Michigan Tackles Poverty

LIKE much of the Great Lakes region, Michigan has seen its economy rebound strongly from the "rust belt" era of the late '70s and early '80s. But left behind in the recovery are pockets of deep poverty.

To drive down the miles of vacant, boarded-up, and vandalized store fronts and homes along Grand River Avenue in Detroit, or in downtown Benton Harbor, is to receive a stark reminder of the nation's unfinished business. And like most states, Michigan also has pockets of deep rural poverty that exceed that of the cities.

So-called "enterprise zones" are one idea for the economic revitalization of such areas espoused by many Republicans - led by former Housing Secretary Jack Kemp - and some Democrats. Such zones give varying degrees of tax relief to business that locate there. On Jan. 25 the Republican-controlled Michigan Senate, with bipartisan support and with backing from Gov. John Engler (R), passed a series of bills to establish up to eight tax-free Renaissance Zones in what may be the most aggressive approach yet taken by any state.

The plan, which appears headed for easy approval in the state House, calls for locating zones in five urban and three rural areas. Cities and counties can apply for more than one. The zones are limited to eight square miles, although they may be divided into as many as six noncontiguous pieces. All state and local taxes, except existing bonds and sales taxes, will be waived for businesses and homes in the zones for up to 11 years. The idea is to jump-start the local economy.

Thus a family with a $70,000 home and annual income of $60,000 would get a tax break of more than $5,000 a year. A small business with annual revenues of $500,000 in a $250,000 building would gain more than $8,000. The state would reimburse school districts for lost revenue.

The plan is no magic cure for poverty. There is no guarantee that new and incoming business will hire local residents. And poor people paying little or no income tax won't benefit much from tax relief. Enterprise zones in other states have had mixed results.

Still, it's a step in the right direction. The package illustrates the kind of creative experimentation that more states need to try if progress is to be made against some of the country's most intractable social problems. And it gives the lie to charges that state legislatures, and Republicans in particular, don't care about the inner city and will not act to help the poor.