exceptions of California and Oregon. As far as the reapportionment tilting towards traditionally red states, as Michael Barone noted in 2008:
Bush would have lost in 2004 if Ohio had not gone his way; under the projected post-2010 apportionment, Bush would have won 276-to-262 if Ohio had not gone his way. The demographic trends reflected in these projections would not prevent Barack Obama from being elected this year and re-elected in 2012, but they would make it marginally more difficult. Demography, modestly, favors the Republicans, and more than modestly over the long haul.

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