Michigan's Twisted Energy Strategy

Michigan Governor Jennifer Granholm took to public radio last Friday in a bid to pressure lawmakers to act on her new budget balancing proposals. But she wound up shooting her energy innovation agenda right in the ethanol pump.

She started off strong, recycling a favorite line from the past two State of the State speeches. "We're the state that put the world on wheels," the governor said. "We should be the state that breaks the US dependence on foreign oil."

But a phoned-in question on gas taxes exposed the hollow rhetoric. Increasing the gasoline tax is widely recognized as a key strategy to decrease fuel consumption, make alternative fuels more competitive, and decrease America's dependence on foreign oil. All goals Gov. Granholm claims to embrace.

The move also is viewed by a growing number of people in Michigan as an immediate way to crank up state revenues, plug a budget deficit of crisis proportions, and ramp up investment in critical infrastructure such as roads, maybe even mass transit. That's why the idea is supported by several prominent Chambers of Commerce.

But when a caller presented the governor with that reasoned rational on the recent radio show, she looked right past it, raising significant questions about the strategic thinking behind her plan to solve the state's budget fiasco, spur energy entreprenuers, and position Michigan to prosper in the 21st Century global economy.

Here's the brief transcript:

Caller Paul from Royal Oak, MI: "I propose significantly raising the gasoline tax. To raise revenue and also to encourage conservation. I think it would be a two-fer."

Moderator Rick Pluta: "Governor, what are your thoughts on raising the gas tax?"

Gov. Granholm: "This has been suggested by business groups. However I'm not proposing an increase in the gasoline tax at this pount because I want to get our fiscal house in order. Insofar as part of my economic plan is a 2 penny sales tax on services, I think there's only so much we can ask of citizens at any given time."

Moderator Rick Pluta: "Might there be a gas tax increase in the future?"

Gov. Granholm: "I know there's a lot of groups that would like to see it. I'm wondering if there's a better way to achieve additional revenue."

The gas tax opportunity - and the threat of letting it slip by - has not gone unnoticed by the media. Detroit Free Press Columnist Brian Dickerson asked yesterday whether "a gas tax hike is the best hope for the state's recovery."