Interesting...The latest guest of Financial Audit is....Gretchen Whitmer?

quote:

---

The video features an in-depth financial audit of the state of Michigan with Governor Gretchen Whitmer. The discussion covers a wide range of topics, including Michigan's economy, state spending, debt, taxation, and national policy issues.

Here is a detailed summary of the various talking points from the video:

Michigan's Economy and Priorities
North Star Goal: The Governor states that Michigan's primary focus, or "north star," is ensuring anyone can come to the state to build the life they want, which involves investing in people, skills for advanced manufacturing, and creating desirable places to live [03:39].

Tariffs and Trade: Governor Whitmer identifies the "tariff chaos" as a major concern impacting Michigan's agriculture and advanced manufacturing, especially the auto industry [05:01]. She advocates for using tariffs "like a scalpel not a sledgehammer" and acknowledges the industry's reliance on a built-in trade relationship with Canada [06:53].

Business Incentives (EVs): The discussion addresses controversial state incentive spending, such as the reduction of the Blue Oval Battery Park package [09:33]. The Governor defends aggressive investment in EV battery plants, explaining they are crucial for Michigan to maintain long-term dominance in mobility and auto research and development [01:11:32].

Economic Outlook: Caleb notes that 87% of Michigan CEOs expect a weaker state economy over the next decade due to national unpredictability [01:12:17].

State Finances and Debt
Debt Management: Michigan's outstanding debt was $6.92 billion at the end of 2024, a 4.2% reduction year-over-year [01:13:46]. The Governor highlights that the state is required to run a balanced budget and has secured an upgrade in its bond rating [01:14:54].

Net Position Concern: A concern is raised that the state's overall net position (assets minus commitments) remains a negative $1.3 billion [01:16:46].

Budgetary Uncertainty: The Governor attributes some financial instability to the unpredictability of federal funding and the risk of government shutdowns [01:18:37].

Spending Breakdown: Health and Human Services accounts for the largest share of spending at 44% ($35.57 billion) [01:19:16].

Welfare and Pensions
Food Assistance Incentives: The host questions whether welfare systems, like food assistance, might be structured in a way that discourages people from working more hours [01:19:45]. The Governor acknowledges this as a potential flaw, but says Michigan operates under the same federal rules as other states [01:20:09].

Pension Underfunding: A significant problem is the underfunded state pension system, which has a funding ratio of 74.83% and an unfunded liability of about $27 billion [01:21:04]. This amount is noted as five times the annual K-12 School Aid Fund contribution [01:22:56].

Long-Term Solution: Governor Whitmer explains that the state is phasing out the pension system for new public employees, which will ultimately remove the system as a long-term fiscal problem [01:27:17].

Revenue, Taxes, and Spending
'Sin Taxes' for Schools: The School Aid Fund is backed by marijuana taxes ($270 million) and sports betting/iGaming revenue [01:29:30]. The Governor notes that while "sin taxes" are politically easy to pass, the majority of school funding comes from the sales tax [01:32:00].

Income Tax Rate: The personal income tax rate was legally returned to 4.25% from 4.05% after a court ruling [01:35:32]. The Governor supported following the law and would require a clear plan for funding before agreeing to any future tax cuts [01:35:46].

Working Families Tax Credit: The state increased its match of the federal Earned Income Tax Credit (EITC), now called the Working Families Tax Credit, from 6% to 30%, to incentivize full-time work and provide tax relief [01:38:40].

EV Fees: The $160 annual fee for Electric Vehicles (EVs) to replace lost gas tax revenue is discussed, which the Governor defends as a fair registration fee since EVs use the roads [01:41:36].

Pork Spending: Caleb details nearly $1 billion in state earmarks (pork spending), including funds for infrastructure, community projects (like the Detroit Zoo and Special Olympics), and grants [01:44:03]. The Governor notes she is working with the legislature to implement front-end transparency on these projects [01:46:57].

Policy and National Issues
Personal Finance Education: A significant policy win discussed is the new requirement for a mandatory personal finance class for high school graduation, which the Governor believes is vital for preparing students to manage their lives and finances [01:54:20].

Tesla Direct Sales Law: The video mentions that state law prevents Tesla from being a licensed dealer or owning a service center in Michigan, a restriction Caleb criticizes [01:56:51].

Political Extremism: The Governor calls the rise of political extremism "really dangerous" and stresses the need for leaders with a platform to speak out against anger and violence, regardless of its origin [01:10:46].

Conclusion: The host concludes by giving the state of Michigan a "Hammer Financial Score" of a six or a seven out of 10 [01:11:45].

---