JEFFERSON CITY, Mo. (AP) - Having won big in the fall elections,
Republicans preparing to take over statehouses around the country are
proposing to cut corporate taxes, weaken union clout and rewrite laws on
discrimination, whistle-blowers and injured workers to the benefit of
In short, they intend to push through a business lobbyist's wish list.
And they plan to press ahead even though some of their ideas could, at
least in the short term, cost their states desperately needed tax
"It's going to be a good year for businesses," said Missouri Sen. Brad
Lager, the commerce committee chairman in a state where Republicans won
historic legislative majorities.
When a new wave of politicians takes office in January, Republicans will
hold a majority of governorships and their greatest number of state
legislative seats since 1928 - giving them the muscle to enact the
pro-business agenda they promised to voters concerned about high
unemployment and an economy that has yet to make its big rebound
following the Great Recession.
But those pro-business policies are in some cases theories - not yet
clearly proven to create jobs. And if they do work, they could take some
time to produce the kind of growth that results in higher tax revenue
for cash-strapped states.
In the meantime, each new business tax break enacted could add to what
the National Conference of State Legislatures forecasts to be an $83
billion shortfall for the upcoming budget year in about two-thirds of
Advocates for education and social services fear that will only deepen the short-term spending cuts coming their way.
"We question if that pool of proposals are really business-friendly or
not," said Amy Blouin, executive director of the Missouri Budget
Project, a nonprofit group that analyzes how fiscal policies affect low-
and middle-income families. "We're at the point where the result would
actually be reductions in education, and businesses tend to care at
least as much about the quality of education and communities and
services as they do about the tax structure."
One of the first places to test the new pro-business push will be
Wisconsin, where Republican Gov.-elect Scott Walker has promised to call
the new GOP-led Legislature into an emergency session on his first day
in office Jan. 3.
Walker wants to lower taxes on businesses with fewer than 50 employees,
impose new business-friendly limits on liability lawsuits and transform
the state Commerce Department into a public-private partnership to lure
companies to the state.
"I think it's basically put-up-or-shut-up time," Walker said after his
November election. "We have a mandate from the voters of the state, and
it's one we don't take lightly."
In Michigan, voters elected the former chief operating officer of
computer manufacturer Gateway Inc. to turn around a state that has
consistently had one of the highest unemployment rates in the nation.
Republican Gov.-elect Rick Snyder immediately chose the former president
of the Michigan Economic Development Corp. to lead his transition team.
"The business people we represent across the state are very excited
about this change of leadership," said Rich Studley, president and CEO
of the Michigan Chamber of Commerce.
Snyder wants to eliminate the Michigan Business Tax, which generates
about $2.2 billion annually, and replace it with a lower corporate
income tax projected to produce about $700 million for the state.
Advocates for social services fear that could nearly double Michigan's
projected budget shortfall to more than $3 billion in the 2012 fiscal
"Without any additional revenues, it's hard to imagine filling that gap
and not having just a devastating effect on social services and human
services," said Karen Holcomb-Merrill, the state fiscal policy director
for the Michigan League for Human Services.
In Iowa, Republican Gov.-elect Terry Branstad has said his plan to cut
commercial property tax rates could cost the state up to $500 million
over four years.
The theory behind cutting corporate tax rates is that businesses will be
more likely to locate or expand in a state if they can keep more of
But the Congressional Budget Office has cast doubt on how much corporate
tax cuts actually help stimulate the economy. A January 2008 report by
the office said "increasing the after-tax income of businesses typically
does not create an incentive for them to spend more on labor or to
produce more," because decisions on whether to increase production
depends on their ability to sell the product.
Such cuts haven't helped yet in California, where outgoing GOP Gov.
Arnold Schwarzenegger forced Democrats two years ago to accept corporate
tax cuts that cost the state an estimated $2.5 billion a year in
revenue. So far, there is little evidence the cuts created jobs -
unemployment has remained a steady 12 percent since the summer of 2009 -
or boosted revenue: The state's lawmakers will again wrestle with a
huge budget gap in 2011.
The pro-business efforts extend beyond policies that will affect a
state's budget. In Oklahoma, where Republicans seized the governor's
office and increased their legislative majorities, incoming leaders such
as Gov.-elect Mary Fallin want to lower workers' compensation costs for
businesses and overhaul the civil justice system to reduce liability
insurance costs for doctors and businesses.
In Missouri, GOP legislative leaders - who must work with a Democratic
governor - want to rewrite laws governing lawsuits by alleged
whistle-blowers and victims of discrimination and workplace injuries.
They contend the current laws are unfair to businesses. And Missouri
Sen. Rob Mayer - the likely next Senate leader - wants a "right to work"
law that would prohibit union membership and fees from being a
condition of employment.
Associated Press writers Scott Bauer in Madison, Wis., Kathy Barks
Hoffman in Lansing, Mich., and Sean Murphy in Oklahoma City contributed
to this report.