In 2000, about one-third of the cars assembled in America were made in Michigan. That number now has dropped to 21%. During those last nine years, Michigan has lost about 10% of its automobile assembly market share, said State Senator Jason Allen of Traverse City during a visit to St. Ignace Friday, March 27. That loss has impacted most aspects of the state's economy, he said, including job losses of many residents.

While not in town to speak before the public, Mr. Allen provided The St. Ignace News with an update on current legislative concerns.

Michigan has the highest unemployment rate in the nation at 12.6%, and Mackinac County has the highest unemployment rate in the state, 27.6%.

"We're hemorrhaging about $100 million a month," said Mr. Allen of the state's budget. "I try to be very positive on the stuff, but I'll tell you it is tough. The question is will General Motors or Chrysler survive."

Sen. Allen, who represents 290,000 residents and whose district includes Mackinac County, chairs the Senate Commerce Committee. The committee, he said, has been focusing on unemployment, automotive business, and tourism. As part of that focus, the committee has drafted bipartisan legislation to lengthen unemployment benefits to help state residents.

The Senate approved the legislation Wednesday, March 25, which authorizes the use of federal stimulus funds to finance an extension of unemployment benefits in Michigan. If the measure passes the House, Michigan residents could receive up to 79 weeks of combined state and federal unemployment benefits.

Currently, the House Labor Committee is reviewing the bill.

Passage of the bill will be crucial to those receiving unemployment benefits, as the existing unemployment insurance extension program ran out at the end of March. With the infusion of federal stimulus dollars, that deadline is extended to about February 2010.

The bill's passage also is important to Michigan businesses, said Mr. Allen. Ordinarily, employers pay 100% of the regular costs of the unemployment system, but under the stimulus law, federal revenue will finance all of the added benefit weeks.

"We're in the worse shape out of any state in the union as far as the pool for unemployment insurance," he said. "We're overdrawn by about $1.2 billion."

A solvency tax imposed earlier this year on businesses was eliminated last month. The tax was levied against employers whose laid off workers drew more unemployment benefits from the state fund than the employer put into the fund.

Sen. Allen said Chrysler Corporation pushed to have the tax eliminated since it would save the struggling company about $5 million in costs.

Now the focus is on battery technology, he said. Engineers are working on the research and development of the next generation of vehicle powertrains and legislators are seeking ways to ensure all of the components will be manufactured in Michigan by establishing tax credits to businesses working on the project.

The program is not without competition. Nippon Electric is working with Toyota and the state of Tennessee. Also, LG Electronics has partnered with Nissan and is working with the state of Mississippi. In Michigan, he said, Ford, General Motors, and Chrysler are working with A123Systems in Ann Arbor, Johnson Control in Holland, and Dow Corning in Midland.

On the tourism side, he said, legislators are looking for a consistent way to fund the state's tourism marketing program. Travel Michigan has a $30 million budget this year, but the proposed 2010 budget cuts funding to $5.7 million.

There is consensus that funding needs to be in place for tourism promotion, he said, but finding the funding is the issue. Legislators are considering taking one-tenth of one percent of unencumbered sales tax, which would raise about $30,000 a year. A Michigan State University study shows that the state receives $2.40 in return for every tourist dollar spent.

Also under consideration is setting up a tax increment financing, or TIF, district, which is similar to a Downtown Development Authority, and would be used to generate tax dollars to promote tourism in the state. Another option being considered is a tax increase on something, which could include rental cars.

In comparison, he said, Florida is using $127 million of stimulus money to promote tourism.

"I just don't see that we are in that same financial position. As I said earlier, we are hemorrhaging $100 million a month. That just changes the dynamics out of a $42.6 billion budget. . . . I think it's going to be a long haul."

For schools, he said, Governor Jennifer Granholm has included $15 million for schools in the City of Detroit in the proposed 2010 budget, although she has eliminated Saving Paradise funding of $750,000 per year, which benefits some Upper Peninsula schools' operational costs, including Mackinac Island, Beaver Island, Paradise, Burt Township (Grand Marais), and DeTour Area Schools.

Also proposed is a change in the formula the state uses to determine per pupil funding. Under consideration is a formula that would use a two-year blend on the student count, rather than the current threeyear blend. As reported in The St. Ignace News March 12, St. Ignace Area Schools, for example, could lose between $150,000 and $362,000 in state funds if the formula change is approved.

Sen. Allen expects legislators will be in session all summer to work on the budget.

"It's going to be very, very tough," he said. "It's going to be a long summer."